Bitcoin, blockchain and the future of money, music and more by Amber Healy
It’s one of the more confusing and convoluted concepts of the past decade (and, let’s be honest, there’s a ton to be confused about in the tech world if you’re a casual observer): what, exactly, is bitcoin? How does that relate to blockchain — and what’s that mean anyway?
This week’s interview with Tracy Leparulo, founder and CEO of Toronto-based Untraceable, takes a closer look at these technologies and how they’re becoming quickly integrated into the Web3 world and beyond. It’s better to brush up on the terms and concepts now because, as Tracy says, this is the way of the future.
Some basics first:
Blockchain is a system for tracking and protecting transactions in such a way that it cannot be forged or manipulated without the people involved in that transaction knowing about it. Think of your old-school checkbook and the paper book ledger we were supposed to fill out every time we wrote a check, made a deposit into the account or took money out. On the blockchain, those transactions are automatically logged and coded, so anyone with access to the digital ledger knows what happened the moment it is completed. No one can go in and make a change without authorization. Someone might try to manipulate the transaction, but even that attempt would be recorded and flagged.
Blockchain and Bitcoin are related but not the same thing.
Bitcoin is a type of cryptocurrency, a form of digital money that is transferred between users, or buyers and sellers of items, and it utilizes blockchain in order to ensure the transaction is secure and incorruptible. There are a few different cryptocurrencies, including Bitcoin, Ethereum, XRP, Polkdot and, in one that might sound familiar from the oddities of finance during the pandemic, Dogecoin.
Cryptocurrencies are not tied to a government or any fixed value, but instead fluctuate based on demand, kind of like stocks. This also means they’re not tied to a central bank, making it an attractive option for people who do not have or are unable to maintain a traditional bank account (or those who don’t want to do so).
How does this fit into the future of technology, music, virtual and augmented reality and beyond?
Blockchain is an attractive way for musicians to establish royalty breakdowns, for example: If there are five members of a band, and they agree to split the ownership of their songs, publishing rights and other intellectual and copyright properties that directly result in getting money for their work, setting those percentages up on a blockchain means they cannot be edited or changed without all members of the band agreeing to it. John Lennon couldn’t write Ringo Starr out of the windfall for the White Album, for example, if they’d used a blockchain to establish who was owed what for their work.
For virtual and augmented reality worlds, being able to trade in cryptocurrency means there’s no middleman or difference in the value of your local currency if you’re making a purchase from a seller in another country. The value of Bitcoin or Ethereum is what it is, regardless of where people live. And because it’s a secure, incorruptible transaction, the risk of being hacked, having personal private data stolen or other security lapses possible in traditional bank transactions, all of that is dramatically decreased.
Even if the average Joe or Jane you pass on the street is not familiar with these concepts, in a few short years it’ll be so commonplace, most people will need to have some understanding of them. It’s inevitable, in the same way that ATMs have largely replaced in-person bank tellers and automatic transfers have almost made the checkbook obsolete.