When society was in its early stages, there was no such thing as money; people used different valuable materials such as salt, wheat, and gold as a medium of exchange. However, people shifted from walking around carrying blocks of precious material to paper; fiat money, bringing in currency and the generation of coins. As years progressed, banks became established, and governments had control. For something to represent value, people must trust that it is valuable and will stay valuable long enough for them to redeem that value in the future. Trust is the fundamental currency in commerce. It’s very fragile yet somehow, we managed to manufacture it and over time, we changed our trust model from trusting “something” to trusting “someone”: the government. The more convenient fiat money was only valuable because the government said it had value and this very aspect generated our economy.

In the modern day, fiat money is centralized; it is controlled and issued by a central authority which is either the government or the central bank. It is also not limited by quantity so the government can print as much money as they want to inflate the marketing money supply. As technologies moved even further, we found even more convenient ways of storing and trading things online, using credit cards, wire transfers, PayPal, and other forms of digital money. The progression of macroeconomic changes over the years led to the formation of Cryptocurrency which is the transfer of digital assets. This form of digital currency raised a lot of concerns regarding a single unit of currency being multiplied and spent simultaneously more than once, creating a discrepancy between the spending record and the amount of currency available. This was referred to as the “double spend problem”. The solution that banks use today involves keeping a ledger on their computer that tracks who owns what and keeping a tally for each account. However, when banks have a mandate to create money, they essentially control the flow of value in the world which gives them unlimited power, and this can be problematic if the bank firms are corrupt. Moreover, if the central authority’s interest isn’t aligned with the people it controls, there may be a case of the mismanagement of the money like printing more money to save a bank from collapsing erodes the value of the citizens’ money. Giving banks control over your money supply would mean that they can freeze your account at any point in time, deny you access to your funds, or cancel the legal status of your currency. And this is what makes Cryptocurrency a better economic system than the traditional government or bank.

To solve this problem of corruption, mismanagement, and control within banks and governments over a country’s money supply, Satoshi Nakamoto suggested a way of creating a system for a decentralized currency called Bitcoin, to generate digital money that solves the “double spend problem” without needing a central authority. This is done by means of achain of blocks that contain information: blockchains. With Bitcoin, every computer that participates in the system is also keeping a copy of the ledger. In other words, the pseudo-anonymous Bitcoin protocol is built on blockchains. Each block contains some data, the hash of the block, and the hash of the previous block. The data that is stored inside the block depends on the type of blockchain. The Bitcoin blockchain for example stores the details about transactions such as senders, receivers, and the number of coins. A block also has a hash which can be compared to a fingerprint; it identifies a block and all its contents and is always unique. These blockchains are distributed ledgers that are completely open, transparent, and trackable to anyone. They timestamp digital documents, preventing people from backdating or tampering with them. To take down the system or hack the ledger, one would have to take down hundreds of computers that are constantly updating copies, which makes it almost impossible for hackers to tackle. Moreover, the blockchain technology can verify, trace, and secure multi-step transactions. They can also diminish compliance costs and catalyze data transfer processing. Blockchains can be used as voting platforms and develop registries to detect conflicts and illicit activities, providing a peer-to-peer payment system with the highest security.

Blockchain technology is one of the greatest inventions and paradigms like the internet and has already grown in popularity, constantly expanding in fields of finance, business, and healthcare.It has propelled people to employ various kinds of cryptocurrencies, revolutionizing the world of commerce and economy, and creating an exciting future full of new opportunities.