Bitcoin is a cryptocurrency, where
money transfer done peer to peer via scanning personal barcodes. The biggest
difference in this payment system is the absence of any supervisory agency, decentralized.
You need a wallet first, this wallet has a private and a public key. When you
decide to make a transaction you announce everybody in the system and they keep
record of this claim (your account number given by the system, receiver’s
account number and the amount you sent). First you sign your transaction in
your private key then it goes public key to everybody see it and approve it.
Your transfer becomes prevail when they approve. These transactions are being
recorded to electronic ledger called blockchain. In the system, there is a
synchronization of all ledgers so any fraud cannot be happened. Miners use a
software and powerful processors (generally graphics cards) to solve hash
problems to produce bitcoin.
Firstly and obviously the “banking
system” will be disrupted definitely. Because, there is no intermediary in blockchain. Banks take
commission our transfers. There will be no need for any bank in international
money transfers (even Western Union).
WU works with non-bank users customers but they get 10% of every transfer so
they will be disrupted. Also it is much faster than traditional banking system
so banking industry will lose customers. (peak transaction is 7 sec in Bitcoin)
However, it brings threat with itself. For example, Tor is an anonymous system.
Blockchain was used that browser as well and it disrupted legal system because
people were buying illegal materials from Silk Road Anonymous Market. The
second industry is “cyber security”. We use 3D
Secure in our online shopping. It is a kind of trusted intermediary between
buyer and seller. The data in blockchain ledger is strongly verified and
encrypted which means it is almost impossible to hack the transaction between
buyer and seller (at least with today’s technology). The system itself is
secure so no need for any cyber security software.