UCL Centre for Blockchain Technologies at the University of Wisconsin and The New School, have a team of economists that recently published an interesting report on the evolution of Bitcoin and the economy. In their research, it has been concluded that Bitcoin economic growth has matured through four “sinful” stages and each stage, has brought Bitcoin away from “sinful” acts towards legitimate commercial activity.
These findings are hardly a surprise to most as many Bitcoin headlines used to be about Mt. Gox and Silkroad, whereas today, it is about banks and economic exchanges. Not to mention, even some banks are taking a look at Blockchain technology.
There are four primary business categories for the Bitcoin economy currently: miners, gambling entities, black markets, and exchanges. There are also three different realms or regimes of these four categories: early prototyping, sin, and legitimate enterprises.
Through studying patterns of transaction behaviors through the Blockchain, these economists were able to quantify and systemically categorize the role of Bitcoin in the economy over time. The study suggests there is a connection between public policy and the use of Bitcoins. When it comes to illicit activity and Bitcoins that undermines the value of Blockchain technology thus, minimizing its value as a legitimate currency.
While this threat does exist, over time, Bitcoin has moved away from illicit activity as commercial enterprises have adopted the technology and it could be seen in other economic sectors such as telecommunications, healthcare, media and energy services. It gives businesses a new opportunity to reinvent and redesign their logic.
Bitcoin technology brings a decentralized banking system that allows for more transparency in today’s economic world. Another known threat to Blockchain technology is technology literacy versus illiteracy. For the average individual, it’s hard to understand how Bitcoins and Blockchain works and affects the world. Technology literacy could pose a threat to the development and future of Bitcoins. It is important that a community effort of education to help the Blockchain technology become mainstream.