Much Abuzz About Bitcoin

UPDATE — December 20, 2017

It’s barely been a month since I wrote this article and Bitcoin has more than doubled in value. The network of computers that make up Bitcoin’s backbone now use more electricity than Denmark. By 2020, the network will use more electricity than the United States.

Bitcoin was already at the top of my mind this weekend when it surpassed $7,500 in value. A friend of mine in the tech business had asked me why I hadn’t already jumped on the Bitcoin train, and I didn’t know — so I asked my financial adviser the same question.

“Judy,” he said, “it’s a bubble. And people use it to buy drugs. If everyone was jumping off the Throgs Neck bridge, would you?”

I decided to take my own advice and listen to the expert, but I was still curious as to what Bitcoin was all about. What I found out surprised me.

Though Bitcoin is known for being the currency of the underworld, the “blockchain” technology behind it is actually pretty revolutionary. Put simply, a blockchain is information that is spread over many computers. That information cannot be changed unless all of the computers agree it should change.

This makes blockchain desirable for accounting firms, like early-adopter Deloitte. In this white paper, Deloitte examines the potential benefits, which include integrating it with typical accounting procedures starting from “securing the integrity of records, to completely traceable audit trails. At the end of the road, fully automated audits may be reality.”

The healthcare sector is also excited about blockchain. Because the records created as blockchains cannot be altered, it is seen as a promising means to create continuous health records. Additionally, some in the healthcare community have noted that it could be used to increase compliance with federal privacy laws by helping to establish patient identities.