Public Relations & Social Marketing Insight

Contracts, transactions, and the records of them are among the defining structures in our economic, legal, and political systems. They protect assets and set organizational boundaries. They establish and verify identities and chronicle events. They govern interactions among nations, organizations, communities, and individuals. They guide managerial and social action. And yet these critical tools and the bureaucracies formed to manage them have not kept up with the economy’s digital transformation. They’re like a rush-hour gridlock trapping a Formula 1 race. In a digital world, the way we regulate and maintain administrative control has to change.

Blockchain promises to solve this problem. The technology at the heart of bitcoin and other virtual currencies, blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically. (See the sidebar “How Blockchain Works.”)

With blockchain, we can imagine a world in which contracts are embedded in digital code and stored in transparent, shared databases, where they are protected from deletion, tampering, and revision. In this world every agreement, every process, every task, and every payment would have a digital record and signature that could be identified, validated, stored, and shared. Intermediaries like lawyers, brokers, and bankers might no longer be necessary. Individuals, organizations, machines, and algorithms would freely transact and interact with one another with little friction. This is the immense potential of blockchain....

Bitcoin isn’t like traditional currencies, and not just because it doesn’t exist as actual coins or paper banknotes.

Unlike traditional currencies like the dollar or euro, Bitcoin isn’t controlled by a single government or central bank. Instead, every transaction involving the popular cryptocurrency is logged in a computerized public ledger called a blockchain. This collection of receipts is maintained on millions of devices around the world in individual collections called blocks. Each time there’s a transaction involving Bitcoin, an anonymous data “fingerprint” appears in a block recording the exchange.

This key innovation is the basis for "Block Bills," a collection of paper banknotes that bring the virtual payment system into the real world. As works of art, the whimsical bills have no monetary value. But they provide a “map” to the inner workings of the Bitcoin system—and they have a subtle beauty all their own....

While buyers speculate on bitcoins, the viability of the virtual currency is in doubt.

The frenzy over bitcoins has reached a fever pitch, along with their price, which hit a December high of $1,240 and a low of $522 in wild trading gyrations on one popular bitcoin exchange.

The rising interest in Bitcoin has translated into growing, if not widespread, use of the cryptocurrency. Bitcoin is a virtual currency that uses cryptography, or code, to complete financial transactions.

When the first bitcoin ATM opened in Vancouver, British Columbia, in late October, the story was covered globally, showing the rising interest in the digital currency. As reported in The Washington Post, 100,000 Canadian....