Bitcoin, the world's hottest cryptocurrency, had a wild ride last week. On Thursday, the value of a single Bitcoin briefly exceeded $19,000. That's amazing when you consider that Bitcoins could be bought for a mere $800 earlier this year.
Whether you believe in the Bitcoin bubble or not, this much is certain: The underlying technology of Bitcoin will have a deep and lasting impact on IT/business strategy.
Bitcoin is built on blockchain, which itself is a miracle of modern technology. Wikipedia describes blockchain as "a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data."
Without blockchain, Bitcoin would have no foundation. In other words, Bitcoin cannot exist without blockchain.
But if you're an IT executive, you're probably not staying up at night worrying about cryptocurrencies. And that's okay. Cryptocurrencies might be a long-term phenomena, or they might be short-term fads. We simply don't know.
But you probably should be paying attention to blockchain, because of its potential to play a critical role in securing data and assuring the integrity of transactions. Blockchain is inherently secure and inherently difficult to tamper with. That makes it a highly valuable tool for modern corporations.
I predict that blockchain will become widely used for contracts, especially contracts involving multiple parties in multiple jurisdictions.
Why does all of that matter to IT leaders? It matters because the Internet of Things (IoT) is an incredibly complex ecosystem composed of multiple vendors, developers, investors, providers, integrators, distributors and end-users.
The IoT is a nearly perfect use case for blockchain, because all of the players in the vast IoT ecosystem will need contracts that clearly specify their roles and responsibilities.
Since there's a distinct possibility that the IoT will become the world's default technology infrastructure, it makes sense to secure IoT contracts with blockchain. That's why CIOs and other IT leaders need to start getting up to speed on blockchain sooner rather than later.
For those of us in the IT industry, the news about Bitcoin is interesting, but not immediately relevant. What's more important is that Bitcoin's foundational technology, blockchain, will likely be around for many decades. From a strategic perspective, that's the net takeaway.