The Bitcoin ecosystem had a bumpy start, but driven in part by the demand created by the Silk Road and perhaps the Cyprus crisis, the impact grew quickly: the total value of bitcoins rose to several billion US$ in the first two years (currently it is around US$ 14 billion), hundreds of alternative cryptocurrencies (altcoins) were created and large mining entities were established, mostly in China. The ideas behind Bitcoin have opened up new approaches to cryptocurrencies, but also to distributed consensus, distributed naming, secure timestamping and commitment. One of the aspects that have drawn the most interest is the smart contract (that is, cryptographically enforceable agreements) on top of the Bitcoin ecosystem (or on other systems such as Ethereum). Even if some observers predict that the Bitcoin ecosystem will disappear or become irrelevant, the core ideas have already made a major impact.
Unlike any other payment system or cryptocurrency created before, Bitcoin allows for fully decentralized generation of currency and fully decentralized verification of transactions. The core idea is the blockchain, a public ledger that registers all transactions under the form of a hash chain; the blockchain describes the state of the system, that is, it specifies who owns which amount. Transactions themselves are validated based on a scripting language, which creates some flexibility. In a distributed system, a central problem is how to achieve consensus (e.g., how to deal with double-spending transactions). Transactions are broadcast over a low-latency peer-to-peer network that offers some robustness against censoring or sabotage. This approach allows the Bitcoin ecosystem to achieve distributed consensus in a practical way assuming that players are rational (something which is known to be unachievable without additional assumptions such as rationality) albeit at the cost of a major computational effort in terms of mining.
While the financial industry is less interested in the anarchistic aspects of the Bitcoin ecosystem (the governance model and the uncontrolled money supply), the distributed consensus idea is very appealing and is believed to have a very high business potential for a large number of financial transactions and interactions. In 2015, about US$ 1 billion was invested in venture capital in the area of blockchain and cryptocurrencies and the Aite Group predicted in 2016 that blockchain market could be worth as much as US$ 400 million in annual business by 2019. The idea of a public ledger for timestamping and registering documents using hash chains is more than 25 years old, as witnessed by the efforts of Surety Technologies in the early 1990 and the ISO standardization in this area in the mid 1990s –- but these earlier approaches did use a central authority to register all transactions. Bitcoin has inspired many actors to revisit those ideas by `taming’ the Bitcoin ecosystem into a private or permissioned ledger, where only a few selected actors have control over new currencies or verification of transactions (to get rid of distributed control) and where access to the ledger can be restricted (to get rid of full transparency). Some of the notable developments in this context are the open source initiative of IBM that is called Hyperledger and Intel's experimental Sawtooth Lake architecture.
Professor Bart Preneel of KU Leuven heads the imec-COSIC (COmputer Security and Industrial Cryptography) research group. His main research areas are information security and privacy with a focus on cryptographic algorithms and protocols and efficient and secure implementations. He undertakes industrial consulting for major players in the finance, telco and hardware industry and has co-designed the Belgian eID and e-voting scheme. He is active in international standardization . Professor Preneel has served as Director, (1997-present), Vice President (2002-2007) and President (2008-2013) of the International Association for Cryptologic Research (IACR) and is co-founder and chairman of LSEC vzw (Leuven Security Excellence Consortium). He is a fellow of the IACR, a member of the Permanent Stakeholders group of ENISA (European Network and Information Security Agency) and of the Academia Europaea. He has testified for the European and Belgian parliament. He has been invited speaker at more than 150 conferences and schools in 40 countries. In 2014 he received the RSA Award for Excellence in the Field of Mathematics.