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In 1988, credit cards weren’t a thing. People who wanted to split purchases into installments used promissory notes, paid off like booklet-style payments.

In 2008—ten years ago—cards not only existed, but the vast majority of financial transactions were already done through ATMs rather than at the teller counter.

That same year, a new way emerged to perform electronic transactions more securely over the internet: blockchain. And with 2018 around the corner, it’s hard to discuss the topic without running into controversies that involve one of the most recent financial innovations on the planet: encrypted digital currency.

The term “blockchain” refers to the chaining of data, which is exactly what it’s based on: distributed, shared records and data whose main goal is to create a global index of transactions for a given market. Even though it can provide anonymity for buyers and sellers, blockchain is often described as a kind of open ledger that provides information about balances and transactions through wallets around the world.

If understanding the concept of blockchain is already complicated, imagine trying to predict how it will revolutionize system integration in the future. To simplify the “prophecy,” just remember that back in 1988—at the beginning of this article—the general public didn’t really know what the internet was. Today, everyone uses the internet for everything, all the time, without even noticing.

That’s why more and more companies and people are realizing that encrypted currency has everything to become a natural and intuitive habit over time. This means corporations—especially in the financial sector—need to keep their eyes wide open so they don’t miss opportunities and market share.

Bitcoin, smart contracts, and security

Forget virtual currencies as something that solves only “virtual” problems: blockchain continues its natural path of technological innovation while its currencies are used in people’s real lives, in everyday situations outside the computer.

This “alternative” form of financial transaction made the news in Brazil in 2017 when, in Santa Catarina, criminals demanded a ransom payment in bitcoins, the most widely used cryptocurrency in the world. For context, in June 2017, 1 bitcoin was worth around 10,000 reais.

Another innovation blockchain enables is the smart contract—a kind of document that self-executes through rules formalized between the parties, without the need for intermediaries. To understand it, think about buying and selling real estate, which today involves the buyer, the seller, and the government, represented by a notary/registry office—something that isn’t cheap. With a self-executing contract, the government could be removed from the process and, as long as both parties followed the rules, the smart contract would remain in effect.

What makes these solutions possible—and closer than we might think—is the security of data that flows through blockchain. Because all data is shared across wallets around the world, a hacker who accessed a single data source would obtain only a fragment of information, not the full picture.

Today, if a banking attack impacts a single person, that person’s account can lose everything. In blockchain, this type of theft becomes much harder—if not practically impossible—because many accounts would have to be compromised simultaneously and in a coordinated way for value to be extracted.

New directions for technology

According to specialists, blockchain has already moved beyond the aura of a “disruptive technology” and become a real possibility for stronger data security in businesses that handle online transactions. And everything suggests that, even though it can be applied to many types of companies, two institutions stand to benefit the most if they move quickly: banks and governments.

Because banking systems are still highly vulnerable to fraud, adopting this type of technology could significantly reduce invasion risks. This matters because cyberattacks can be disastrous—such as when a group of hackers invaded a Brazilian bank for hours in 2016 and gained access to passwords, credit cards, and personal information by controlling online and ATM operations. If the bank used blockchain, such an action would require massive computing power.

Governments can also benefit from the technology to better understand illegal markets, corruption schemes, and fraud involving public money.

One major controversy is blockchain’s anonymous nature: today, a person can use encrypted currency to buy many kinds of products and services on the deep web without revealing their identity. And the more widely it is used, the more this feature can expose weaknesses.

But those are topics for another time. What you need to know today is that blockchain is a technology capable of revolutionizing the financial world as we know it. Get your digital wallet ready: soon, talking about bitcoin, smart contracts, and other concepts will feel as natural as swiping a card and choosing between credit and debit.