Aleksander Berentsen and Fabian Schär of the Federal Reserve Bank of St. Louis have recently published an article that emphasizes many of the benefits of cryptocurrencies. The article states "that cryptoassets are well suited to become an important asset class," in addition to offering praise regarding a number of the major applications associated with cryptocurrencies.
The piece opens by outlining many of the core motivations underpinning the development of bitcoin, stating that it was Satoshi Nakamoto's intention to "develop a cash-like payment system that permitted electronic transactions but that also included many of the advantageous characteristics of physical cash." The authors state that bitcoin was designed to comprise a monetary form that would allow the electronic transfer of value through the circulation of data files – allowing bitcoin to "retain the advantages of physical cash," whilst being able to be distributed freely via "electronic networks."
Berentsen and Schär state that "the true potential of blockchain technology will become apparent" only once distributed ledger technology attains general adoption, which the authors anticipate may take "many years, or possibly decades." As such, the authors conclude that one cannot predict the industries in which bitcoin and blockchain technology will have the greatest impact – however, the article emphasizes the shift in economic dialectical relations may be borne through the innovations of colored coins and smart contracts.
Of colored coins, the authors state that bitcoin "can be used to produce fingerprints for all kinds of data files and then store them in a blockchain." The article states that "public blockchains [create] the potential to monitor data files," which may have far-reaching implications with regards to "data integrity." It is asserted that the employment of colored coins renders "any manipulation attempt […] apparent because any change to the data file will lead to a completely different hash value," thus creating a decentralized, untamperable record of said data that is publically available to all.