Keyboard not found, Press F1 to Continue


Distributed Consensus Systems: Impact on IT Business and Outsourcing

What follows below is a paper I wrote in Spring 2014 for a Business Outsourcing Course at UNLV. I apologize in advance for the less then perfect formatting.

  1. Introduction

The concept of currency dates as far back as 12,000 B.C. when raw materials were exchanged for tools. The need for currency is best represented by the classical economic problem of the double coincidence of wants. Joe wants a fish and has wheat to trade while Jane wants wheat but does not have the fish that Joe wants. This problem causes great economic stress unless a common unit of trade (currency) is introduced to the transaction.

As currency systems evolved, the modern day system whereby nation states control the money supply came to be. Prevailing economic theory is that the money supply must be liquid and controlled in such a way that inflation can be managed. This cornerstone economic ideal of the 20th century is being turned on its head with the invention of cryptographic based currencies such as Bitcoin. Deflationary by nature, the supply of Bitcoin is mathematically predictable and unchangeable.

Much debate has ensued over the viability of such a fixed supply currency but the application of the technology as a currency may be only scratching the surface. In this paper we take a brief look at the history of digital currency, explain the core innovations introduced by Bitcoin, and discuss the possible disruptions that its creation may fuel.