Cryptocurrencies are coming to a project near you! Indeed, you could be first on your block to budget in a cryptocurrencies, of which there are now hundreds according to a study by NIST
It's all magic you say? You're in good company: Arthur C. Clarke once wrote, “Any sufficiently advanced technology is indistinguishable from 130 magic”
Now, I've worked on projects with foreign currency funding; that put's the company's treasurer on the project team. The treasurer works the currency hedges and other exchange related stuff.
Would a project paid for in Bitcoin be different? Yes, and no. Yes, the volatility of cryptocurrency values adds a degree of risk not usually on the risk matrix. No, currency-hedged projects are not that unusual. We've done it before.
What is money?
This question doesn't usually arise in project management circles, but hey! It's a new monetary world.
Most of the world's money today, some say 90%, is virtual: no paper, no coinage, no gold or other tangible back-up. Virtual money that is one of the five world exchange currencies has properties that transfer well to cryptocurrency:
- Convenienty portable, more so than gold bullion for sure
- Persistent, never wears out or can be destroyed like coinage and paper (the Canadians have gone to a plastic replacement for paper, but nonetheless....)
- Value universally understood by comparison to tangibles (we know the value of a Coke the world over)
Ergo: cryptocurrencies can qualify as money
The blockchain
The thing that makes a cryptocurrency work is an underlying technology called a "block chain". The important take away understanding a block chain is that it is a secure distributed database with no central authority but with enforced data integrity.
Now, a secure distributed database can be useful for a lot of stuff, and for distributed projects it could be very useful indeed.
Here's what NIST says about what a blockchain is:
Blockchains are immutable digital ledger systems implemented in a distributed fashion (i.e., without a central repository) and usually without a central authority. At their most basic level, they enable a community of users to record transactions in a ledger that is public to that community, such that no transaction can be changed once published.
A blockchain is essentially a decentralized ledger [database] that maintains transaction records on many computers simultaneously. Once a group, or block, of records is entered into the ledger, the block’s information is connected mathematically to other blocks, forming a chain of records.
Because of this mathematical relationship, the information in a particular block cannot be altered without changing all subsequent blocks in the chain and creating a discrepancy that other record-keepers in the network would immediately notice.
In this way, blockchain technology produces a dependable ledger without requiring record-keepers to know or trust one another, which eliminates the dangers that come with data being kept in a central location by a single owner.
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