INTRODUCTION: DECOUPLING BITCOIN AND BLOCKCHAIN TECHNOLOGY

Since the creation of Bitcoin in 2009, interest in the cryptocurrency and its features has been growing, mostly within IT-related communities (Romano & Schmid 2017). For many years, the technology that underpins Bitcoin has largely been unnoticed by the public (Mattila 2016). Although Bitcoin constitutes an independent monetary system, free from governmental influence, via monetary politics, and free from intermediation by financial institutions and service providers, the underlying technology can be decoupled from it: blockchain describes the data structure, which is managed in decentralized ways and facilitates frictionless transactions directly between trading counterparties. Bogart and Rice (2015) explain that blockchain technology disintermediates actors in the common way of value transfer and thereby removes frictions in the exchange of value over the Internet. Accordingly, it describes a new economic layer on top of the Internet and ultimately provides the integrity of electronic data and the uniqueness of digital assets. Swan (2015) suggests that blockchain technology will introduce the fifth computing paradigm, following the mainframe, personal computer, Internet and social networking/mobile phones.

However, increased hype in recent years around Bitcoin, blockchain and distributed ledger technologies (DLT) has resulted in blurred terminology about what characteristics define blockchain technology (Swan 2015; Mattila 2016). Condos et al. (2016) define blockchain as an electronic register for digital datasets, events or transactions, which are managed by a distributed network of participants through computations. Walport (2015) defines blockchain as a type of database that takes a number of records and collects them in blocks, where each block is cryptographically linked to the preceding and following blocks. Blocks thereby contain records of valid network activity since the last block was created and added to the blockchain (Bogart & Rice 2015). The chronological order and cryptographic signatures that link blocks enable blockchain to form a transaction ledger, creating a traceable history of transactions. This ledger constitutes the only database, in which all participants trust and on which they rely. It is managed in a decentralized manner, meaning participants jointly manage the maintenance and updating of the database with consensus mechanisms.