Hello World! My Blockchain Journey Begins
A Few Blockchain Words To Get You Started
Tonight I wrote on my LinkedIn that my journey with blockchain started on the morning of August 22, 2017 after reading an article about IBM and Walmart partnering up to use something called “blockchain” for food safety tracking. I was like “WTF is blockchain?” I Googled it and then, immediately after, sent an email to eight teammates requesting to discuss. It gripped me that completely. In fact, less than three weeks later, I wrote my most popular article on LinkedIn:
Since then, I’ve learned a few things — not nearly enough, but enough to understand a few basic terms. Below I share them as if a friend asked me via text what the meaning of each of these blockchain-related words meant and I started typing away. Writing is one of the best ways to learn, so if you spot an error, please debate or correct me in the comments!
I’d Like to Have a Few Words…
Blockchain
Blockchain is a new type of computing that uses multiple decentralized computers to publicly store and sync information and transactions in a way that can never be erased or changed. Blockchain computers follow their own unique protocols and are also called distributed ledgers because they’re decentralized databases with a full history of transactions.
Protocol
A protocol is a set of rules specifying how the computers in a blockchain network go about doing their jobs.
Bitcoin
Bitcoin is a computer that exists for a single purpose: to generate bitcoins, a secure and anonymous currency to pay for things. The bitcoin computer follows its own protocol, and all computers on the network follow that set of rules. Oh, and the Bitcoin computer was the first blockchain computer.
Ethereum
Ethereum is more of a general-purpose computing platform / virtual machine that lets you create applications that take advantage of something called smart contracts. Ethereum uses its own native currency called ether.
Smart contract
A smart contract is the equivalent of a legal or business agreement but in code form. The advantage of having it in code form and tying it to cryptocurrency like bitcoins or ether is that as soon as the agreement is met, the smart contract can automatically release payment based on the terms of your agreement. This will become very important for business applications and streamline many processes related to accounts payable and accounts receivable.
Cryptocurrency
Cryptocurrency is new generation of currency, or money, that can be used to buy and sell things online and, already in some places, offline. There are many cryptocurrencies, and bitcoins and ether are just two of the more popular ones. They use really strong math (cryptography) to make sure you can’t fabricate currency, coins, or tokens or change information once it’s already recorded on the blockchain.
Tokens
I’m still confused about tokens, but this appears to be another word for cryptocurrencies. Tokens and the word “coins” are sometimes used interchangeably, but tokens appear to be app-specific (such as ether tokens used for Ethereum applications) whereas coins appear to refer to specific cryptocurrencies like bitcoins. Tokens can be used to give users of a given application, for example, the Dragonchain blockchain, access in the form of micro licenses. But they can also be used for other things such as to lower transaction fees for token-holders or to be used as coins…I’m confused enough about tokens that I asked Robert Simoes this question:
….aaaaaaand since at this point you see I have some confusion and we’re also starting to bring up dragons and dragonchains (and, yea, they were made by Disney developers), it’s time to stop writing new vocab for now!
Q&A On the Terms Above
You might already have a few questions, so I have a few answers.
Q: You said blockchains publicly store information and transactions. Can a business set up a private blockchain?
A: Yes, it can be done. Companies like IBM have the building blocks for businesses to build their own blockchain networks, which can be public or private.
Q: This all sounds like gobbledegook to me, and bad gobbledegook at that. Why should I care about any of this?
A: Do you care about the internet? Maybe you don’t. But you rely on it every single day, even right now just reading this. You watch Netflix, you check your Facebook, you read the news, you order an Uber, you send your niece diapers through Amazon, all because of Internet technology, even if you don’t understand the inner guts of what makes it work. Blockchain is the next big wave of technology and computing and communication protocols that in the next 3–5 years will probably flip your world upside down and create brand new innovations you won’t be able to live without – you just happen to have advance tickets to that world by reading stuff like this.
Q: Okay. So you said blockchain is a technology, a computer, and a protocol?
A: Let me clarify. The general name for this technology as a category is “blockchain technology”. Actually, it’s a supercategory because many technologies can be created on top of it. And because these technologies rely on a network of computers to record transactions and events, that network can also be called a “blockchain computer”. Finally, since computer networks depend on specific rules or sets of instruction to communicate with each other, a blockchain computer is said to have a “blockchain protocol” to guide that communication. So blockchain can refer to one, two, or all three depending on the context.
Q: I still don’t get it.
A: Don’t worry. It took me a month before I stopped pulling out my hair – this is very hard to understand at first, but once it clicks for you, you’ll start to notice all sorts of ways the concept will be useful to your life or your work. I promise. So start writing about it, talking about it, and getting egg on your face trying to explain it until you can do it.
A Final Note
Blockchain is not even remotely just about cryptocurrency or financial technologies
I’ll end by saying this: blockchain is not even remotely just about cryptocurrency or financial technologies. This is something that, because of what it allows people and businesses to do with computing in a whole new way, will affect nearly every industry and create many new business models. But because Bitcoin became the first blockchain technology and Ethereum has the potential to become mega-influential as a blockchain computer that powers business applications relying on smart contracts, it’s not a bad idea to get your head around both. So here are a few resources:
Further Reading from My Teachers
- Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction. This is a textbook. Yes, a textbook. It was written in 2015 by a group of professors and researchers at Stanford, Princeton, the University of Illinois at Urbana-Champaign, and Concordia Institute for Information Systems Engineering. Yesterday, a peer correctly commented that if they wrote this in 2015, the ideas informing the text go back even further, and that’s absolutely true: cryptocurrencies and the ideas behind them go back a while. This book will teach you the history and technical infrastructure of Bitcoin and what makes this technology so robust (and here to stay).
- Tim Ferris Podcast Episode #244: The Quiet Master of Cryptocurrency — Nick Szabo. Tim Ferris is a famous author (of “The 4-Hour Work Week) who has a popular podcast. He interviews famous and influential people about what they do. This particular episode interviews the inventor of smart contracts, Nick Szabo, which some people believe is actually Satoshi Nakamoto, and there’s at least one point in this two-hour podcast that made me think maybe those people are right. The episode also features prominent Silicon Valley-er and AngelList founder Naval Ravikant and is dense with must-know information about all the terms discussed above.
- IBM Blockchain Essentials. I mentioned that businesses can already start creating their own blockchains through IBM, which is as of today the world’s largest blockchain company. How? It co-founded a project named the Hyperledger, and the Hyperledger Fabric, which allows businesses to explore use cases and with IBM’s help build a blockchain. That’s why Walmart and hundreds of other companies have partnered with it to begin benefitting from blockchain’s potential in their industry. As part of IBM’s push to educate the market about this new form of computing, it has this free two-hour course anyone can take and earn a badge for. It looks great on your LinkedIn profile and will teach you the basics of blockchain for business.
- And don’t forget my post, If You Want to Understand Blockchain, Start Here. I wrote this as a way to catalogue how I was starting to learn about blockchain technology. There’s some useful links including white papers about blockchain’s potential impact on healthcare, engineering, manufacturing, supply chain logistics, human resources, and plenty more.
Happy learning!
Give me a clap or two, follow me @Alex Ortiz, and write a few comments below, maybe a basic vocab term I left out or a correction you spotted!
