Confused by Blockchain Technology? No worries. Let’s talk about it!
Blockchain technology is radically different than anything we have seen before. It’s ok to be confused. It’s ok to not know what blockchain can do for you, what it means for the world and why some are proclaiming it will have a greater impact on the world than the internet itself. So what is blockchain technology anyway?
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” -Don & Alex Tapscott, Blockchain Revolution.
😕 In this article, we’ll talk about what this means in plain english. But first let’s take a trip down memory lane with the internet.
The Internet in 1994 Was Confusing Too
Do you know what it was like when the internet started to go mainstream around 1994? Those were really confusing times. Today it’s such an integral part of our lives that we take for granted and can’t imagine living out it — but back then people groaned about why they would need yet another source of information.
It took a while for us to understand what the internet is all about. Take a look at these short clips from 1993, 1994 and 1995.
🚸 1993: CNN’s first report on the internet in universities.
📺 1994: Today Show hosts are baffled by the internet.
“What is the internet anyway?”
“It’s that massive network that is becoming really big now.”
🤓 1995: Bill Gates talks to David Letterman about the internet.
Right. Let’s get back to blockchain technology.
Much like the early days of the internet, the practical uses of blockchain aren’t obvious at all — even to the experts. You’d be right to wonder: “What do I need this blockchain thing for?” Blockchain technology today is reminiscent of the internet back in the 1990s. It’s new and shiny. Many people are talking about it. But there seem to be way more questions than answers.
✋ Wait. I have a question: Is blockchain the same thing as bitcoin?
Good question. I’m glad you asked. No, not quite! But bitcoin was the first application of blockchain technology. Even till today, bitcoin and other cryptocurrencies are the only example of blockchain technology that most of us have heard of. But blockchain technology is much more than digital money. Much much more.
The top 3 cryptocurrencies (or cryptoassets, as some hipsters like to call it) today are bitcoin, ethereum and ripple. As I write this there are 24 cryptocurrencies with a market cap of over $1 billion. But I digress.
💰 If you want to learn how to buy bitcoin and other cryptocurrencies, the best website for beginners out there is coinbase dot com.
Blockchain Technology 101
Let’s look at the explanation one more time.
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” -Don & Alex Tapscott, Blockchain Revolution.
Let’s break that down.
At the end of the day, a blockchain is just a ledger — it keeps track of things that happened. If you think about it — it’s actually really boring. It sounds like something that only passionate accountants would find interesting and talk about at a pub. But clearly this ledger has much greater ramifications. What makes it so fascinating and significant is that this ledger is anonymous, tamperproof, distributed, encrypted and usually public. This was literally impossible until now.
A blockchain is just a ledger.
So What’s The Big Deal?
Let’s take bitcoin as an example — If it wasn’t for the blockchain technology, bitcoin could not exist because it’s a decentralized digital currency, where there is no central bank or administrator. There is no person or entity making sure that when X sends 1 bitcoin to Y, X can’t also send the same 1 bitcoin to Z. The blockchain network allows users that don’t know each other and don’t trust each other to have peer-to-peer transactions without an intermediary. The blockchain network itself verifies each transaction and keeps track of everything that has ever happened. It’s public. It’s secure. It’s distributed. It’s anonymous (technically pseudonymous). No one can go back and change anything.
Blockchain is the protocol that allows transactions to be simultaneously anonymous and secure by maintaining a tamperproof public ledge of value.
Let’s Dive A Bit Deeper Into The Bitcoin Blockchain
- It’s public — There are no secrets on the bitcoin blockchain. Every single transaction is public. That’s right. You can go to a website like Block Explorer or BlockCypher or others to look at every transaction that has ever taken place.
- It’s distributed — Not in one central location. A copy of the entire bitcoin network is stored and synced across the bitcoin blockchain network.
- It’s anonymous — Technically, it’s pseudonymous. It doesn’t have your name attached to it. It’s an alias. (Monero is the only cryptocurrency that I know of that claims to be truly anonymous.)
- It’s incorruptible — Any bad actor (say, Nicolas Cage) acting alone is powerless. To take over the network, an attacker would have to control more than 50 per cent of its total computing power.
- It’s cryptographically secure — This one is a doozy. IBM explained this best. “The records on a blockchain are secured through cryptography. Network participants have their own private keys that are assigned to the transactions they make and act as a personal digital signature. If a record is altered, the signature will become invalid and the peer network will know right away that something has happened. Early notification is crucial to preventing further damage.”
Sorry. I can tell you’re dozing off.
Long story short —
The blockchain will have a much bigger impact on the world than the internet, because the blockchain technology does for trust what the internet did for information. That’s why blockchain is a “new distributed platform that can help us reshape the world of business and transform the old order of human affairs for the better.”
Let me show you rather than talk about it, and let’s move beyond the bitcoin example, shall we?
Real-world Examples of Blockchain Technology
Remember the blockchain is an excellent way to keep track of anything of value. It really is that versatile. It’s being used today to track ☕ coffee beans to digital diplomas 🏫.
☕ 1. Coffee Beans on the Blockchain
Coffee farmers are always at the short end of the stick in the notoriously complex global supply chain. Currently, only 2% of the added value of every cup of coffee ends up in the pockets of coffee producers.
Moyee Coffee is using blockchain technology to bring transparency to this mess.
The first ‘block’ in the chain has already begun and you can follow real-time payments to Ethiopian farmers for their coffee cherries. This is nothing less than a revolution and the start of a project that will bring an unprecendented level of transparency in a profoundly unfair industry.
The bext360 blockchain project will mean by next year all Moyee’s coffee will be fully blockchain-traceable from the washing station in Ethiopia to our retail and office customers in Europe.
For consumers, this provides “unprecedented levels of transparency around origin and quality; and allowing, for the first time, a coffee drinker in Europe to pull up this data and verify exactly where their coffee was sourced.”
☞ Read full story here: https://medium.com/@MoyeeCoffeeIRL/worlds-first-blockchain-coffee-project-cd04fff9e510
☞ Listen to the Innovation Show Podcast with Moyee Coffee.
🛍 2. OpenBazaar = eBay on the Blockchain
OpenBazaar isn’t a company. It’s free open source software. It’s a peer to peer application that doesn’t require middlemen, which means no fees & no restrictions.
Nobody has control over OpenBazaar. There’s no central authority. Each user contributes to the network equally and is in control of their own store and private data.
OpenBazaar costs nothing to download and use. There are no fees to list items, and no fees when an item is sold. It’s completely free e-commerce.
Buyers can pay for goods in 50+ cryptocurrencies like bitcoin, ethereum, litecoin, zcash, dash and others. While sellers can receive payment in either bitcoin, ethereum or zcash!
☞ Website: https://www.openbazaar.org/
☞ Interview with Brian Hoffman, lead developer of OpenBazaar, by Jason Calacanis: https://www.youtube.com/watch?v=ijE6ktEsm4o
💾 3. Storj = DropBox on the Blockchain
Storj is dropbox on the blockchain. In other words:
“Storj (pronounced: storage) aims to become a cloud storage platform that can’t be censored or monitored, or have downtime. It is the first decentralized, end-to-end encrypted cloud storage that uses blockchain technology and cryptography to secure your files.” — Storj
☞ Website: https://storj.io/
Read this for more: https://storj.io/faq.html#faq-1-1
🖥 4. Dfinity = AWS on the Blockchain
Dfinity is a blockchain computer with unlimited capacity, incredible performance and algorithmic governance, shared by the world. It’s the Amazon Web Services (AWS) on the blockchain — cheaper, infinite scale, secure.
Rather than having multiple servers, Dfinity enables “infinite computing” which means that one server can grow larger infinitely based on your needs because it’s not one server in a room in New Jersey, but instead millions of distributed nodes around the world enabling your server. That means you get a virtual computer with unlimited capacity. “Dfinity is a new kind of world computer with transformative global, economic, and social impact,” they say on their website. “We are democratizing access to a performant, tamperproof, infinitely scalable, distributed computing system.”
☞ Website: https://dfinity.org/
🎰 5. Gambling on the Blockchain = FunFair
FunFair is a legal blockchain-powered casino platform. Not only does it offer lower costs and high level of security that comes out of the box for all blockchain applications — but there’s one reason why casinos on the blockchain are appealing: provably fair.
Because the blockchain is public. You don’t need to trust the “casino” that they are playing by the rules. Today legal gambling websites are centralized and their code is hidden on their servers. FunFair is on the blockchain which means that after every hand is played, the details are stored onto the blockchain visible for everyone to see. You get peace of mind that you’re not being cheated.
☞ Website: https://funfair.io/
☞ Casino game demos: https://dfinity.org/
🇮🇳 6. Land Ownership on the Blockchain
Excerpted from CNBC:
Andhra Pradesh, a state in India, wants to use blockchain to fight land ownership fraud by making transactions more transparent. Did you know that according to estimates $700 million is being paid in bribes at land registrars across India every year?
The government of Andhra Pradesh has partnered with Swedish start-up ChromaWay to build its blockchain-based solution. ChromaWay has already piloted a blockchain project in Sweden focused on the process of buying and selling real-estate. This time it wants to combine the features of a traditional land registry database with that of blockchain technology.
☞ Read full story: https://www.cnbc.com/2017/10/10/this-indian-state-wants-to-use-blockchain-to-fight-land-ownership-fraud.html
🎓 7. Digital Diplomas on the Blockchain
Excerpted from MIT News:
In 1868, the fledgling Massachusetts Institute of Technology on Boylston Street awarded its first diplomas to 14 graduates. Since then, it has issued paper credentials to more than 207,000 undergraduate and graduate students in much the same way.
But this summer, as part of a pilot program, a cohort of 111 graduates became the first to have the option to receive their diplomas on their smartphones via an app, in addition to the traditional format. The pilot resulted from a partnership between the MIT Registrar’s Office and Learning Machine, a Cambridge, Massachusetts-based software development company.
The app is called Blockcerts Wallet, and it enables students to quickly and easily get a verifiable, tamper-proof version of their diploma that they can share with employers, schools, family, and friends. To ensure the security of the diploma, the pilot utilizes the same blockchain technology that powers the digital currency Bitcoin. It also integrates with MIT’s identity provider, Touchstone. And while digital credentials aren’t new — some schools and businesses are already touting their use of them — the MIT pilot is groundbreaking because it gives students autonomy over their own records.
☞ Read full story: http://news.mit.edu/2017/mit-debuts-secure-digital-diploma-using-bitcoin-blockchain-technology-1017
💊 8. Pharma Supply Chain on the Blockchain
Excerpted from HealthcareITnews.com:
Blockchain has the potential to transform healthcare in general and the pharmacy supply chain in particular.
The distributed ledger technology could offer legislative, logistical and patient safety benefits for pharmaceutical supply chain management. From a regulatory perspective in the United States, blockchain technological and structural capabilities, in fact, extraordinarily map to the key requirements of the Drug Supply Chain Security Act.
The DSCSA outlines a 10-year timeframe that will require elements including medication track-and-trace, product verification and notification of stakeholders about illegitimate drugs. A shared ledger of information to enable each of these steps is a foundational aspect of blockchain technology.
☞ Read full story: http://www.healthcareitnews.com/news/next-big-thing-pharmacy-supply-chain-blockchain
☞ Want more examples? Watch this video on YouTube on the 19 industries that blockchain technology will disrupt.
“Blockchain will have a much bigger impact on the world than the internet. The only thing more impactful than blockchain might be artificial intelligence.” -Brock Pierce, Mumbai, SingularityU India Summit.
VIDEO: Blockchain Explained to a Child and others!
Next steps
📜 Read 2018: The Year of the Cryptocurrency Craze article on WIRED.
📜 Read Difference Between Bitcoin and Blockchain article by IBM.
📜 Read Blockchain, a Technology on the Verge of Revolutionizing Society article by the Technologist.
📘 Read Blockchain Revolution by Don and Alex Tapscott.
📕 Read Ethereum — Blockchains, Digital Assets, Smart Contracts, Decentralized Autonomous Organizations by Henning Diedrich.
💰 Coinbase — How to buy bitcoin?
😀 Twitter — Got questions or want to chat? Send me a tweet.
