A Digital-Noob’s Guide to Blockchain

If you’re a ‘digital-noob’ like me i.e. don’t work in tech space and your digital prowess extends as far as being able to upgrade your phone software with relative ease but you quietly want to get the scoop on the hype around blockchain? Well, stay tuned because this blog post is for you.

Photo by rawpixel.com

Earlier this year, I joined the team at Quant Network and had to get myself up to speed on everything blockchain quick smart and I thought I’d share what I’ve learnt on my journey.

Here is my personal guide to everything you need to know about blockchain. And by everything, I mean quite literally just the basics. Although, I will help breakdown all the preferred buzz words and acronyms related to distributed ledger technology or DLT. (See what I did there?)

Blockchain — what the heck is it?

Blockchain is kind of like a chain of little bits of data that is connected aka it’s a distributed public ledger of transactions where identical copies are maintained on multiple computer systems controlled by different entities or continuously list of records which are linked and secured using cryptography.

An individual blockchain is built with its own set of protocols and rules that everyone agrees to. So once data or information is captured on the block it’s basically impossible to alter it retroactively.

Got it? No? Ok so let me break this down further.

It’s a database that is ‘distributed’ i.e. it’s not held in one place but across multiple sources. Every single member of the blockchain network has a copy of that database, so if anyone tries to alter data it, it is picked up and discarded because all the other members have the right untampered data, eliminating the potential for fraud or tampering.

Why is it ‘distributed’?

Well, being distributed or ‘decentralised’ makes it more secure. When data is centrally held — it’s a hacker’s dream. (Think: Cambridge Analytica, Sony Pictures circa 2014 etc). If you compromise a centralised database you have access to ALL the data. To compromise data on a blockchain, you need to go and compromise every single member of that network, it could be millions of computers so it’s just too hard and too time consuming to even try.

Plus, it’s encrypted i.e. uses cryptography that jumbles up the info so it’s not apparent to the naked eye and again making it even more secure.

Also, the data isn’t just ‘held’ in lots of different locations just waiting to be accessed.

A blockchain is built with its own set protocols that everyone agrees to. These protocols are known as ‘consensus’.

Consensus is the network protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract within a blockchain.

This makes a blockchain is ‘immutable’. ‘Immutable’ means it can’t be changed but this is also another buzzword that everyone loves to throw around.

‘Smart contracts’ are a way to add logic and steps for running actions on top of a blockchain. Basically, gives the instructions e.g. If this happens, then do x etc.

Why should I care about blockchain/s?

Well, the potential of this technology is HUGE. Blockchains are inherently safer by design and potentially suitable for the recording of events, medical records and personal ‘sensitive’ information but not only that —blockchains and the subsequent applications built off of them (aka decentralised applications or ‘dapps’) are not all alike, they are built with their own specificity to address different needs.

For example, there are dapps and blockchains that have been built for everything from stamping out dangerous counterfeit medicines entering the supply chain for the pharmaceutical sector to the WWF tracking tuna to eliminate illegal and unsustainable fishing practices or (my personal favourite) checking the authenticity of your Yeezys.

What is the connection to Bitcoin?

Blockchain technology is the foundation that Bitcoin was built off. Blockchains biggest application to date has been in transactions or as a form of currency.

Bitcoin is itself a blockchain and developers can build dapps off of it but it’s also a cryptocurrency. In fact, it was the first digital currency but since then there have been lot more.

Digital currencies have proven to be quite ‘disruptive’ (another buzzword) and for good reason too. It was the first digital currency to solve the double spending problem without the need of a trusted authority or central server.

So basically, it’s a currency minus the bank — it can be exchanged for goods and services like any other currency but without a middle man. Ever. No fees to store it and no fees to transfer it and the transactions are inherently safe and not open to being manipulated.

I know what you’re about to ask:

No, it’s not an actual coin.

Yes, you can use at KFC.

Or to buy a 50 cent album.

While undoubtedly Bitcoin was the first. It’s not the last. Ethereum is another blockchain and cryptocurrency — although we aren’t clear if its considered a security by the SEC but that a bigger discussion for another time. I once heard a commentator on CNBC describe Ethereum it as “Bitcoin but with a magic spell inside it”.

I don’t know about magic spells but one thing to remember with cryptocurrencies is that while blockchain technology enabled them and they operate like a currency they are in fact their own blockchains and they were built with their own functionality.

What is mining?

Mining is the process by which transactions are verified and added to the public ledger.

The mining process involves verifying a block of transactions using some computationally difficult puzzle or algorithm AND if successful the person doing the mining is rewarded. For example, in the case of Bitcoin or BTC — a miner gets 6.5 fresh Bitcoin per block successfully mined.

Why is there so much hype around crypto?

Coinbase is one of the most popular e-wallets that you can use to purchase and store your cryptocurrencies. The number of Coinbase users increased from 0.4 million in January 2017 to approximately over 13.3M users. This signals a pretty major shift.

Why? I personally suspect the majority of these people rushing to get in on the crypto-action are all chasing the illusive dream of making a fortune because everyone heard the story of the guy who bought 500 Bitcoin for $27 dollars in 2009 and now it’s worth millions. The upside of spending $27 and turning that into a seven-figure sum is not hard to see.

But a less cynical person might say that the growth of cryptocurrencies and their enthusiasts stems from a very warranted dissatisfaction from the status quo. It’s a signal of times changing and the fact that people are sick of traditional models of banking and transactions where we are gouged at every turn and our data isn’t secure. It symbolises an exciting new world in many ways.

Popular culture, however, falsely paints crypto as something a little more dubious and sinister. Any fans of the Showtime series Billions might believe that crypto is a great way to keep your wealth away from the pesky eyes of the IRS or SEC. In reality, that’s not the case.

To open, use and accumulate crypto via an e-wallet requires pretty stringent KYC (know-your-customer) and AML (anti-money laundering) processes along the way. Especially taking your crypto and exchanging for legal tender. Much like legal gambling in most markets or collecting your Lottery earnings.

In fact, one could argue that it is easier to fraudulently vote in the general elections in the UK (where they don’t require photo ID verification) than it would be to collect crypto wealth.

What (if any) downsides are there when it comes to blockchain?

Right now, the downside to blockchain would have be interoperability.

The potential of blockchains are seemingly limitless. The world’s new smart economies along with dozens of start-ups are using blockchain technology for everything from global payments to music sharing. It is predicted that in the next few years, much of our digital consumption will be run via a blockchain foundation without us even realising it. There is however one major barrier when it comes to blockchains and that is the lack of interoperability.

Interoperability is a term you may hear a lot more moving forward. Interoperability (or more specifically the lack of interoperability) basically refers to how blockchains cannot work, interact or communicate with one another. Which is a real shame.

Is interoperability that important?

Absolutely! Many of us are too young to remember the early days of the internet but it was alarming time and we are in the same situation again with blockchain. We are just repeating the same mistakes of the past.

You see, in the early days of the internet — it was just a few proprietary networks that were not connected to one another in any way. They were operating in silos. It meant that if you were someone who had an AOL account — you couldn’t message or contact someone on another network. Can you imagine that? It’s like having a mobile phone carrier that prohibits you from contacting anyone else on another carrier. Can you imagine?

It was only when the internet was opened up and we removed these proprietary systems that it flourished, and we have internet of today.

But the modern-day internet isn’t that great anyway…

One could easily argue that the modern-day internet isn’t any better than the early days. While we aren’t prohibited from connecting to one another across different networks, we have now become accustomed to these tech oligopolies that profit by misusing our personal data. The founder of the world wide web, Tim-Berners Lee says he is “devasted” by what has become of the web. He was quoted in a recent article in Vanity Fair saying: “We demonstrated that the Web had failed instead of served humanity, as it was supposed to have done, and failed in many places.” He also said that the increasing centralisation of the Web, he says, has “ended up producing — with no deliberate action of the people who designed the platform — a large-scale emergent phenomenon which is anti-human.”

Berners-Lee himself sees the solution to this problem in distributed ledger technology and we at Quant Network agree. This is the vision and motivation for our blockchain operating system, Overledger. This is also why I’m excited to have joined the team. We think that it’s about time that we right the wrongs of the past and build the internet of the future — the Internet of Trust.

Loucineh Mardirossian

Written by

Sometimes comic, full-time hip hop enthusiast & Ina Garten fan girl. Head of Corporate Affairs @QuantNetwork.

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