Throughout modern history, we as humans have had to put our trust in other people’s hands. Today, we rely on banks, insurance brokers, governments and many other institutions, with no choice but to trust in the information they provide us with, knowing that all may not be as it seems — mistakes are made, greed and corruption lurk amongst us, and we are often left blindsided to the actual truth.
What if we could interact with an entity whose integrity was absolutely guaranteed, completely eliminating the need for trust?
Enter blockchain, Web 3.0
The first successful implementation of blockchain technology was the result of a white paper released by an anonymous person, or as many believe, a collective — using the pseudonym “Satoshi Nakamoto”. It described a peer-to-peer version of electronic cash, that would allow online payments to be sent directly from one party to another, without going through a financial institution, i.e. a trustless payment system.
“Blockchain takes care of the business of trust, and guarantees integrity”.
This was Bitcoin, and it solved problems that others before it had attempted to solve without success, most notably the double spend problem where a user could spend more than they had available by sending multiple transactions simultaneously. This was solved through the mining process in which transactions are confirmed by immense computing power.
Blockchain takes care of the business of trust, and guarantees integrity. We have an immutable distributed public ledger, where the blockchain’s history cannot be altered in any way, shape, or form whatsoever. This peer-to-peer system is encompassed in it’s own self contained and secure environment, and the nature of blockchain means that there is no need for third parties to control transactions.
The hashing and algorithms that govern the blockchain make it virtually impenetrable to malicious attacks. As a user you have a unique public fingerprint known as a public key that identifies you on the blockchain and which is your address. You also have a private key from which your public key is derived from. This private key is what’s used to generate transactions on the blockchain and can be thought of as a wallet, for which you are the only one with access to.
“The hashing and algorithms that govern the blockchain make it virtually impenetrable to malicious attacks”.
Opening up a world of potential
We could compare the idea of blockchain to the internet in the early 90s, when the use cases were not all that clear. Blockchain may seem like an abstract idea, and one that’s difficult to fully grasp, but when we start to look at the use cases for this technology, it becomes abundantly clear how much of today’s challenges can be solved by it.
The many projects currently under development, or in use, include:
- Finance: Instant and secure payments without the need for any financial institution.
- Decentralised computing: The leasing out of CPU or storage in return for rewards issued in the form of a token.
- Smart contracts: A contract where execution is guaranteed once certain criteria has been met. This occurs without the need for a third party.
- Advertising: Advertisers can connect with users who have a keen interest in their products and services, and in return, reward the user with tokens.
- Medical: A blockchain for health records, which speeds up applications and medical procedures.
- Citizenship: Identification information can be stored on the blockchain.
Blockchain is an even playing field; instead of having a single entity in control, code and algorithms keep everything in check, giving this relatively new technology the power to revolutionise a variety of sectors, and change the way the world operates.
Erez Greenberg is a C# engineer at Nona Creative — a full-service software development studio in Woodstock, Cape Town.