The Hitchhiker’s Guide to the Blockchain Universe
Let me tell you a bit about 3 different eye-catching technologies within the blockchain universe.
Now you might ask, “why present 3 technologies in a short article rather than focusing on just one and have a thorough analysis?” Well, that would be a good question. But my aim is not only to introduce 3 different niche technologies within the blockchain technology which is a niche technology itself but also by the examples of three aspects of the business, showing how dynamic and vibrant this industry is as a whole.
But before we begin, may I ask if any of you is colour blind? No? Great (Yes? Then this little experiment doesn’t apply to you, mate)! Could you please look at the image below and tell me if you could see the square in a different colour?
Fantastic! It was easy, right? Well, apparently not so much for everyone. There is a tribe in Namibia, called Himbas. When members of the Himba tribe are asked to do the same thing, they cannot find the differently coloured square! Yeah, to them, all these squares are the same colour. This is because, in the Himba language, there is no word for the colour blue. To them, these are all green. This experiment proves how impactful language and knowledge can be on our mental abilities. In the absence of a word or a certain knowledge, we can fail to see the obvious.
Similar to Himba people not being able to see the colour blue just because they don’t know anything about blue, to an uneducated eye all cryptocurrencies can look the same, while the blockchain industry actually has remarkable and completely different projects.
Yes, 99.9% of all cryptocurrencies are flat-out scams, no doubt about it. However, a very limited number of those currencies are very valuable and have the potential to change the world as we know it. That is why they deserve to be studied, and that’s what I enjoy doing.
Now, the first technology I want to talk about is called Zero-Knowledge Proofs.
In essence, zero-knowledge proofs are used to prove the possession of certain information to third parties without revealing the information itself. Sounds cool, huh? Let me explain more. There is a well-known story presenting the fundamental ideas of zero-knowledge proofs. And it goes like this;
There is a locked door in the middle of a puzzle. To be able to enter the puzzle from Section A and leave it from Section B, one has to pass through that door. And to pass through the door, one has to know the code. Bob claims to have the code, and Alice wants him to prove it. Bob is willing to do so but he doesn’t wish to share the code with Alice. So, he enters the puzzle from Section A and leaves it from Section B. Since he has to pass the door to be able to do so, Alice understands that Bob has the code but she remains to not know what the code is.
I find zero-knowledge proofs to be truly astonishing, and I believe that this technology will revolutionize the way we interact with the internet.
How?
Imagine you are asked to prove that you have a certain amount of money in your bank account. You have to do so but you don’t like the idea of others knowing exactly how much money you have in the bank. Zero-knowledge proofs will allow you to prove that you have the money without revealing the exact balance. We will be able to use it for any information you can think of that website constantly ask from us. So yeah, it will give the control of our personal information back to us.
The second technology I want to talk about is Non-Fungible Tokens, a.k.a. NFTs.
I don’t know the level of your exposure to the concept of NFTs but for many people, NFTs mean silly monkey images sold for insane amounts of money. While representing the possession of art is one of the many use cases of non-fungible tokens, it definitely isn’t the most fantastic one.
An NFT can be thought of as an irrevocable digital certificate of ownership and authenticity for a given asset, whether digital or –more importantly- physical. Basically, they are the online version of valuable papers our society heavily rely on. University diplomas, property titles, ID cards… All these documents are essential parts of our lives and they still haven’t been replaced with a suitable tool for online procedures. NFTs are here to fill this gap. An NFT can be attached to any asset or real-life document you can think of, and it can be used to prove the authenticity of those things beyond any doubt. This will bring real-life level certainty to our online existence.
For the third and last technology, I chose something more in connection with Bitcoin, the mother of all cryptocurrencies, and it is called the Lightning Network.
The Lightning Network is a “layer 2” payment protocol built on top of the Bitcoin blockchain. It is intended to enable fast transactions and has been proposed as a solution to the Bitcoin scalability problem. Yes, with its 7-transaction capacity per second, Bitcoin has a scalability problem. But since its genesis, Bitcoin supporters have been suggesting that, once Bitcoin is well-established, this scalability issue could be solved very easily with a layer 2 solution. Lightning Network is that solution. And it is so fast, even Visa and Mastercard look pathetic compared to Lightning Network. While these conventional systems can handle tens of thousands of transactions per second, Lightning Network can cope with millions. So yes, it is a huge step forward.
The Lightning Network uses channels between participants to make it so that multiple transactions can be conducted without waiting for the slower Bitcoin blockchain to confirm single transactions. Between the opening and closing of a channel, users can shift funds between themselves as needed until they close the channel. Once the channel is closed, the transactions are sent to layer 1 for confirmation. This way, transactions on Bitcoin not only become extremely fast but also, they get remarkably energy-efficient. If all things go well, Lightning Network will enable Bitcoin’s mass adoption, and we will have our first truly decentralised and incorruptible global currency.
And this concludes today’s tale for adults! I hope you had fun. I know I did!
