The Shape of the Future — Episode IV: Blockchain
The world is developing technology at an increasing speed, and it can be hard to keep up with these developments. So when I decided to start a series of technology articles, I wanted to simplify the current trends to allow as many people as possible to understand them. Welcome to The Shape of the Future, where we will look at the technologies shaping our tomorrows through the lens of today’s world.
The blockchain nowadays is mostly associated with cryptocurrency, but actually a friend of mine once said that saying the blockchain is crypto is like saying the Internet is Email.
The blockchain itself is actually a decentralized computer network. Therefore, it is often called a distributed ledger.
So what does that mean?
Let us brutally simplify it for starters. Let us look at what a decentralized network is.
Imagine a computer gets a document. He makes a copy to his hard drive. To secure this copy, he sends it out to another computer. That computer adds another doc and sends copies of both out to another and the original one. They keep on doing that until millions of computers have a copy of all those documents. If something happens now to the first computer, the document is copied a million times to other computers and it is not lost. If someone wants to alter the document, a million copies of the original exist. No computer controls all the other computers, so there is no way to remove all those copies. The copy is preserved and unforgeable. This is called “immutable”, as the data is preserved and cannot be changed.
That is the principle of a decentralized network.
Well, of course, you might wanna change the doc for some reason, and how does the network now know what it has to do without asking a human? Because that human might be a source of danger to the authenticity of the doc.
Also, how can these computers save this incredible amount of data? Their hard drives must get full rather quickly.
Those are the two main problems the blockchain solved by applying a technological solution to it.
So what is the blockchain?
A blockchain (there is more than one) is a database that writes all information into a network and duplicates and distributes these records automatically. The information is stored in blocks, which are then chained to their successor blocks once complete (or full depending how you see it), building a chain of unchangeable data-collections building one chain. Therefore, it’s called a blockchain. The name pretty much describes the main functionality of the technology.
The information is written in a specific encrypted immutable signature called a hash. As no central authority has the ability to change the blocks chained in chronological order, the blockchain can not be altered once it is written. It is therefore permanent and trustees. The latter term refers to the fact that no trust in a central authority is needed.
What does this have to do with crypto? Well, crypto was the first and is today the most dominant use case of the blockchain. The origin of the blockchain is also connected to cryptocurrencies, to the most famous one to be precise: Bitcoin.
Satoshi Nakamoto, a mysterious person or group, we cannot be sure anymore nowadays as he has never been identified, wrote the original white paper that is the origin of both the blockchain of today and Bitcoin.
Other use cases for the blockchain that have been developed are ownership registry, copyright registry, audit trials and transaction records.
The blockchain also enables something called a smart contract, but that is a topic of its own and we shall look deeper into those on another day.
