Hey Thoughty2 here. Erik Finman made a pact with his parents, if he was a millionaire by the age of 18 they wouldn’t force him to go to college. At the age of 12 he bought bitcoins using a $1,000 gift from his grandmother. By the time he reached 18 they were worth one-million-dollars. Sure enough, he didn’t go to college. We’ve all heard the success stories of Bitcoin early-investors. Bitcoin has reached highs of $7,000 for just one coin. Bitcoin or one of its competitors could, very possibly become the global currency of the world in the future.
Bitcoin is certainly an interesting new force in our world and whether it becomes a new global currency or crashes into a digital abyss there is something even more interesting than Bitcoin that will unquestionably change the world beyond recognition. I am talking about the very technology that makes Bitcoin possible, blockchain. Blockchain is so much bigger than Bitcoin, Bitcoin is simply the first adopter of a revolutionary technology that is going to change our world, in the same way as the wheel, the printing press and the electric spaghetti fork.
The idea behind blockchain was described in 1991 by a group of researchers but it wasn’t until a mysterious person or group of people, whom we still don’t know the identity of, under the pseudonym of Satoshi Nakamoto used this idea in 2008 to create Bitcoin. And blockchain finally became a reality. A blockchain is a ledger of financial accounts but digitised and decentralised, and this decentralisation is from where its power and immense security is derived. A blockchain is as the name suggests, a chain of virtual blocks. Each block contains data, based on whatever the blockchain is being used for, in the case of cryptocurrencies like Bitcoin each block contains a list of transactions that have occurred, including the person who sent the Bitcoin, the recipient and the amount.
A single block is by no means secure because the data can be easily tampered with, to vastly simplify things, a hacker could change the amount of a transaction to be more than it actually was to fraudulently extract more funds from the system. But when you have more than one block they are linked together by a virtual chain. The linked block will always contain a unique fingerprint of the previous block, known as a hash. If a single byte of data changes in the previous block so does its fingerprint, or hash and so the subsequent, linked block is no longer valid, also, every single other block down the chain is now invalid too, this could be many thousands of blocks and millions of transactions.
This mechanism adds significant security to the whole system and makes it almost tamperproof. But not quite, because modern computers can easily change every single hash along the entire blockchain within milliseconds, so then the entire chain would be fraudulent, but it would show as valid. So the Bitcoin blockchain and all other modern blockchains have something called a proof-of-work failsafe, which means any adjustment to a single block must be slowed down, often taking 10 minutes or more to accomplish, increasing security, hackers really don’t like time throttling of any kind. But also, every data alteration must be backed-up with a proof-of-work. Just like in school when you copied all your maths homework from the internet then your teacher gave you a verbal beating because you hadn’t shown your workings.
Lastly, what makes blockchain so immune to tampering, fraud and hacks is the fact that it is completely decentralised. No single person, organisation or server controls or dictates a blockchain network, such as Bitcoin. Blockchain is collectively stored and replicated en-mass on a peer-to-peer network similar to Bittorrent. But unlike Bittorrent, which has a centralised tracker, no one centralised server or corporation tracks and controls who has what data on the blockchain. Instead, everyone on the network, which could be thousands or even millions of people, has an exact replica of the same data file, or blockchain. So its integrity can be verified, everyone on the network has to have a record of the entire blockchain, all the way from its inception, meaning everyone on a blockchain network such as Bitcoin, has a record of every Bitcoin transaction that has ever happened. That’s an awful lot of data, as of today the Bitcoin blockchain is around 200 gigabytes in size.
The key to this system’s integrity is that every participant on the blockchain network has an equal vote, no one person has more of a say over which transactions are valid and which aren’t. So for a new transaction to be approved or an alteration to be made to an existing transaction, over 50% of participants on the network have to agree to it. So if you want to hack a blockchain network, you will need to convince or forcibly take control of over 50% of the network, in the case of Bitcoin it’s estimated there are currently 10,000 members of the network, known as nodes. So the larger the network becomes, the more distributed the data and the more secure the blockchain is.
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Never before in the history of networking and the world wide web have we had such a secure, impenetrable way to conduct business and communicate online, as blockchain provides. Every year an increasing number of large corporations are hacked and customer’s data is exposed online for the world to see. From large banks such as JP Morgan to more intimate sites such as Ashley Madison. If you think your data is safe online today you are grossly mistaken. However, if more companies that are responsible for maintaining large amounts of data were to properly adopt the blockchain system to store their data in a global, distributed and decentralised network, the chances of that data ever being hacked would be near impossible. And just because your data is distributed and public for everyone to see on the blockchain, it doesn’t mean that the world can view its contents and see all those naughty pictures you uploaded for your secret concubine in the Philippines. Data contained within a blockchain network can be and is often cryptographically encrypted. Thus the data can still be checked and verified by the world, without ever being viewable except by its owner and other people the owner may selected to have access.
The uses for such a technology are far and wide and cryptocurrencies are only the first step and the very tip of the iceberg for what blockchain can and will be used for in the near future. Without being over dramatic, over the coming years blockchain technology will change our world more than any other invention since the internet, apart from AI of course, I must say that to avoid AI getting very angry with me and seeking revenge in about five years time.
Imagine the scene, you order a three-course meal in a restaurant. The starter comes, you eat it, the waiter asks if you enjoyed it, you say yes and the price of that starter is instantly deducted from your account balance. The same happens with the main, and the dessert. Once you’re finished you walk out the door without handing over any cash or using a debit card. I’m talking about a new blockchain technology, an add-on if you like, called smart contracts. Smart contracts are automated rules that can be embedded into a blockchain, that perform an action when a set of prerequisites are satisfied. This essentially means you could pay for a meal automatically after you order it from the menu. You could walk into a shop, pick an item up off the shelf and walk straight out the door, meanwhile a smart contract is automatically created on the blockchain that deducts the cost of that item from your digital currency of choice.
A few insurance companies are currently developing smart contract technology so that a claim can automatically be started when your car detects it’s been in an accident. Or say a natural disaster hits your area, your home insurer could create a smart contract that would automatically create a claim and even pay out, without you lifting a finger. Employers can use smart contracts to automatically pay employees without any delay. Smart contracts can make property sales effortless and completely automated. There is no doubt that that within ten years every business sector imaginable will be using blockchain and smart contracts in some manner.
Social networks are also destined to run on the blockchain in the future. Imagine a social network where a large, shady corporation with highly questionable business practices, not wanting to point and fingers, doesn’t own all your data and can do whatever they like with it. A decentralised social network that runs on blockchain will have no walled-garden full of your private data. Only you can decide what people can and cannot do with your posts, images and videos, because all your data will be encrypted and distributed evenly across the globe. Using blockchain, a system which is so many times more secure than any proprietary system used by social networks today.
The most exciting part of this is that blockchain will enable freedom of speech like never before in human history. Every person in every corner of the world, so long as they have a smartphone, will be able to communicate and share their opinion freely with the rest of the world via blockchain social media. No single government entity, corporation or person will be able to stop you from saying whatever you like about anyone or anything, because no one person or entity will have control over the network. We will all have equal control, in a democratic, distributed system.
Blockchain will finally enable online voting for elections, which has been put off by almost every world government because of the security risks and fear of hacks. Blockchain is finally a secure enough technology to allow online voting to happen in the very near future.
Kodak recently saw its stock price soar upwards after it announced it is developing a system powered by blockchain that will track a photographer’s images around the internet and can even automatically charge people for using them on their website or in print media.
Blockchain can and most likely will be used to track the provenance of food items and raw materials used in manufacturing. Every piece of wood, brick and sand used in the construction of a house will be able to be tracked back to the exact location it was sourced from and the company or peoples who harvested it, in a rock-solid verifiable way that is no longer susceptible to outright lies and fiddling or paperwork. Imagine picking up a ready meal in the supermarket and scanning the barcode with your smartphone; your phone instantly informs you of which farm the beef comes from and exactly where the potatoes and vegetables were grown within your meal and because of the integrity of blockchain, you know you can trust the information.
World governments are even getting on board. Dubai has pledged to become the world’s first blockchain enabled city. In 2016, 30 government departments based in Dubai formed a new blockchain committee purely to investigate the possibilities to change every government sector in the UAE to use the blockchain to make life easier, more efficient and cheaper for the citizens of Dubai. They are looking to enabled every sector to utilise blockchain including healthcare records, business registration, shipping, bill payments and visa applications. Considering Dubai processes over 100 million of such documents each year, digitising all these within a blockchain could make a huge difference.
Some forward-thinking engineers are even working on one of the most revolutionary ideas of all, decentralising the internet. We all use the internet every day and it’s easy to think of it as a mysterious cloud that exists everywhere and all around us like a benevolent god providing endless cat videos. But it’s not a cloud at all and there’s no mystery or magic to it, the internet is a collection of physical servers, millions of them, in thousands of data centres around the globe. The problem with this is that all these servers and the data held upon them is owned or leased by large corporations. I’m not trying to insinuate that large corporations are inherently bad. But imagine taking all those servers and evenly distributing them across the world, so now, instead of a website, such as YouTube being located in just one, or a few locations, it is located in millions of locations across the world. No one has control over the website, it is now a group collaborative effort, that is edited and run democratically by the very people who use it and enjoy it every day, you. If the internet is decentralised it would also make it infinitely more reliable and anyone, in any corner of the world would be able to access it, without any censorship, or huge, government firewalls. True net neutrality would finally exist. Thanks for watching.
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