New Kid on the Block

SLOW Magazine - - Contents -

Blockchain is a new de­vel­op­ment in the world of tech­nol­ogy and prom­ises a mul­ti­tude of uses, from crowd­fund­ing to gov­er­nance.

Blockchain” has be­come some­thing of a buzz­word bandied about by those in the know. But what is it, what can it do, and why should we give a hoot? In lay­man’s terms, Blockchain is a set of codes and al­go­rithms where each “block” in the “chain” is de­rived from the one be­fore it and gives rise to the one that fol­lows. Each block is unique, car­ry­ing its own “DNA”. Due to this DNA se­quence and the fact that all trans­ac­tions along the chain are recorded, Blockchain will show when a trans­ac­tion on a cryp­tocur­rency (such as Bit­coin) was com­pleted. This DNA can­not be al­tered without cor­rupt­ing an en­tire chain, which makes it un­likely that crim­i­nals will at­tempt to al­ter or hack Blockchain, thus mak­ing it very se­cure and highly re­li­able. In fact, Blockchain has been de­scribed as an “in­cor­rupt­ible dig­i­tal ledger of eco­nomic trans­ac­tions” that can be “pro­grammed to record ev­ery­thing of value”. More­over, it is trans­par­ent and open for pub­lic view – Blockchain can­not be used to hide any­thing. Cur­rently, Blockchain is prin­ci­pally used to ver­ify Bit­coin spend­ing, though it has enor­mous fu­ture potential.

Bit­coin is another word that has the world all a-flut­ter. In short, Bit­coin is a com­put­er­gen­er­ated dig­i­tal cur­rency cre­ated and held elec­tron­i­cally. It is pro­duced by peo­ple and busi­nesses, run­ning com­put­ers all around the world, us­ing soft­ware that solves math­e­mat­i­cal prob­lems. Bit­coins are “mined” us­ing com­put­ing power in a dis­trib­uted net­work. This net­work also pro­cesses trans­ac­tions com­pleted with the vir­tual cur­rency, mak­ing Bit­coin its own pay­ment net­work. As op­posed to con­ven­tional cur­rency based on gold and sil­ver, Bit­coin is based on math­e­mat­ics. Peo­ple use open­source soft­ware pro­grammes which fol­low a math­e­mat­i­cal for­mula (freely avail­able, so that any­one can check form of cur­rency.

Bit­coin was first pro­posed by soft­ware de­vel­oper, satoshi Nakamoto, who had the idea of pro­duc­ing a cur­rency that was in­de­pen­dent of any cen­tral author­ity, trans­fer­able elec­tron­i­cally and more or less in­stan­ta­neously, with low, if any, trans­ac­tion fees. Un­like other cur­ren­cies, Bit­coin can­not be printed and op­er­ates as a cryp­tocur­rency only – it is used to buy things elec­tron­i­cally and is traded dig­i­tally. The most im­por­tant char­ac­ter­is­tic of Bit­coin is that it is de­cen­tralised, mean­ing that it is not un­der the con­trol of any one per­son or in­sti­tu­tion.

Ac­cord­ing to the rules that make Bit­coin work (known as the Bit­coin Pro­to­col), only 21 mil­lion Bit­coins can ever be cre­ated by min­ers, although these coins can be di­vided into smaller parts, with the small­est di­vis­i­ble amount be­ing one-hun­dred-mil­lionth of a Bit­coin, called a “satoshi” (named after Bit­coin’s founder). The to­tal value of the cur­rency is cur­rently close to Us$9 bil­lion.

Many are won­der­ing whether Blockchain might evolve into the new In­ter­net. lo­rien Ga­maroff, founder and CEO of Banky­moon, a soft­ware com­pany fo­cus­ing on Blockchain tech­nolo­gies, be­lieves that Blockchain is go­ing to be a “mas­sive dis­rup­tive force”. “This is the next rev­o­lu­tion, the next In­ter­net, if you like. It is not an un­der­state­ment to de­clare that a new tech­no­log­i­cal rev­o­lu­tion is upon us.”

In­deed, Blockchain does have enor­mous potential fu­ture uses, as it gives In­ter­net users the abil­ity to re­li­ably au­then­ti­cate dig­i­tal in­for­ma­tion. Var­i­ous uses have been iden­ti­fied for the tech­nol­ogy, in­clud­ing smart con­tracts, crowd­fund­ing, supply-chain au­dit­ing, gov­er­nance, the shar­ing econ­omy, and file stor­age. Smart con­tracts will do away with third-party in­volve­ment, al­low­ing the rules agreed on by par­tic­i­pants to be it) to produce this au­tonomously en­forced. say, for ex­am­ple, you and your pal bet on the out­come of a rugby match. The agree­ment will say that if you win, you will get paid the re­ward and if your mate wins, he will get paid. The rules will be en­tered into the smart Con­tract and, de­pend­ing on the out­come, the win­ner will be paid di­rectly. There is no need for third-party in­volve­ment. This is a sim­ple ex­am­ple, but con­sider the im­pli­ca­tions for in­dus­tries heav­ily re­liant on con­tracts and the en­force­ment thereof.

Crowd­fund­ing ini­tia­tives such as Kick­starter and Gofundme are do­ing great work for the emerging peer-to-peer econ­omy. They are ush­er­ing in a new paradigm of eco­nomic co­op­er­a­tion, while demon­strat­ing that peo­ple want to have a di­rect say and a di­rect im­pact. Think, too, about in­stances where you buy a prod­uct that makes im­pres­sive claims about its eth­i­cal ori­gins (think di­a­monds, or any fair-trade item). A supply chain that is kept on Blockchain will of­fer an easy way to cer­tify its al­leged back­story. As far as gov­er­nance is con­cerned, think of the potential ef­fect that full trans­parency of elec­tions or other kinds of poll-tak­ing could have. There is al­ready an app, Board­room, which en­ables or­gan­i­sa­tional de­ci­sion-mak­ing to take place on Blockchain, mean­ing that com­pany gov­er­nance be­comes fully trans­par­ent and ver­i­fi­able.

Ga­maroff has pre­dicted that, as more mer­chants and ser­vice providers start ac­cept­ing Blockchain and Blockchain cur­ren­cies, peo­ple will grav­i­tate to­wards it. “This is the next tech­no­log­i­cal rev­o­lu­tion. one that will take us into a fu­ture we can scarcely imag­ine.”

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