WHAT IS THE BLOCKCHAIN?

EDGE - - BLOCK PARTY -

The best way to start un­der­stand­ing the blockchain is to un­der­stand what it pro­poses to re­place. Tra­di­tion­ally, trans­ac­tions be­tween peo­ple which re­quire trust, such as fi­nan­cial trans­fers, have been con­ducted by trust­wor­thy or­gan­i­sa­tions like banks. In an im­per­fect world in which some­one might run off with your money, banks have risen as in­sti­tu­tions that can be re­lied on to en­sure such trans­ac­tions are car­ried out to the let­ter. These in­sti­tu­tions, how­ever, tend to be pri­vate, and the sys­tems they use are out of the con­trol of the peo­ple who rely on them. Blockchain tech­nol­ogy com­pletely rev­o­lu­tionises the na­ture of mak­ing trust­wor­thy trans­ac­tions. A blockchain is a ledger: a record of trans­ac­tions which is stored across many com­put­ers con­nected by the In­ter­net. This de­cen­tralised na­ture means that no one owns a blockchain and any­one can use it, but it’s also highly se­cure, us­ing pub­lic-pri­vate key cryp­tog­ra­phy to en­sure the iden­ti­ties of the peo­ple in­volved in any trans­ac­tion. Each deal is stored on the blockchain in a block, and when made, many com­put­ers across the In­ter­net ver­ify it. No block can be changed un­less all sub­se­quent blocks are changed, thus re­quir­ing ev­ery­one in the blockchain to be in­volved in mak­ing a sin­gle amend­ment. All these fea­tures are de­signed to en­sure that ev­ery­one can agree that ev­ery piece of in­for­ma­tion in the blockchain is per­ma­nent and cor­rect, and thus ev­ery­one can trust in it. An ob­vi­ous first use for a blockchain was there­fore in the foun­da­tion of new cur­ren­cies that are free of the tra­di­tional bank­ing sys­tem, hence the ap­pear­ance of Bit­coin in 2009. The blockchain that pow­ers Bit­coin was just the first ex­pres­sion of the core tech­nol­ogy; an­other key one is Ethereum, which gen­er­ates the cryp­tocur­rency Ether. Open-source, these two lead­ing in­stances of the blockchain con­cept have spurred many sep­a­rate off­shoots.

Cryp­tocur­ren­cies are just one use of blockchains, though cur­ren­cies are built into them as a way of en­cour­ag­ing early adopters to jump into sup­port­ing a new blockchain by cre­at­ing the net­work that would al­low them to func­tion and re­pay­ing them for al­low­ing their com­put­ers to be used to per­form the com­plex cal­cu­la­tions that go into ver­i­fy­ing ev­ery trans­ac­tion.

Be­yond cryp­tocur­ren­cies, the blockchain also has great ap­pli­ca­tion for stor­ing in­for­ma­tion about iden­tity, tak­ing con­trol of in­for­ma­tion about who we are and what we have away from pri­vate com­pa­nies. Think, for ex­am­ple, about Steam, Xbox Live and PSN, which record what games you own, how far you’ve pro­gressed in them, and who you’re friends with. Your data is locked into those pri­vate net­works, so if you buy an Xbox One, you can’t im­port your PlayS­ta­tion friends list, or any of your games or the Tro­phies you’ve won, un­less Sony al­lows it. Which would seem un­likely. Al­though the data com­pa­nies store is about you, it’s not yours; you sim­ply get to see and use some of it, and al­ways on their terms.

Were that data stored on a blockchain, how­ever, it would be both in­alien­ably yours and trans­portable to any ser­vice which can read it. And since it’s de­cen­tralised, if the com­pany which es­tab­lished it goes out of busi­ness, the in­for­ma­tion re­mains in­tact and ac­ces­si­ble. Ask your­self how this works with the le­gal own­er­ship of games, and why Sony would want in­for­ma­tion about their cus­tomers to be stored in a form out­side their con­trol, and, well, you be­gin to un­der­stand some of the is­sues that the blockchain’s many free­doms are pos­ing.

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