By Dr. Paul O hAonghusa UCD CITO – coding value project. Title image by Maple + Mauve.
Blockchain, in essence, is the technology upon which the increasingly well-known cryptocurrency Bitcoin is built upon. The guiding idea behind the blockchain is rather simple (but ingenious): “transactions,” (broadly conceived, they do not need to be currency) are timestamped as they occur and added to a public ledger that everyone can verify and check for authenticity. In Bitcoin, for instance, each transaction is authenticated by competing miners, incentivised to solve the cryptographic puzzle involved, and are included in a block that gets added to the ever-growing legitimate chain. In essence, every miner is working to perpetuate the correct blockchain that is, more or less, the sum of all the blocks. If anyone tries to meddle with the chain everyone will notice because the blockchain is public. These miners are working independently, though they may sometimes pool resources together, such that nobody is completely in control of the entire network. If any miner became too powerful, and decided to meddle with the blockchain for their own benefit, everyone would realise.
That’s why the blockchain is often discussed as distributed since its full of decentralised peers. It’s not a million miles away from a more familiar concept such as peer-to-peer file sharing where everyone is sharing a little bit of the workload. The peer-to-peer aspect is what makes the blockchain stand out because it provides us with a means of decentralised authentication. One of the primary dilemmas facing the digital world is that when one is dependent on a centralised structure, say a company database, there is a single point-of-attack. It also means the burden of protecting or sustaining that database falls on a small set of people. So, you have this new technology that distributes the problem of authenticating transactions, of various stripes, and yet despite generating buzz it’s not entirely clear what it might be used for.
One obvious answer is that it will be possible to essentially create another version of Bitcoin, an “altcoin,” with potential applications on popular social media or gaming platforms. The tricky part is convincing users to adopt this altcoin albeit this would not be entirely difficult if they are avid users of your platform. More innovative angles on the blockchain include renewed takes on file-sharing as can be found with Storj and their decentralised take on cloud storage. Akin to traditional peer-to-peer file sharing users can host tiny bits of other files in the cloud where they are encrypted on a host that is not centralised, such as Dropbox, and so less vulnerable. Users are rewarded with coins according to how much space they share.
Another interesting application is Colored Coins wherein one can create digital assets on top of the blockchain. In other words, in the same way a colour can be added to something, one can add an asset to the blockchain. This could be used to issue and transfer tokens representing, for example, bonds or stocks. That’s why NASDAQ is interested. Contracts, too, can be implemented on the blockchain. That’s just a smattering of possibilities, but it is precisely this open-ended potential that has everyone from Microsoft to JP Morgan looking to get involved. For those of us who have watched Bitcoin grow from an obscure, often considered illicit, curio into a research stream embedded into the future visions of major corporation, the change has been astonishing.