With restrictions on social interactions easing, I hope you're still taking precautions, are safe, and well. :)
Today, we're diving into the much hyped technology on which Bitcoin is built - the blockchain. Many have touted it to be the net logical evolution of the internet.
I'll be presenting it in the following format :
Though I recommend that you read the full piece in flow, feel free to skip to the part you're interested in by clicking on it.
I hope you'll enjoy it. :)
What is it, really?
A blockchain is two things - a network, and a way of keeping record.
It's a network like the internet where participants interact and transact. And a way of keeping record like an accounting system, but for today's hyper-digital age.
Let's get into it.
Why the hype?
Due to its many features suitable to the digital age, Blockchains have and continue to enthrall many the top minds around the world. Let's look at these features one by one. I promise you, this would be among the most readable pieces that you'll find about blockchain.
On the internet, you could make a thousand versions of yourself. Or worse, someone else could impersonate you. How then, would someone who's looking to engage with you, know which is real and which is fake?
On the blockchain, one's identity is linked to something like an Aadhaar number or a GST registration number. Hence, ensuring that all participants are genuine.
Once only genuine participants exist on the network, their collaboration becomes more meaningful. That brings us to collaboration.
In future if blockchain is adopted the way most people are envisioning it, this is how it'll play out. Say you're buying chairs. You've narrowed in on two options that look and feel the same. One simply has a sticker that says "Export Quality". And the other, has a QR code, which on scanning shows a lot of accurate information - where the wood was bought from, which quality foam is used, the upholstery and polishing materials used, and so on.
How's is possible to have such detailed information for every product? Read on.
A, B, C, D, and E are on this network called the Furniture Blockchain.
E is the lumber company that purchases wood from woodcutters, and supplies different types of wood to various buyers.
D is the merchant who supplies upholstery material for chairs.
C is the designer of the chair's structure.
B is the brand owner that has dealt with C, D, and E, to put the chair together, and further polish, package and dispatch it to A.
A is the shop-owner from whom you're buying.
You're probably thinking that we never take the time to realise how many players play a part in every product we use. Well, that's the world we live in. Specialisation is a byproduct of a large, networked society.
Coming back, by being present on the Furniture Blockchain - A, B, C, D, and E collectively generate and store data about the functions each one has performed.
When E supplies wood to B, E enters the date the wood was purchased, the date it was sold, the quality, the quantity, and other relevant details into something called a 'block of information'. This is validated by the recipient, B, and then it became part of a chronological chain of such blocks.
That brings us to the next feature - storage.
Nowadays, data is stored in a digital format in centralised served. The achilles heal here is that centralised systems become a pointed target for hackers (who've had some success over the years).
In a blockchain however, every transaction is recorded on each and every participant's system. This way, even if hackers delete or alter some data, the authentic record would still exists with other members of the blockchain. The blockchain then, would automatically replace the altered chain with a copy of the authentic chain from another participant. For hackers to be successful, they'd have to gain access to the systems of all the participants on the blockchain.
An Unchangeable Chain
On blockchains, once a block of information has been validated, and added to the chain, it cannot be altered. This is one of the marquee features of blockchains! This makes information stored on blockchains more authentic than that available on the internet.
How is this done?
Each block has an auto-generated identification code. Plus, it carries the identification code of the previous block. So if anyone tries to delete a block, the entire 'chain' becomes invalid.
For example, say there are 10 blocks in a blockchain, with identification codes P1, P2, P3 ..... P10.
Now, someone has deleted the 5th block (P5).
Due to this, P6 now falls after P4.
But, P6 also has embedded within it the actual previous block's identification code, which is, P5.
So the chain will become invalid.
Now, from the systems of other participants on the blockchain, block P5 will be reentered into the chain.
Similarly, a block's identification code will change if someone alters the information within a block. So if the information within P5 is altered, its identification code would change to say P#5. This wouldn't match with the previous block identification code embedded in P6. Hence corrupting the chain. Now too, an authentic copy of the blockchain (from a fellow participant) would replace this corrupted copy.
This permanency feature induces better behavior from participants. Say, in our example, D had fraudulently supplied leatherette but shown it as leather. That information will always stay on the blockchain, and will always be a blotch against D's trustworthiness.
Now, on knowing how accurate the information on the blockchain is, a majority of buyers (in our example) would prefer to buy the chair with the QR code showing its blockchain. Especially when the purchase is made digitally.
Real world applications
Blockchain's mass adoption depends on - whether the computing power and storage required to support it, at the end of each individual participant, becomes affordable for everyone.
Conceptually though, blockchains can definitely improve Accounting, Finance, Supply Chain Management, Healthcare, Real Estate, and Energy.
Some say blockchain would do to finance what the internet has done to media. That remains to be seen.
Though most efforts are being made in finance, in my opinion, one rather different but meaningful endeavor would be to try and solve the problem of land ownership in rural India. This is laden with problems like fractional ownerships, confusing or missing land records, land mafias, and governance issues. By allocating digital identities to all the land, district wise (a herculean task, for sure), significant improvement to the lives of our rural folk can be made.
Some parting thoughts
Blockchain, like I said at the beginning, is two things - a network, and a way of keeping record. Sure, it has some impressive features, and promises to transform many industries. But, at its core, it's a way to build trust and enforce accountability.
It's becoming increasingly harder to figure out who to trust, especially digitally. So with lives becoming more and more digital, a framework where trust is built into the system is necessary.
I do wonder though, that just like someone came up with a way to have distributed storage, would someone come up with a way to hack every unit on the system, while remaining undiscovered? Is that even possible? Sure, blockchain has built an extremely potent castle, but does a marauder exist who can penetrate it?
From a completely different line of thought - innovators are going to such lengths to record everything, all so that people behave well, and can be trusted. Won't it just be better for societies to focus more on building a stronger moral fabric among its people? Can we all do our bit to place higher importance on building character than on honing intellect, accumulating riches, and garnering influence?
I think these questions have been asked for ages, and I've a feeling we'll be asking them for the rest of our lives.
If you've gotten till here, you're the real MVP! Thanks for reading. :)
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