You have probably heard of bitcoin. It’s a digital currency based on the blockchain technology. But who is the issuing authority of this currency? There’s no issuing authority. Bitcoin is generated by bitcoin miners. Bitcoin miners use powerful computers to carry out the mining. The computers use a lot of electricity to solve mathematical problems which are generated every time a bitcoin transaction takes place.
Okay let’s start again. What is bitcoin? Bitcoin is a crypto currency. And what is a crypto currency? It’s a digital currency based on encryption. And what is encryption? Encryption is the security mechanism based on cryptography. Cryptography? Yes. Cryptography is a way of ensuring secure communication so that third parties cannot compromise messages between the intended parties.
Bitcoin are shared on the internet and so it makes sense to secure them. The bitcoin is mined with security built in as standard. The technology behind bitcoin security is called the blockchain.
So the blockchain is a secure public ledger of every bitcoin transaction which has ever taken place. So how a public ledger be secure? Well, it means the ledger is only available to the people who have made those transactions. But how? By using cryptography, the Information on the blockchain is available to the owners of the transactions.
Okay, that will soon make sense. The best way to explain this is to compare the robustness of crypto currencies to the vulnerabilities of fiat currencies. Fraud is quite common with fiat currencies both electronically and physically. Crypto currencies are difficult to compromise. If you wanted to compromise a bitcoin transaction, you would have to compromise all the computers on the bitcoin network because the system works on consensus. We’re talking about trying to simultaneously manipulate thousands of computers that have high grade security based on cryptography. Good luck with that!
In other words, the blockchain is unshackle, yet! The blockchain is constantly under attack and the more it is attacked, the more secure it is becoming. It is becoming more robust as a result of attempts to compromise. Apparently some governments have tried to compromise bitcoin and failed miserably. But who knows. You can never say never with technology. I’ve never heard of a system which becomes more secure the more it is attacked.
What fascinates me is the technology behind bitcoin: the blockchain. It is dubbed the trust protocol and also the internet of money. It has applications across the entire economic spectrum. Developers are building applications on the blockchain from education, healthcare, and insurance, to banking and governance.
It will soon be impossible to rig or manipulate the votes after they have been cast. Imagine being able to vote using your smartphone with the confidence that your vote is secure.
The blockchain solves the problem of trust. It is designed with trust in mind. We have seen how the economy suffers if the people don’t trust the government. The blockchain takes away the burden of trust from human beings to a computer program based on cryptography.
The blockchain economy is an economy with inbuilt trust. As an educator, I’m monitoring the development of an application called academycoin. It is a payment system for educators and students based on the blockchain.
Here’s an example of how a musician can benefit from the blockchain. We know that piracy has been an issue and artists lose a lot of money because people can get their music for free. If the digital version of a song or album is released on a blockchain, it can have a smart contract which negotiates payment every time someone tries to use for anything. Educators could do the same with the resources which they create.
There’s a blogging platform called Steemit which is based on blockchain technology. I’ve been using it for about a week. It rewards bloggers for their articles and comments through a system of upvotes and downvotes. There’s a built in incentive to produce content and participate in conversation around topics of interest. It also has a video sharing platform called DTube.
There’s also a new social media platform based on the blockchain. It’s called the APPICS APP and it is soon to be released. I can foresee people moving away from platforms such as Facebook which reward themselves for the content which its users create. Herein lies the promise of the blockchain: to reduce inequality across the globe by rewarding people for their time, by paying people for valuable content no matter where they post it. Suddenly social media becomes a driver of economic growth and development. It is no longer a waste of time thanks to blockchain.
Crypto currencies promise to resurrect dead capital around the world. There are many people whose governments have compromised the wealth of entire generations of its citizens. Many people are deliberately economically marginalised for the selfish reasons of its leaders. Blockchain technology takes away the burden of trust from the government to the individuals.
The blockchain is a technology solution to inequality of income and of capital. We need to have a conversation about how we can build applications that will eliminate dead capital.