What the Hell Is the Blockchain, Anyway?

in blockchain •  2 years ago  (edited)

In a previous post, I waxed poetic of thinges olde. This evening, the lens of my mind zooms in on the present and the future. This perspective affords an advantage: when viewing things from above, whether through a microscope or a telescope, you can also see the bigger picture quite clearly.

The bigger picture of Bitcoin and cryptocurrencies is the blockchain. Bitcoin and the like are children of the blockchain. It is one very narrow use of the technology. As explained in the previous post (same link as above), money is a ledger. All money is a form of a ledger. This does not mean that ledgers are only useful for recording financial transactions. Oh dear no! Not at all.

Money is but a subset, one use case, of ledger as cryptocurrency is a small subset of money. Even within the subset of cryptocurrencies, different utilities can be deployed. Some are faster and therefore well suited to small, everyday transactions. Some are unlimited in quantity, meaning they can be reasonably lent and repaid. Some are very private. Some have "smart contract" (I hate that term but it will have to do for now) capabilities and would therefore probably be quite useful in complex deals in which multiple parties sign off and money changes hands several times.

Alas, I have digressed (but not really). I came here to talk about the blockchain. You see, it is the blockchain that makes all these different, better, customized forms of money possible. The blockchain is akin to the Internet.

OK! OK! We get it. The blockchain is cool. The blockchain is huge.

Get to the point already!

So what the Hell is the blockchain?

It's a ledger that is distributed and cryptographically verified by many, many independent peers all over the world. Once something is written to the blockchain -- not some fake blockchain controlled by a central authority, but a real one controlled by no one and everyone -- it cannot be altered except by those who have the keys. Nobody else can send your Bitcoin but you because you hold the key to that little part of the ledger, and this is verified by a large network of nodes on the network, along with any transactions you make.

Now, why is this decentralized verification so important? Well, think about it. How can you trust a ledger if only a few corruptible parties verify it and have "write" access to it? You may trust such a thing if you are forced to, but deep down does your gut tell you that this is the pinnacle of social evolution? If so, I sure hope your gut is full of shit. It probably is. Mine is. Never listen to your gut. There's nothing in there but shit.

Bloomberg gets it. This is EXACTLY the sort of problem that the blockchain solves, fundamentally. The entire financial collapse of 2007 could have been avoided if the blockchain had been available to track and verify the soundness of the CDOs, the quality of the debt, even the credit-worthiness of the poor suckers who took out the ARMs the banks were handing out like lollipops by a pervert at the playground. There would be no need for Experian if we all had a hash known only to the government and delivered by one-time cipher to a lender who needed it.

What if we moved the entire stock trading industry to the blockchain? Why have a brokerage house and central clearing house holding your stocks in the form of IOUs while they lend them out and write all manner of zany derivatives contracts against them? We pay them for this "service"?

Truth is, we could totally eliminate all those financial middlemen (some might say parasites) and transact every trade peer-to-peer through a blockchain. Shares would be verified, their owners known, and we could trade them back and forth directly as we currently do with BTC, LTC, XRP, ETH, and all the rest on cryptocurrency exchanges.

What are some other uses of ledgers? Well, how about voting? Don't you want to make sure that your vote was recorded correctly and anonymously? What if you were given a crypto key that identified you as a voter, and you scanned this key at your local polling place? Then you could view your vote in the blockchain, as could everyone else. Citizens would be able to run blockchain nodes on their own computers to distribute hashing power. That would be pretty cool, right? Anonymous, yet brilliantly pure and transparent.

Anything you might need to keep track of in an accurate way can be kept in the blockchain. If you're reading this on steemit.com, you're reading it from a blockchain.

Pretty cool, right?

This thing has a ton of potential to make the world better, richer, more democratic and free. It can, and it will.

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Sort Order:  

Great post! I especially like this section:

"Why have a brokerage house and central clearing house holding your stocks in the form of IOUs while they lend them out and write all manner of zany derivatives contracts against them? We pay them for this 'service'?"

Blockchain can truly bring value to all parties. Rather than large institutions keeping all the profit, it can be distributed to everyone via decentralized ledgers. Basic attention token being a prime example of this. Rather than have all the advert money going to large corporations like Google, we the people get paid for viewing ads and interacting with them and companies get better results because we are more interested in the ads we're viewing. Win-win.

Basic attention is a fantastic project, and I strongly hope that it gains wide adoption in the brutal online publishing business. Google and Facebook take something like 80 percent of all online advertising while producing zero content of their own. It's totally unfair.

In the United States, our Constitution explicitly grants the power of "coin" creation to the PEOPLE by way of our representatives in Congress. I have a feeling the Founding Fathers would have loved the blockchain and its ability to restore this very fundamental and important right. I will address this in more detail in my next post.

Thanks for the comment. Following you...

I couldn't agree more. Interesting idea with the founding fathers, I've never thought about it like that.

Thank you! Following you as well! Keep up the content, you're doing a great job!

Blockchain is an open source ledger that is poised to revolutionize the digital payment world.

Yes. Good. And more.

Voting via blockchain seems interesting because you can assure your vote isn't manipulated after you cast it, but how would the crypto keys be distributed in the first place? You'd still need some sort of central authority to identify the voters in the first place.

I'm not an anarchist. There will still be a need for governments and banks (though in a much more limited capacity than today).

You would need a central authority to generate and distribute the keys. In the case of voting, the keys would be one-time use so if you showed up at the polling place and found your vote had already been cast, you would simply delete it and request a new key. You would be able to view, scan, read -- verify -- your key, of course.

Your post resonates well with my thoughts on this subject. https://steemit.com/blockchain/@gsari/bitcoin-and-beyond

Thanks for sharing. Following you.