Blockchain Technology Decoded !!

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Blockchain explained: It builds trust when you need it most.Here's everything you need to know about the technology powering the bitcoin Cryptocurrency today and, soon, a myriad of services that will change your life.

Trust is an essential part of ordinary living, whether it's picking mechanics based on Yelp reviews, sliding credit cards into gas station fuel pumps or heeding our doctor's advice. But our trust has been eroding for years. In the US, only 33 percent of us felt we could trust our government in 2017 -- a decline of 14 percentage points from 2016, according to Edelman's annual trust barometer study. Trust in businesses dropped from 58 percent to 48 percent, too, while media (fake news!) and social networks also took a hit.

That's a problem. The less trust you have, the harder everything becomes. Did that job candidate really graduate from college? Did your brother-in-law really repay that loan? But there's an unlikely solution that might help restore enough faith in strangers to make our lives a bit easier: an encryption technology called Blockchain.

Because blockchains work as a secure digital ledger, a bumper crop of startups are hoping to bring it to voting, lotteries, ID cards and identity verification, graphics rendering, welfare payments, job hunting and insurance payments. A lot of that revolution could be invisible to you, taking place inside and among businesses. But it's potentially a very big deal. Analyst firm Gartner estimates that blockchain will provide $176 billion in value to businesses by 2025 and a whopping $3.1 trillion by 2030.

How does blockchain actually work?

OK, strap yourself in, because this gets a bit hairy.

A good place to start is the name: a blockchain is an ever-growing set of data blocks. Each block records a collection of transactions — for example, that you now hold the title to the car you bought or that you paid a car dealer to get it.

That may sound simple, but here's a difference between Blockchain and the Department of Motor Vehicles. Today, the government stores the information on its own central computer. Blockchains, though, distribute it across a group of computers -- maybe even thousands of them. Each has its own copy of the Blockchain transactions. That decentralization and synchronization means no single party controls the data. If one business sells an asset to another, each sees the same data. There's no need for lawyers at one company to call the other if their accounting databases disagree, because there's only one accounting database.

Mining madness.

The process for locking down a block onto the blockchain so it can't be changed, at least today, is called mining.

And it's a problem.

Here's how it works. When you and others announce transactions to a Blockchain network, computers on that network race to solve a complicated mathematical puzzle based on those transactions. A computer that succeeds announces it to the network, and the transaction is accepted if other computers verify that none of the assets in question were already used. That's what'll keep you from selling the same concert ticket twice on a Blockchain-based ticket market.

But today's mining approach, called "proof of work," has huge drawbacks.

For one thing, mining works most profitably on powerful computers that consume immense amounts of electrical power. For example, bitcoin mining today uses about as much power as the country of Singapore, enough to power 4.4 million houses, according to cryptocurrency analyst firm Digiconomist. That amount is growing.

There's lots of work to free Blockchain from the problems of transaction speed and energy consumption, though. One idea, "proof of stake," uses no significant computing power and looks to be the future for the Ethereum Project, which is responsible for the either Cryptocurrency. If bitcoin was the first generation of Blockchain and Ethereum the second, there are a number of people hoping their project will catch on as the third.

Tezos, for example, hopes to build in better governance so its technology can move forward without the troubles bitcoin and Ethereum have suffered, said Tezos CEO Kathleen Breitman, speaking at the Techonomy conference in November -- though ironically, Tezos has suffered governance problems of its own with a spat over its own management.

Smart contracts

The original Blockchain was described in a 2008 bitcoin paper by Satoshi Nakamoto, a pseudonym for a person or perhaps group that unified some ideas into the first working cryptocurrency. The idea became reality with the release of open-source bitcoin software in 2009. The bitcoin Blockchain now records about 300 million transactions and counting. But ether has popularized a newer idea called smart contracts. These are programs that run on the Ethereum network and take automated if-this-then-that actions. For example, a smart contract could look for the highest bid in an auction at a certain time and automatically transfer ownership rights to the auction winner. With smart contracts, Blockchain could help automate lots of computing operations, including ones humans never touch. Your electric car could wait for favorable electricity prices before deciding when to charge itself from the grid, solar panels or in-home batteries, then the Blockchain could handle accounting among all the parties.

Expect to see Blockchain showing up in particular where there are groups of interlinked organizations. That could include one company and its suppliers, or it could be consortiums of competitors and and their suppliers.

For example, IBM has a Blockchain partnership with a long list of food suppliers and grocery retailers, including Dole, Kroger, Nestlé, Tyson Foods and Walmart.

Another way blockchain could bring many parties together is property records.

There are thousands of counties in the US, each with its own record of who owns what. One startup, Propy, hopes to digitize those records, mirroring the records initially the way title companies do, but also storing them on the Blockchain, said CEO Natalia Karayaneva.

Slow down there a minute

For something as hyped as blockchain, with millions of dollars raised, you have to expect some backlash. There's plenty, starting with the criticism that blockchain would have already taken off if it's so great and concerns that it's abetting cryptocurrency shenanigans. There's also the concern that poorly written code could leave a faulty foundation.

Over Inflated expectations are nothing new to the tech industry, though, and there are enough serious players engaged that it's hard to dismiss Blockchain as all sizzle and no steak. Expect a winnowing as reality sets in.

Why should you care about Blockchain? It’s the ultimate trust builder (Cnet)

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