Breaking the chain (001): Blockchain

The digital age is upon us – now more than ever. However, the chains of digital ignorance are so tightly wrapped around the world, hindering humanity’s progress with its iron grip. Everyone should be aware of just how much technology can improve our lives. Yet, we are so consumed by our day to day lives that we haven’t stopped and asked, “Can it be better?” Actually yes, it can be. Using knowledge, we will shine light, and hopefully, tap into this wellspring of innovation called technology.

Join us as we loosen these binds link by link, and what better topic to start with than “What is Blockchain?” Let’s get to it! There are many articles seeking to answer that question. Unfortunately, most of them aren’t very helpful as they are catered to those who are tech savvy. They talk about “nodes”, “hashing”, “cryptography”, et cetera. How will the rest of the world make use of this technology if they don’t first understand it. Albert Einstein once said, “If you can’t explain it to a six-year-old, you don’t understand it yourself” – so let’s untangle the myth.

Let there be Blocks! – Origins

The exact origins of Blockchain are unknown. What we do know was that it was introduced in the mid-90s as a concept to help decentralise the exchange of money. But it was only in 2008, when a computer programmer under the alias of “Satoshi Nakamoto” created and distributed the first open source Blockchain code publicly by creating Bitcoin (https://bitcoin.org/bitcoin.pdf).

Satoshi Nakamoto, till this day, remains an enigma. There are reports which supposedly identify this mysterious person but as of this writing, Satoshi Nakamoto’s true identity remains unknown.

Bitcoin, the first cryptocurrency, using blockchain technology has become a runaway hit. When I first came across it, Bitcoin was trading for 5$ each, and I thought, “Ridiculous”. Now, at a 1000+ percent increase – it trades for approximately $5,000 as of this writing.

Now can you see, what the chains of ignorance can cost.

A shared notebook that is always up to date

Technology is only as complicated as the ‘experts’ who make it complicated. So let’s make it simple. Simply imagine Blockchain as a notebook. Now imagine, each time someone writes on a page in the notebook, every other person who owns a copy of this notebook will see that writing too.

Now imagine this notebook can act as a ledger, record, transaction history – take your pick! Then, you can begin to see its usefulness, right? All information is recorded in a separate page (Block) and copied across to all other (Chain) notebooks simultaneously. And this is where the name comes from.

A Blocky example

Let’s take a practical example.

We have a group of 3 friends (Andrew, Mo, and Sean). These guys want to start trading rocks. Traditionally these friends would have to go to a “Mountainbank” to deposit their rocks, they would need to fill up paperwork to setup a “Raccount” and fill up more paperwork to move their rocks around. They are at the complete mercy of “Mountainbank”.

So they decided to create a “Rockchain” which is a Blockchain for their rock trading hobby. With Rockchain they don’t need Mountainbank anymore. They can trade directly.

Here’s how it goes. Say Mo wants Sean’s “Art of Zen” book, and is willing to trade 1 rock for it. If Sean agrees to this trade, and both have approved that the trade is good, Mo will then write on his notebook: “Mo: -1 rock, Sean +1 rock” and just like that, Andrew, Mo, and Sean’s notebook will all have the same information automatically. This ensures that at any point in time, these friends know exactly how many rocks they all have.

For those visual people like myself:

Blockchain and bitcoin

Blockchain and bitcoin are rarely spoken of separately – Bitcoin IS the first manifestation of this technology. It is a digitally “mined” limited resource – with only 21 million Bitcoins ever to come into being. It is mined and distributed using Blockchain technology.

Rockchain, our example above, is a vast simplification. There’s a lot more going on in a live Blockchain like Bitcoins. There are algorithms to secure transactions, validate the integrity of transactions, keep your real identity private, and so much more.

Bitcoin is classified as a “Cryptocurrency” – which is its own can of worms. It’s a sub-technology that spawned in Blockchains wake! But let’s save those details for another time – perhaps in a later blog.

Breaking the chain – Practical uses for Blockchain

People all around the world are starting to find practical applications for Blockchain.

Blockchain in Politics – MiVote: Secure voting platform

The vote you choose to make on the MiVote App defines the position of the MiVote Movement on each critical policy debate in the Australian Parliament. Unlike current political parties, they do not have a position on any issue until the majority of members have told them where they want Australia to go. The people, together, will determine their future.

Blockchain in Retail – Everledger: Diamond Verification

Currently diamonds are verified by using a paper based certification system. But now Blockchain technology is being used to give each stone an additional unique identifier, calculated using 40 data points in addition to the traditional ‘Four Cs’ of diamond classification – cut, colour, clarity, and carat. Diamonds over 0.16 carats also have a serial number inscribed on their girdles during the grading process. The platform is partially public – all diamond certificates can be cross-referenced on Everledger (a Blockchain).

Blockchain in Energy – SolarCoin: Independent power distribution

SolarCoin is an alternative digital currency that works like air-miles for solar electricity generation. SolarCoin is claimed by individuals living in homes with solar panels on their roof or commercial solar electricity producers. Solar energy, unlike fossil fuels, does not place excess heat or carbon into the atmosphere. The goal is to provide an incentive to produce more solar electricity globally by rewarding the generators of solar electricity. SolarCoin is intended to shift the cost of electricity, thereby reducing the payback time of a solar Installation.

Blockchain and YOU

Now, imagine what you can do with Blockchain? The possibilities are endless. How can you improve your quality of life? Securing the procurement and delivery of high value pharmaceuticals? Creating an undisputable digital identity? Take your best shot!

I’m sure this blog may have evoked many questions, but I do hope ultimately to have whetted your appetite to learn more about this revolutionary technology.

Go forth and break those chains!

Marco Malupa is IT Director at Limehouse Consulting.

Disclaimer

This publication contains general information only and is based on the experiences and research gathered by Limehouse Consulting and Strategy Limited (hereinafter “Limehouse”) practitioners. Limehouse, is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

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