Most people today don’t understand even the basics of the technology that powers blockchain. It’s a fact that this new technology is difficult to relate to anything that has come before. As in the 2017 spike event that took Bitcoin to the moon and got everyone talking, it is now quite apparent that cryptocurrency is not going away. This means that it is time to figure it out for all of us who haven’t gotten around to doing that yet.
Let’s do this as simply and concisely as we can.
Where it all started: Ledgers and Decentralized Ledgers
I was speaking with a friend of mine who is 58 years old and a competent programmer. He’s a serial entrepreneur who has built technology companies in the past. This man is no novice by any means, and yet, the moment the word blockchain enters a conversation, he stops and recoils, essentially calling bullshit on the entire concept of this technology.
He is far from alone. Many in his generation, even including many of the most technologically savvy among them, simply do not see the point of a decentralized ledger. After all, why not just have a spreadsheet? A file, on a server, where you can just go look up the value you’re interested in. You know, old school.
The key benefit of a decentralized ledger is that it doesn’t ever go away.
A decentralized file structure has one benefit that no other technology can offer: immutability. Even CDs and hard drives, film and paper, videos, cassettes, and floppy disks—these forms of media all suffer from one key flaw: eventually, they decay. The files stored on them degrade, become unreadable, and information is lost. Additionally, control of the file centralizes access to it—if you have the file, or if you have a connection to a server which controls it, you’re able to use it. If you lose your access, say the server is shut down for some reason, then it may as well have never existed for you. This happened to GeoCities, infamously, and the sites that were lost will never be recovered.
Let me repeat that: there are multiple copies of the file all over the place and they correct the errors that crop up in one dataset or another automatically. It is impossible for us to lose them or have our access to them revoked. Just have an internet connection, and you’re able to get at anything you want to on the blockchain.
Where it went next: Trust
Initially, the purpose of Bitcoin was essentially to influence people to “mine” cryptocurrency. There was, of course, no actual mining taking place. Instead, the computers involved in mining are actually processing transactions. This entails “chaining” “blocks” of records together (hence the moniker, blockchain!) and backchecking across this blockchain to ensure that fraudulent transactions don’t occur. There has still been some fraud, notably one ETH transaction in which over $50M of Ethereum was stolen, but by and large the decentralized ledger works very well to minimize fraud.
Ethereum and Tezos are both networks which have been designed for the explicit purpose of applications being built upon them. After all, if we lived in a perfect universe, the only data we would keep locally on our devices would be the most expendable data, the data we could most easily live without.
Applications built upon the blockchain use various parts of the decentralized ledger to store information, but there is a problem: it costs money to access the ledger and move blocks around on it. So, most dapps (decentralized applications) are built using other storage solutions such as IPFS. Ideally each dapp would completely decentralize the backend services via blockchain tech, and only involve a front end user interface that could be downloaded or used via the browser on a computer, phone, or tablet, but it’s still too expensive to do that—for now.
The confidence with which transactions involving the blockchain can be executed comes from a complete automation of every step in the process. No humans means no double checking, which in turn means faster turnaround. When we look at a cryptocurrency such as Bitcoin, what we find is that there is instability, but not influenced by any particular local currency instability. Instead, the Bitcoin instability tends to involve massive amounts of investors buying or selling; hence it remains more stable than some countries which have currency issues.
Imagine being in Venezuela before inflation struck—if you had all of your assets in Bitcoin, you could simply withdraw however much of the local currency you needed when you needed it. You wouldn’t be as affected by the inflation because your wealth could scale right along with it. Cryptocurrency tokens such as Stellar Lumens and Ternio aim to make it fast and easy to transfer money anywhere in the world and, indeed, to hold your wealth in tokens and only withdraw into a local currency when you’re ready to buy something. There are still many problems with all of these technologies, but the use-cases are generally both utilitarian and financial… for now.
Where it’s going now: Intellectual Property on the Blockchain
Imagine a future in which one could earn a living making edits to Wikipedia! Wouldn’t that be incredible? Well, it may be a possibility in the near future.
Friends of mine recently have been asking about the difference between Everipedia and Wikipedia. This is a great example, because Wikipedia does not involve a way to make money. Phenomenally successful, Wikipedia is a major accomplishment in information technology, but they ask for donations all the time. Everipedia won’t need to do that, because, baked right into the center of the platform, is a way to make money: crypto tokens, in this case called IQ.
Now, Everipedia doesn’t purport to do much beyond what Wikipedia does today, but the fact that it is working toward a completely decentralized existence is quite remarkable. In fact, since January 2018, Everipedia has been decentralized. Users possess a certain amount of network power, which they then “stake” to modify the encyclopedia. Staked tokens are rewarded by accrual of a certain amount of additional tokens. Thus, positive contributions to the network are incentivized, and the decentralized nature of the network prevents any sort of server shutdown, whether or not Everipedia receives donations.
The incentives align: users who own the most tokens will have the most incentive to preserve the site’s value, which will keep them active in suppressing untruthful edits. Likewise, the accumulation of additional tokens will incentivize users to make quality edits, which should keep the network growing in terms of quality and scope. Add these facts to the peer-to-peer network’s primary benefits, that it is secure and that it is trustworthy, and the difference between Everipedia and Wikipedia becomes crystal clear.
Security on the blockchain is no laughing matter, either: governments cannot censor blockchain dapps and they cannot forge entries to delude their people. The current face of the network seems to be mainly academic, so there is a possibility that this is what the future of scientific research or paid liberal arts research will become. At a time when adjunct professors are resorting to rideshare and prostitution to make ends meet, a bit of extra scratch for maintaining a current knowledgebase on a website that’s free for everyone in the world to access would be a welcome thing indeed.
Non-Fungible Tokens (NFTs)
A non-fungible token is different from a Bitcoin or an Ethereum token because it is unique. It is non-replaceable. The concept has recently found traction among artists who are currently experimenting with all sorts of unique experiments. At Cent, the NFT market is a very popular collaboration forum. Visual arts, poems, stories, and even music can all be “minted” and stamped into a nonfungible token which is essentially unique and permanent.
As a philosopher, I am aware that a great deal of Aristotle’s work was lost to history. Between the simple loss of books to normal wear and tear, the burning of them in accidental fires, and the occasional book-destroying actions of various political powers over the years, we do not even know what once existed in terms of external-facing texts written by the great man to explain his thought.
If a wallet was lost, an NFT could also be. The uniqueness of the NFT thus defeats some of the benefits of the blockchain, by restricting access to something that is essentially public. Intellectual property is generally best public, but it is also possible to maintain privacy on the blockchain.
Imagine a future in which one could earn a living making edits to Wikipedia! Or blogging about anything. Podcasts. These things are all realities for a select few people today, so the biggest shift that the universe is gearing up toward at the moment is the increase in scope that all of these things will undergo as more and more of us pile on and learn to make money by doing what we love to do--even if it's a creative undertaking we're into.
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