A quick guide to blockchain Otesanya David March 31, 2022

A quick guide to blockchain

A quick guide to blockchain


There is one technology trend that could prove to be even more tectonic and enduring than cloud computing: the blockchain. While the cloud challenges how we build software and modifies how we operate businesses, blockchain technology potentially alters how we think about and process transactions themselves. Beyond serving as a foundation for cryptocurrency, blockchain could influence in a fundamental way how we propose and record agreements.

The revolutionary nature of blockchain and the cryptocurrencies it enables are much touted and certainly subject to exaggeration. And yet, when contemplating how current technology developments might play into the future, it’s tough to identify another development more likely to influence the shape of things to come. Blockchain may prove to be the most significant innovation since the internet.

So what is the blockchain, and why is it potentially history changing?

Consensus truth

Building distributed software systems is hard. The core of this difficulty is the data: protecting it, making it available, storing it. Although much of the difficulty stems from human beings trying to cheat the system, there is also inherent objective difficulty in overcoming failures and maintaining data consistency (for example, see the CAP theorem). Any time data is sent or retrieved (be it a post about your lunch or the balance of your bank account) it is subject to these hazards.

In the case of something important, like your bank account, the traditional way to make data secure and accurate is via a trusted agent, e.g., the bank. The distributed version of banking has hitherto been a grafting of traditional practices onto the internet. The bank is trusted to persist and retrieve our financial information.

The limitations of this arrangement are spelled out in the Bitcoin whitepaper that triggered the crypto tidal wave. (The foundational document in cryptocurrency, this paper by Satoshi Nakamoto summarizes the prior art and proposes the first real-world, public blockchain network.) Satoshi’s criticisms of the “inherent weaknesses of the trust based model” are pegged to the fact that “non-reversible transactions are not possible.” Put another way: Banks are required to be in the position of mediating disputes, which causes trust to spread and costs to climb.

Copyright © 2022 IDG Communications, Inc.


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