The Missing Piece of the Internet
In describing the Internet age, Walter Isaacson borrows a phrase from the poet William Wordsworth: “Bliss was it in that dawn to be alive.” In the two decades since its public inception, the Internet has interwoven the world in ideas and commerce, sparked revolutions, destroyed industries and creatively remade them. Rooted in the Internet’s ability to disperse information quickly and vastly, this era has empowered ordinary people and wrestled influence away from gatekeepers such as the traditional media and government.
And yet, assets of value — such as currency, licensed content and votes — have faced a unique difficulty. These assets require greater care. Unlike informational content, each dollar or song must be wholly transferred from one owner to another, not duplicated in the process of distribution. They demand greater security and transparency — a promise that each penny will be transferred and every vote counted. Otherwise, they lose their worth and the system crumbles. Our collective solution so far has been to rely on institutions to act as trusted intermediaries for these assets. Banks ensure that each side upholds the terms of a transaction; governments certify votes and public records. But what if they are not reliable guarantors? Banks are slow and, like other intermediaries, prone to hacking. Government malfeasance and corruption is a fact of life for far too many people around the world.
Blockchain promises to upend the traditional order. This global exchange platform provides the missing piece of the Internet. Eliminating the need for any intermediaries, Blockchain’s ingenious underlying mathematics produces a trusted public record that allows the system to secure and transfer any asset. It allows for banking without banks and voting and land titling systems that exist beyond the reach of corrupt regimes.
The Innovation of the Blockchain
The innovation behind Blockchain begins with the fact that no central entity owns or controls the systems. All its data is stored across a global network of computers. When we put an asset of value — such as currencies, health records or land titles — into the Blockchain, these transactions are cryptographically linked in data blocks, providing a complete history for every piece of data in the system. Each transaction on the record is digitally signed so we know who submitted it to the network, and we can directly transfer these assets in a secure, fast, and transparent way.
The innovation of the Blockchain consists of three main features: security, transparency, and auditability.
- The Blockchain provides unprecedented data security. The Blockchain system self-guarantees the authenticity of all the data within it, eliminating the need for trust in other parties. This prevents double spending, falsified asset ownership, and other forms of data tampering. Whenever a new ‘block’, or a bundle of transactions, is created, it is added to the Blockchain, creating an increasingly long list of all the approved transactions since the creation of the network. An industry of ‘miners’ applies a digital wax seal, known as a hash, to each new transaction block. It confirms that this block — and every block after it — is legitimate. For one actor to threaten the integrity of the records, they would need to control more computing power than the sum of all Google servers.
- The Blockchain is highly transparent; a record of all transactions is permanently available. All users on the system can see in real time as new transactions are added to the database. Meanwhile, individual privacy is protected without jeopardizing the legitimacy of asset transfers since users work under numerical pseudonyms. Since assets in question are verified by the system through previous transaction blocks, trust is established without the need for personal information sharing in advance of a transaction. This is a powerful breakthrough, protecting sensitive information while facilitating accountability.
- The Blockchain is also entirely auditable. Every time a new transaction is added to the record, it is also cryptographically linked to every previous transaction dating back to the inception of the network. Therefore, the Blockchain spreadsheet cannot be altered once it is verified and impossible to fake. Since the record is both transparent and uncorrupted, a trail of digital breadcrumbs allows for thorough monitoring and auditing of all the data within the network. A public Blockchain provides regulators and law enforcement with a roadmap to identify illicit activity or malfeasance by leaving enough digital clues to identify bad actors.