Blockchain technology has been all the rage of late from Azkaban to Zurich, from magical realms to the real world. This cryptic name for a technology is far more cryptic in construction that started its journey in 2008 when someone or some group under the penname of Satoshi Nakamoto published on the internet a whitepaper titled, “Bitcoin: A Peer-to-Peer Electronic Cash System”. This paper promised to solve the decades-old “double-spend” problem of electronic cash operation without the need for a “trusted intermediary”. So now I have introduced two more esoteric concepts to explain the first cryptic abstraction.
“Double-spend” has long been recognised as a truculent challenge that the smartest programmers, data scientists and cryptographers in the world failed to resolve through even the most clever algorithmic constructs since the seventies. So what is the intractable “double-spend” problem? Since electronic computing facilities became the norm in large government, financial and business organisations, first in the developed economies and then increasingly all over the world since the seventies, the concept of electronic cash has cropped up time and time again. However, when we send a mail or a document electronically to someone, as is ubiquitous these days, we basically share a copy of the text or document.
However, if we want to send someone money electronically, we cannot simply send some electronic money and still retain a copy because then we can keep on sending such electronic cash to any number of people and hence the double-spend problem arose. To prevent such double spend we use trusted intermediaries such as banks that keep track of our money whether dispensed physically through an ATM or electronically through Electronic Fund Transfer Network (EFTN). No amount of encryption of the transmission messages can help prevent the double-spend problem when such transactions take place peer to peer, meaning between two individuals directly without a trusted intermediary employed as the gatekeeper. The encryption of such messages only helps with privacy of data and prevention of unauthorised access.
So how did Bitcoin solve this when it debuted in 2009? Bitcoin is built on a new technology called Blockchain that the proponents of Bitcoin put together using a combination of established cryptographic protocols, innovative algorithmic design and game theory concepts. The last part drawn from game theory is what allows Bitcoin to operate as an electronic cash system without the need for a trusted intermediary. This very first use-case of Blockchain technology is known as permission-less blockchain meaning it is open to all for participation. Anyone, anywhere in the world can download the Bitcoin app and start participating in the Bitcoin ecosystem.
Blockchain technology’s utility is much broader than its use just as a crypto-currency such as Bitcoin, Ethereum or Ripple—three popular crypto-currencies out of thousands available today. Blockchain’s biggest strength is its ability to maintain any chain of transaction data in an open, distributed and immutable fashion. In other words, it provides an openly verified audit trail of transactions that cannot be changed by any one person. This powerful concept of “Single Truth” for anything of value such as money, land titles, shares in public companies, skills certifications, government subsidies, taxes, etc., can be applied through use of Blockchain technology whereby the truth regarding anything of value can be ascertained automatically when all parties of a particular value-based ecosystem participate in the Blockchain implementation.
A Blockchain literally is a chain of data blocks interlinked through cryptographic hash functions that prevent any tampering of such data contained in the blocks. Any tampering of data in a block will prevent the hash functions from pairing up with the previous and subsequent blocks and thus the chain containing the suspicious block will be rejected. However, not all blockchain use-cases are permission-less, that is free for all to participate. For example, Hyperledger—an open-source Blockchain protocol—allows constructing permissioned blockchain ecosystems where certain relevant stakeholders are allowed to participate. Let’s say the government decides to use Blockchain for land ownership records or titles, then the government agencies or staff that are directly involved in administering land ownership records will constitute one set of permissioned participants while the land owners will be another set of permissioned participants who in turn can invite a bank financing the land purchase to have access to the relevant ownership details, and all such participants thus become privy to the single truth on land ownerships.
Blockchain is tremendously powerful as a tool for maintaining open, distributed and immutable truths that matter for anything of value. The adoption of this new technology has been challenging because of the highly complex nature of the technology itself, even though the underlying concepts are well established. Many different platforms for deployment of Blockchain technology are competing for market share and new platforms continue to evolve as we speak. Technology pundits believe Blockchain will transform transactional businesses like the internet transformed information sharing. Blockchain promises to finally deliver humanity from the capriciousness of manipulated truths. Shall we ride to the top of this surging wave of “Single Truth” technology and be a vanguard in the tsunami of blockchain use-cases aimed at universality of truths?
Habibullah N Karim is an author, policy activist, investor and serial entrepreneur. He is a founder and former president of BASIS and founder-CEO of Technohaven Company Ltd. Email: email@example.com