Layman's terms: Blockchain and the intelligence revolution.
A simplistic look into how Blockchain technology works, and the enormous impact it could have on our every day lives.
By George Biddle | 16th November, 2017
Revolution is a word often saved for the more momentous periods of change through human history; the first industrial revolution during the 1700s powered by steam, the second industrial revolution during the 18/1900s powered by electricity, and then the computing revolution during the 1990s. Well, here at Signin, we think it’s a word we should be beginning to use once more. In fact, we believe we have been on the cusp of entering a new revolution for the last few years - something we’d like to call the intelligence revolution - but up until now we’ve lacked a major driver to power it.
There’s been loose buzzwords like ‘AI’ and ‘Machine Learning’ bandied about among those who speak of nodes, fluency in C# and hashing on a weekend (see nerdworld.com for translation) with little or no meaning to the average person, but nothing quite able to quench the thirst of revolution with the scale and reach required – until now.
When an anonymous chap going by the alias of Satoshi Nakamoto brought the world of digital currency into play with Bitcoin, he not only designed a currency that replaced the need for a bank with infallible transparency and simple accountability, but he rather accidentally designed a technology that will change the world in a very big way, and give us the exact driver we’d been looking for to power our next revolution (for those interested, I’ll be talking more about Bitcoin in our follow-up piece in a few weeks time – so stay tuned).
Welcome to the floor; Blockchain technology.
As is often the case with new ideas, people overcomplicate their explanation. Whether you’re pitching a new product, or developing a new technology, people get lost in their own understanding and forget to narrow their focus on language and concepts that others can actually comprehend. So in an attempt to avoid that, a simple explanation is set out below.
‘A blockchain is a decentralised distributed ledger’.
Translating that, let’s look at a blockchain as a shared record book instead, where the chain of ‘blocks’ are line items in the book. However this isn’t just one record book, but rather thousands of identical copies of the same record book stored on devices and servers around the world (hence the decentralised part). Whilst there are endless things that can be recorded in this record book, let’s use a financial transaction as the example here.
Bill and Ben are friends, and so when Bill forgot his wife’s birthday, Ben picked up some flowers and covered his back. Ben is a good friend. Be more like Ben. In order to pay him back, Bill wants to send Ben £20. This creates a new line item in the record book, a copy of which is sent out to all the other identical record books stored on the thousands of devices and servers around the world. Upon receiving the new line item, all those different computers confirm that the transaction is authorised and correct, by talking to each other and making sure that the new line item is identical on every copy, before giving it the okay. It’s like Bill and Ben had a thousand mates stand around them and watched Bill hand Ben the £20, and then all agreed afterwards that Bill actually did hand over the money and it was the correct amount.
The record of every transaction that takes place like this will exist as line items in this record book in perpetuity and as such, creates perfect transparency and accountability. Because there are thousands of identical copies of the record book, no one person ever owns it, and so there is no need for a trusted intermediary like a bank. The verification process of each computer talking to the other makes fraudulently changing line items impossible, as they must be identical on every copy.
The intelligence revolution.
Where this begins to translate into different uses for this tech, is actually understanding what this does. Essentially for the first time, the ownership of something digital can be truly verified. That original copy of ‘Cher – Believe’.mp3’ can now be identified as the real one that I can exchange for other goods and services. The far reaching consequences of this transparency, security and accountability extends into every sector; a few examples of which are outlined below.
Democracy in the 21st Century? Governments could set up their own shared record book with tokens of their own, where instead of representing money, they represent votes. Instead of sending a fiver, you’re lodging a vote in an election which can never be altered and will exist to be counted with the same result forever. Companies like Horizon State are working on this idea as I write.
Sound-proofing Music? How about when using iTunes or Spotify, instead of paying a subscription which might not accurately reflect your usage, you pay the artist directly each time you play their song? Exactly what you’ve listened to and for how long is recorded in a shared record book, reflecting the royalties you’ve paid for the songs played. Startups like Voise and Ujo Music are exploring exactly that.
A digital filing cabinet? This is where it gets really interesting. Instead of using Dropbox and OneDrive to save your files, what if you could split up each file into thousands of pieces and store each part on computers around the world? The record of what and where each part is, is recorded in the record book and cannot be changed, only you have the key to access and view each part as a whole. Say hello to companies like Storj and Sia Tech are exploring exactly that.
A perfectly energy-efficient world? Recent ideas have come to light regarding the enormous scope of blockchain technology within the energy sector. Imagine every house is connected up to a new grid where instead of paying providers for their consumption, houses automatically generate, store and trade resources like electricity and water between themselves based on who has a surplus, and who has a shortage. Sounds crazy? It could go even further still.
You might think that having more houses on the grid would result in more powercuts – and you’d be wrong. Let’s combine AI with blockchain, with an assumption that each house has a smart thermostat fitted. AI can automatically monitor the level of energy and water being used in towns and cities according to the energy record book, and when consumption passes certain levels, each smart thermostat is automatically remotely adjusted and power outages are avoided.
Food for thought.
Many of these ideas are still in their infancy, with experiments only just beginning to take place through innovative startups like those aforementioned. Signin naturally will be a part of this revolution, with blockchain application already being explored alongside our future developments. To paraphrase an article written by Forbes last year however, ‘progress isn’t slowing down, but cashflow is’, which is why developments such as this must depend on inward investment. So next time you look at stashing your money away in the bank, or investing in conglomerates offering slow returns, ask yourself whether you could contribute to the revolution instead.