I decided to try to write an explanation for BlockChain – the technology behind Bitcoin and other crypto-currencies. Not to describe how the technology works (which involves decentralized networks, consensus protocols, cryptography and game theory), but instead try to explain what it effectively does. So far, so good.
I then spent all weekend trying to come up with a good analogy for what BlockChain does. So far, not so good! It is really hard to find an accurate analogy for this technology. I find myself accidentally describing Bitcoin, and then have to step back from it.
Part of the problem is that for most of us, trying to visualise BlockChain is something similar to cavemen trying to understand paper money. Just imagine how hard it was for people who only knew the barter system.
Back then, if I wanted to buy a cow, I’d need to exchange it for six sheep. And suddenly you are telling me that I should hand over my six sheep for these pieces of dried leaves – and you’re promising me that the guy who owns the cow will accept these pieces of paper and hand over his cow to me? How do I know I can trust you?
Now let’s come back to the present day. We are all accustomed to using paper money to buy and sell goods and services – without really thinking about how the whole system actually works, but we struggle to imagine how BlockChain works. Here goes:
Imagine for a moment there is a world computer that is openly accessible to anybody who has an internet connection, so everyone can create an account for free and use it as much as they like. Nobody owns this computer – no government or company or individual. It cannot be tampered with by anyone and it keeps a perfect (immutable) audit of every transaction or keystroke or piece of data that goes into it. It remembers each misspelling your make and backspace you use – it never forgets anything (and no, it does not remind me of my spouse!)
This what BlockChain gives you – a technology platform available to all but not owned by any. And if you want to invent your own micro-currency such as Bitcoin, BlockChain gives you the technology platform to create that currency. It is owned by nobody and will remember everything – therefore it can be trusted. And trust is the one thing that must exist if you are to have a working currency.
There is huge potential for new uses of BlockChain, such as creation of digital contracts – contracts that are guaranteed to be executed once the payment terms are hit – no more ‘the cheque is in the post’, no more need for escrow services, no more need for third parties getting involved.
If you want to invent something new, that you want to make open to every person on the planet, and you want to ensure that the true ownership of this new thing you create will always reside with its rightful owner – you should use BlockChain technology. The future potential is huge and is largely untapped – the reality is that this technology will produce completely novel unforeseen products.
Will there be unforeseen problems? Definitely! Recent GDPR legislation includes the ‘right to be forgotten’. How does that right tally with a technology that can never forget anything, ever? It’s the irresistible force of GDPR vs the immovable object of BlockChain
And that was the best analogy I could come up with!
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