Blockchain Technology for dummies

What is the Blockchain?

Blockchain network concept , Distributed ledger technology , Block chain text and computer connection with blue matrix coded backgroundTechnology has brought a lot of benefits to various sectors and no one would have ever thought that there could be another discovery capable of revolutionising the world again to the same extent as the internet, and then came along blockchain technology. Blockchain technology is now dubbed the ‘re-discovery of the internet’ due to the varied application to which it can be put.

The starting point to understanding blockchain technology is to understand the problem it was intended to solve. It is almost impossible to mention the term blockchain technology and avoid a discussion of bitcoin as this is the technology underlying the famous crypto-currency. Bitcoin was founded by Satoshi Nakamoto- mystery still shrouds who Satoshi Nakamoto is or whether it is an individual or an organisation. Nevertheless, the problem solved is that of double spending. The easiest way to explain this concept is through fiat (conventional currency eg USD, GBP) transactions. Every money bill gets issued with a serial number meaning that only one note of the same denomination bear the unique serial number and any other note with the same number would be a counterfeit note. With digital money, this question was of fundamental importance as this was required to avoid the same digital money being used to honour different transactions without a way of checking. Through a whitepaper, Satoshi proposed a way of solving this problem through a public ledger which records a transaction as it occurs in real time.

To ensure the integrity of the ledger, Satoshi proposed a network of computers (commonly known as miners) spread all over the globe to be ‘guardians’ of the ledger who validate a transaction when it occurs. It is for this reason that blockchain technology has proven to be hacker-proof as one would have to conspire with the entire network in order to compromise the chain. Information on this ledger is stored in blocks which bear all details about the transaction and is filed on the network. A series of these blocks of information when filed is what makes a block chain.  Once the filing has taken place, there is no way of changing the transaction as one would have to also change all previous and subsequent transactions.

Although crypto-currencies have become the most popular application of block-chain, this is only a tip of the iceberg. Block-chain has proven to have far much wider application and the rise of crypto-currencies, though a positive development,  fails to do justice to the wider use of this technology. In order to demonstrate how widely this technology can be applied a few examples would be useful.

Recently in Sierra Leone, the power of blockchain was put through the paces through the first trial for election use case of blockchain technology through a permitted blockchain. In terms of aid distribution, the United Nations recently delivered aid in Syria using Ethereum, one of the major crypto-currencies. Looking to the law, the legal sector stands to go through immense transformation and in groundbreaking ways. In Carlifornia, blockchain technology is under trial for land registry purposes to record land ownership, which is likely to reduce the ability of fraudulent disposals in land transactions. In relation to Intellectual Property (IP) rights, block-chain technology is expected to afford effective protection to IP rights as once ownership is recorded on the blockchain, it will become difficult to claim ownership of the same invention. Lastly, smart contracts have already taken off and will eventually remove the need for lawyers to draft lengthy and costly agreements as this can simply get executed with precision as a computer code once conditions are met. Some go to the extreme of declaring that lawyers will soon get replaced by blockchain technology.

For more on the blockchain series please subscribe!

2 thoughts on “Blockchain Technology for dummies”

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s