“Any sufficiently advanced technology is indistinguishable from magic” – Arthur C Clarke, 1973.
While Blockchain is a quite advanced technology, it most certainly can be distinguished from magic. Yet this is something Melanie Swan seems to have forgotten when she wrote “Blockchain: Blueprint for a New Economy”.
So, your first question may be “What is Blockchain anyway”?
A blockchain is a transaction ledger where groups of transactions are encoded into ‘blocks’ then ‘chained’ together and distributed across the network. There are a number of features that make it special, in particular the fact that the blockchain is massively distributed, i.e. everyone on the blockchain processing network has a copy of the entire blockchain, and verification of transactions takes place by the network rather than by a central processing body.
The easiest metaphor to give is to say it’s like having Netflix to stream movies, but rather than Netflix storing all the movies centrally, movies are held by individuals and streamed across the network. Peer-to-Peer networks have received a lot of bad press over the last decade and a half, mostly from self-interested parties terrified by the disruption it can bring to their business model (and I don’t just mean music labels fighting against illegal downloads).
One of the most attractive qualities of a peer-to-peer (P2P) network is its resilience. Rather than being reliant on the central server and connectivity to it, as long as there are two nodes connected on the system, then the network is running. In the same way that we see that animal species can be brought nearly to the brink of extinction before their numbers being repopulated with very little loss in genetic diversity, so can a P2P network survive significant disruption to its network.
If you want to learn about Blockchain, don’t start with this book. Even for the more advanced reader it only serves as a guide to the speculative. Of its 100 pages only the first 7 are devoted to the practical current use of Blockchain (and are devoid of any explanation of what the technology actually is), the next 20 are devoted to a description of some of the more esoteric applications of Blockchain from the startup world, and by page 45 I had to re-read a paragraph entitled “Personal Thinking Blockchains” just to be sure I wasn’t hallucinating.
Swan begins to imagine Blockchain technology developing to become a “life-logging storage and backup mechanism”. OK – maybe a peer-to-peer Facebook? Er no, that’s not quite what she had in mind “… The data could be captured via intracortical recordings, consumer EEGs, brain/computer interfaces, cognitive nanorobots, and other methodologies. Thus, thinking could be instantiated in a blockchain – and really all of an individual’s subjective experience, possibly eventually consciousness…”. I had to Google some of these terms to be sure I understood them correctly. I still don’t…
Ms Swan has devoted her career to technology, philosophy, finance and research after graduating from Georgetown University. But she has the unenviable task of writing an expose on a technology sector in its earliest infancy. No wonder she has to resort to fantasy to complete a book looking sufficiently comprehensive to justify its $25 price-tag.
So, why is Blockchain relevant to me – or to you? Right now, it’s probably not – but if the application of it takes off, it can have a profound impact on the world. For example, the advent of TCP/IP protocols through the 1970s which led to the eventual migration of a defence research network to the new protocol in 1983 was a technology advancement that passed without much fanfare. However, the development of application protocols on top of the TCP/IP backbone such as Telnet, MIME, SMTP, and HTTP provided chat, message exchange (email), and web functionality. More than thirty years of development later, and every feature and application of our connected world is built on top of this 1970’s infrastructure, which we colloquially give a single name to – ‘the internet’.
In the same way that TCP/IP has provided a protocol for the universal exchange of data, so too might Blockchain be the foundation for the universal exchange of 'value'.
The first use case for Blockchain, envisaged by Satoshi Nakamoto, was ‘bitcoin,’ a virtual currency where transactors operate under pseudonyms and can exchange value and have their transactions verified and recorded in the blockchain. Bitcoin is just one of many potential applications for this technology and its variants. This is where Swan gets completely carried away with talk of intracortical recordings, nanorobots, and other techno-trance babble.
Before we download our ‘mind-files’ into the Blockchain processing network and restore our consciousness after an operation to our new brain, as Ms. Swan suggests, we have to first answer some more practical questions: What will drive Blockchain adoption over the coming years? What are the killer applications, such as email and web was for TCP/IP? To find answers, those of us innovating will have to really get to grips with how the technology works – such as its cryptographic hash functions and the digital signature schemes, which you won’t find any mention of in Swan’s book. For that, I’d recommend you save $25 and watch the free videos posted by Zulfikar Ramzan on the Khan Academy.
Or come back to my blog, for I’m sure it’s not the last mention we make of Blockchain.