Blockchain and Open Source Technology:
- Writer’s Introduction
- History of the Chain
- Blockchain Traits
- Areas of Disruption
- Financial Services
- News and Media
- 51% Attack
- Regulatory Environment
- Energy Consumption
- Writer’s Conclusion
I was introduced to blockchain during the process of becoming fascinated by Bitcoin and cryptocurrency. I became so intrigued with the technology I decided I wanted to invest into decentralized digital currencies.
It was then through my venture into digital currencies I learned of something more notable; namely, blockchain. In the short time since I have been introduced to blockchain, I have watched a vast catalog of videos and listened to a handful of podcasts that have highlighted the groundbreaking technology. I have also successfully completed an online course in the basics of blockchain, that came with a certificate of completion from the e-learning website Udemy.com.
Blockchain has unbelievable potential and this technology will be taking the world by storm, particularly with its potential to revolutionize the economy. Like the Internet, blockchain harnesses the potential to be an empowering social vehicle. It also has the ability to disrupt intermediaries like lawyers, brokers, bankers, and third-party commerce platforms, giving power to independent organizations and individuals while creating a free environment to transact and interact with others with little friction.
History of the chain:
To many spectators who haven’t taken the time to assess this game changing technology powering cryptocurrency known as blockchain, believe it is nothing but a digital currency with noting underneath the hood but hype. However, they are unbelievably wrong. This technology is as big as the internet was at its pinnacle, and I have no doubt it will take the world by storm, lets hope for the better. At the surface, it looks like blockchain’s inception is attributed to “Satoshi Nakamoto” (creator of Bitcoin), although the conception of blockchain technology dates as far back as the 1970’s. In the 70’s, cryptographers were working on this very idea, but without a catchy buzz name like “Blockchain”. The original formation of the concept was coined a “hash tree” or “Merkle tree”, this was the first display of secured, distributed peer-to-peer digital data records. It wasn’t until 2008 with the help of Satoshi Nakamoto that this form of cryptographic technology took on a more commercial application and popular appeal through the cryptocurrency known as Bitcoin.
A more detailed explanation of BC is, a continuously growing list of public archives where transactions are recorded in what are called “blocks,” blocks of relevant data are sequentially linked, using one of the most private and secure technologies called cryptography. Cryptography is the sophisticated techniques that transforms information into unreadable data. These techniques are used in the data privacy of credit cards and emails.
Every computer that becomes part of the system stores a copy of the current registry of the BC, and before a transaction can be completed on the BC network, a process called “proof of work” and/or “proof of stake” is exercised to verify the legitimacy of the latest block. At its fundamental core, BC is inherently resistant to modification of its data. BC uses are innumerable, and generally, this technology can function as an open, distributed archive that is verifiable and permanent.
BC was taken to new heights after the creation of the Ethereum project (founded in 2015), which runs on the BC technology. Ethereum took the BC technology, along with cryptocurrency, and combined it with what are called “smart contracts.” Smart contracts are detailed algorithmic templates that help with the exchange of anything of value in a transparent way while avoiding the services of a middleman.
Decentralization is a term you will often hear when blockchain technology is being addressed. Decentralization is a term that is as empowering as it sounds. Centralized systems are proprietary in nature; they are systems designed in hierarchical decision-making structures, where all decisions and processes are handled strictly at the top or at the executive level. These systems cultivate behavior that inhibits cooperation. In a decentralized environment there is more openness, there is distribution of control, and tasks. Each component of a decentralized system is equally responsible for contributing to the function of the organization. Decentralization is at the crux of BC technology. It is an integral asset to blockchain’s security. By storing data across a participatory network, blockchain eliminates the risks that come with data being held centrally. This creates a network that becomes stronger with the increase of participators. This promotes redundancy, resulting in fewer points of vulnerabilities that computer hackers can exploit.
Blockchain possesses some remarkable characteristics. Each so called “trait” is like a distinctive layer of reinforcement. For example, you can trace the conception of Bitcoin along with BC back to the Cypherpunk Movement. The Cypherpunk Movement is made up of a coalition of activists who advocate widespread use of strong cryptography and privacy enhancing technologies as a path to social and political change. This movement dates as far back as the late 1980’s. When considering the intentions of a technology as groundbreaking as BC, it would be practical to acknowledge the tenets of the movement, especially since Satoshi Nakamoto released his Bitcoin whitepaper on one of the Cypherpunk mailing list. Before diving into the traits of blockchain, it is important to share the main tenets of the Cypherpunk Movement. Eric Hughes, in his Cypherpunk’s manifesto of 1993, said, “Privacy is necessary for an open society in the electronic age…we cannot expect governments, corporations, or other large, faceless organizations to grant us privacy…we must defend our own privacy if we expect to have any…cypherpunks write code. We know that someone has to write software to defend privacy, and…we’re going to write it.”
These principles give enormous insight into why blockchain was created and, therefore, an understanding of what it SHOULD look like in the future. In some form, BC is meant to be permission-less (accessible by anyone). This trait is what makes BC practically impenetrable. It’s open source, so each participant is a guard against intruders; hence, no rigorous access control is needed. Since BC thrives off of its open source nature, transparency is a direct result. BC is visible by any one. Trust is embedded into blockchain’s system of transactions, transactions that are immutable. Security is blockchain’s most distinguished trait.
Open source software has a history of being more secure than proprietary systems. Many argue that open source is more secure than its counterpart, because there are larger communities of developers that participate in the maintenance of the software. So far history has testified in favor of the integrity of open source technologies, with popular successful products like Linux, Firefox, WordPress, OpenOffice and many more open source products that defy the odds of prioritization, which also includes BC.
Areas of disruption:
Its important to stress how valuable and important BC technology is in the empowerment of democracy, decentralization, efficiency and security. Blockchain could be groundbreaking if it continues to promote decentralization.
As Don Tapscott from the Blockchain Research Institute said, “if we do this right, blockchain technology can usher in a halcyon age of prosperity for all.”
BC has the capability to relinquish intermediaries and establish a more reliable trust between consumers, and this is the true value of BC. Blockchain only gets more powerful with each participant, thus enforcing its inevitability to disrupt our disenfranchised system. It is highly possible that BC will significantly disrupt many industries in the coming 10 years. There are signs and current attempts at disruption. Some soon to be disrupted industries will include: financial services, transportation, music, media, and government.
Blockchain’s disruption in the financial service sector will give access to billions of people around the world, including those in third world countries who don’t have access to traditional banking. Bitcoin and Ethereum, along with many other cryptocurrencies, are allowing anyone to send money across borders almost instantly and with relatively low fees. BC can be used to create decentralized versions of peer-to-peer ridesharing apps. Think of the Uber application without the middleman. A smart contract will replace the conventional intermediaries. Consider the enormous potential in advocating a system like this; both car owners and users can capitalize off of this disruption. Startups working in this area include Arcade City and La’Zooz.
When you support musicians who are bound to major label distributors, you are really supporting the commercial label they are bound to. The relationship between an artist and their distributor is nothing short of debilitating. This dynamic is circumventing innovation, creative control, commission, and direct fan relationships. Blockchain has the power to reform the music industry by empowering independent artistry. Startups are coming up with ways for musicians to get paid directly from their fans, without compromising large percentages of commission to platforms or record label companies. Smart contracts are the catalyst for the detachment of corporate control. Smart contracts can help solve licensing issues, and better catalog songs with their respective creators. Mycelia and Ujo Music are two startups currently adopting blockchain-based solutions to the music industry.
News and media:
From YouTube’s demonetization campaign, to Facebook, Google, Twitter, and other main stream social media platforms, efforts at censorship, surveillance, and “fact-checking” monitoring strategies prove the news and media industries are in major need of viable independent and alternative media sources that grant users democratic control and user privacy.
Censorship and privacy protection are two major features that are undermined by the centralized nature of social media. One would believe social media platforms would guarantee censorship and privacy protection for its users. It is quite the contrary. Unfortunately, users trust corporations because who has time to read fine print? Through decentralizing corporate social media, blockchain technology assumes the transparent responsibility for censorship and privacy protection. Censorship and privacy protection are not the only things blockchain is trying to promote in the media industry. Blockchain companies are also sharing advertising profits with their users and rewarding users for creating content.
Ong.Social is a decentralized social dashboard that allows one to connect to an Application Programming Interface (API) of your other social media accounts. This method is the key to ultimate control over one’s content, social channels, privacy, and data encryption. As if the previous incentives were not enough, consider the fact that community members’ contributions receive monetary incentives that are rewarded through cryptocurrency. Steemit is a social news platform that runs on blockchain. It’s a platform that runs blogging and social network communities. Steemit has a system reputation, and as such it incentivizes community interaction that is rewarded in cryptocurrency.
Similar to the many emergent technologies, blockchain has its flaws that need to be addressed. Some of its early criticisms have been rectified, although there are still issues that need to be resolved and more that may surface. Most of the criticisms directed at blockchain have been associated with its application for cryptocurrencies like Bitcoin. Blockchain is most known for its financial services, but that is just one category of the many applications blockchain can serve when considering data transactions. With that in mind, here is a quick review of the general weak points of blockchain.
One of blockchain’s most spoken about flaws is the 51% attack. The 51% attack refers to a siege against a blockchain, most notably a blockchain service associated with the mining operation for cryptocurrencies like Bitcoin. Nevertheless, any blockchain service that requires a mining process is susceptible to a 51% breach. Miners are participants of an incentivized process of validating blocks of transactions that become the blockchain ledger. Hypothetically speaking, a 51% attack is a flaw where an individual person or organization has over half of the mining power, where that entity can have the power to corrupt the blockchain. This is no small feat, as it would require an enormous amount of computing power to obtain, let alone maintain, this type of control. It could cost mining pools millions to execute and maintain an attack of this magnitude for just one month, so the risk just is not worth the reward.
One challenging obstacle for blockchain is the inevitability of regulation. Blockchain thrives outside of the regulatory world, although if blockchain technology seeks future adoption, it will most likely have to adopt regulation. This may hinder innovation and jeopardize the anonymity blockchain promises to provide. Not all regulations will present challenges to innovation and privacy, but the likelihood of debilitating regulations are inescapable.
For example, there could be regulatory binding rules of validating e-signatures on the blockchain. Expect law enforcement demands for back doors, front doors, and golden keys, which may or may not impact blockchain. This is mostly a concern with commercial (privatized) networks that source their own blockchain operations. Modern day currencies have always been issued, regulated and manipulated by governments until the creation of cryptocurrency. This, unfortunately, may come to an “end” when government regulations are applied. Government regulations for cryptocurrencies like Bitcoin may require businesses to attain a license that may cost $5,000 and then an annual fee of $2,500 to participate in what is called “Digital Currency Business Enrollment Program.” However, this technology was not created for the cozy interaction with government, it was created for disruption, and sovereignty.
As long as fossil fuels are the primary source of our energy, BC presents an environmental concern. BC records are stored across a decentralized network of participant’s computers. This practice actually reduces the need for concentrated data centers that requires high levels of energy consumption. Where blockchain presents an energy concern is in the “proof of work” or what is called a trustless and distributed consensus system, which requires some rigorous computations to be completed, in order to validate the transactions on the blockchain. There maybe some solutions to this problem, but until sustainable ways of producing energy are implemented this may pose an environmental concern.
I practice a healthy dose of skepticism, so I like to analyze ideas from a dialectical point of view. As a matter of fact, in the process of writing this paper I held different positions on blockchain, eventually coming to a neutral standpoint. Blockchain is one of the most exciting and complicated technologies of our generation. Blockchain’s implementation is years away from widespread adoption. We are witnessing blockchain in its incubation stage with many different players from across the centralized and decentralized spectrum. Both legal and “black” or should I say free market competitors are competing for the future of blockchain’s mass appeal. On one hand, the commercial industry is looking to tame the rogue, disruptive and rebellious technology, and in the other hand the open source community is looking to establish a foothold in blockchain’s decentralized nature.
While I hold uncontrollable excitement for blockchain’s potential, I hold the same amount of concern. This is mainly because I try to be a reasonable individual. My concerns range from potential regulation to the digitization of data. Despite my opinion on this technology, the fact of the matter is that blockchain is here and there is no turning back the clock on innovation. Blockchain organizations are garnering historic levels of crowd funding, some organizations raising figures in the double-digit millions in the span of one month. Clearly, I am not the only person who sees potential in blockchain. Perhaps this synopsis encourages you to invest into a blockchain that is open source, decentralized, disruptive, deregulated, and an empowering vehicle of a more prosperous future.
Mr. Robot (Bitcoin)