In short, No. Blockchain and cryptocurrency aren’t one and the same, crypto (as the cool kids call it) does use blockchain technology though.
It’s me, so of course let’s check out its history and journey back to the origins of this technology then bring it back to now and have a gaze into the possible future…
The concept of blockchain first emerged in the late 70’s/early 80’s through the work of a bloke called David Chaum who conceived the idea and did his PHD on it. There are lots of other aspects to his work and career as well but if we fall down that rabbit hole we’ll be here all day and we haven’t even got into the meat of things yet! If we really wanted to ‘go deep’ then the concept of ledgers goes back to the 15th century (double entry book-keeping which is still a thing today of course) but if we have too many side quests you’ll have to bequeath finishing this blog to your descendants as you won’t live long enough to finish it yourself! 😂
Further work on how to secure and protect the data ‘blocks’ linked in a chain, carried on throughout the 90’s with chains of blocks being controlled ‘centrally’ by an authority such as a company or a set of individuals and centralised blockchains are still used today.
A couple of examples of centrally controlled blockchains are private blockchains. The diamond merchants De Beers use it to track their diamonds so that they can assure that they haven’t either been tampered with or that they aren’t ‘blood diamonds’ (i.e. diamonds from conflicts or crimes). Walmart use a private centralised blockchain to trace and monitor their supply chain. Who knew eh? I didn’t until now that’s for sure.
Once we get into the 2000’s, the design of these chains of related data blocks was further developed so that as well as having a centrally controlled option, a decentralised version was now a thing.
So, if one authority isn’t the boss, how does that work?
Well, again, without taking a massive detour into the history of distributed computing which is all tied up with how the Internet operates, essentially it’s computers sharing resources and information in pursuit of a common goal. If you have ever downloaded any films or software from a dubious source (which I am of course sure you haven’t) that is the same concept. If you fancy a deep dive into all of that then let me know and I’ll cue it up for a future blog!
With the above noted and parked in your mind, let’s get back to de-centralised blockchain and how that works specifically.
Decentralised blockchain is a digital shared ledger that records transactions on multiple computers in a secure and transparent manner.
Anyone with internet access can sign on to a public blockchain (there are different types of blockchain remember but again let’s park that for now) and become an authorised ‘node’.
Whoa, hang on, how is that secure?! Any old Sam Jones can get involved?! OK so before we run for the hills, the information in the blocks that contain transaction data, once added to the digital chain, can’t be altered i.e., if you make a mistake you need to add another transaction to the chain that corrects it, you can’t alter the one you have already added. If you are familiar with the term ‘contra-entry’ from talking to your Accountant that’s basically what we are talking about.
Each block of data in a blockchain will include;
- The version number of the block
- A string of characters from the last block that was added called a hash (and no we aren’t getting into that here either but that doesn’t mean you can’t get in touch with me and AskMrsWatson of course )
- A code that is generated from the transaction data
- A timestamp of when the block was created
- And finally, a random string of characters
The more people that join this digital conga (that’s given me an image of little blocks with stick arms and legs dancing in a chain like drunk guests at a wedding), the more complex the chain gets and the safer it becomes as there is no single point of failure and with all these blocks being reviewed by everyone who has added blocks in the chain it becomes increasingly harder to compromise the longer the chain (unless the criminal is controlling more than 50% of the total computing power). It’s therefore pretty secure.
Hopefully the above has helped distinguish the difference between blockchain and cryptocurrency in that blockchain is the technology and cryptocurrency is one of the ways it can be used to record transactions.
So what does the future look like?
The way the Internet changed our lives completely, blockchain could very well change beyond recognition how (or indeed if) we still use banks, how we contractually and transactionally buy and sell products and services including cars, houses, legal and insurance (it’s already happening but might not be on your radar yet). If you have ever thought about the Internet and said ‘I wish I’d known more earlier’ then learn more about blockchain and cryptocurrency, that would be my advice. Even if you aren’t interested in technology, if you are in the dark, those who wish to exploit you for that won’t be…..