Why Blockchain Will Change Everything
Right now we’re in gridlock. The human race wants to move forward with the Internet of Things — to really push the boundaries of what we can do with our digital connectivity and possibly create an entirely new (and hopefully cooperative) world — but a few major problems stand in the way. First, our economic, legal and political systems are practically stuck in the Stone Age, using paper contracts and proof of identity in a slow-as-sludge bureaucracy. Second, history online (and on paper) is far too easy to delete, and “fake” information is abundant, making it difficult to know exactly what happened and when. Third, cybercrime is out of control, with companies and individuals simultaneously spending a fortune on security and losing their valuable currency (data, information, money) to hackers every day, with damages set to hit $6 trillion by 2021. And blockchain can help to solve these problems, which is why it’s so exciting.
Blockchain, as we think of it today, was invented by the anonymous person(s) known as Satoshi Nakamoto in 2008 to make Bitcoin possible. The digital currency itself was an experiment, but it’s the underlying technology that’s truly valuable. And while no one really knows who Satoshi Nakamoto is, this technology has been a long time coming. In fact, you could trace its beginnings to names you might already know. These would be the cypherpunks, including Jacob Applebaum, who created the anonymous web browser known as Tor; Bram Cohen, who created BitTorrent, a distributed file-sharing platform; and Julian Assange, the founder of Wikileaks, which utilizes a secure drop box for journalistic sources and government leakers. Ironically, these extremely talented cryptographers, thinkers, programmers and mathematicians — in their quest to change the world and take third-party trust out of the equation — have ultimately made it possible for traditional industries such as finance, banking, insurance and health care to secure their data and save money through blockchain. Funny how that works, huh?
According to a 2017 FinTech report from PricewaterhouseCoopers, over 77% of financial service firms are expected to adopt the blockchain by 2020, and 50% of large FinTech firms identified blockchain as the most relevant emerging technology to invest in within the next year. This technology is likely to change how we manage our digital identities, transfer funds, pay for products and services, and keep our valuable information and histories secure. And major companies applying blockchain to their current systems and processes expect to not only save money but also make gains in terms of transparency from a regulatory perspective. And that’s not all.
Blockchain could make it easier to consume and pay for the content you enjoy online. The Brave Web Browser is an excellent example of this, making it possible to pay publishers based on your consumption of their content. Blockchain could also be used to create a reliable digital identity system without relying on government-issued paperwork. It could revolutionize supply chains, making it possible to verify where a company’s product actually comes from, as well as streamline the shipping process by reducing costs and friction. The music industry could use it to enforce copyrights and ensure that artists get paid. And Sierra Leone recently proved that this technology can even be used for voting, ensuring complete transparency through a public ledger validated by authorized individuals. This is why some are predicting that the changes coming with blockchain technology will be “as large as the original invention of the Internet.”
Speaking of which, how the hell does blockchain actually work? The simplest explanation oddly enough matches the name: it’s a chain of “blocks” which is continuously growing. These “blocks” hold valuable data that has been encrypted and secured within the structure of the chain itself. And once a block has been closed on the chain, it is extremely difficult to change due to the nature of the code and how it all links together. In addition, everything is decentralized and compartmentalized, meaning that your information is spread out across a massive tapestry of interwoven data, and the more threads (or chains) added to this tapestry, the more complex (and secure) it becomes.
Plus, with a vast computer network constantly maintaining this complex system, the blockchain is able to check itself for weaknesses and attacks. Think of the chain as a history, and that history is always being maintained and preserved. If anyone tries to change that history, that action would instantly be recognized as altering the chain. As for the people who own the data? Blockchain enables those with the proper keys to verify their identity and access what’s theirs — and nothing else. This system makes blockchain extremely reliable for securing data. But there’s another problem it solves in terms of cybersecurity: how we handle our sensitive information to begin with.
Let’s say you want to find buried treasure. The map is being held within a certain room. You somehow break into that room, only to discover the map has been shredded into millions of tiny pieces, and each piece has been stored in a secure mini-vault — millions of them. In order to get the map, you’d have to break into each and every mini-vault and then piece it all together. It’s just too much work. You’d have to really, really want that booty.
Of course, right now stealing someone’s valuable data and/or information is surprisingly easy, even if you have the best cybersecurity around. You could have walls built around your data, moats filled with sharks — complete with laser beams on their heads — but hackers could still break in. And in that case, since most individuals and corporations haven’t compartmentalized or decentralized their valuables, a single vault is all a hacker would need to crack open to get the goods.
That’s partly why hackers were able to steal information from some 117 million LinkedIn accounts in 2012, the financial information for some 110 million Target customers in 2013, credit card data from more than 50 million Home Depot customers in 2014, and all the juicy studio gossip from Sony Pictures Entertainment that same year. It’s also partly why Equifax got breached in 2017, exposing the valuable information of some 143 million consumers. And this is just a handful of examples.
The problem is that we’ve always treated the internet like a bank, storing all kinds of sensitive information in a single vault without a thought for the consequences. And like naive children, we trusted the internet to keep it safe, even though we failed to encrypt our information or even lock it with a private key. But we need to remember that the internet works because it is open, and it’s our responsibility to close our end points. Why? Because no one is in charge of the internet — not even the creators of the network themselves. No one is going to protect you or your data from fellow users. And while that’s great on the one hand, it’s really bad for business on the other.
How can your health records go online if they can’t be kept safe from prying eyes? What about your insurance policies? Your dating profiles? Your social security information? Your legal records? We foolish troglodytes have been playing with fire, and many of us have already gotten burned. What blockchain does is reinvent how we store and protect data online by empowering users to protect themselves, rather than trust an open network or even human nature. Sure, that means more personal responsibility, but which would you rather: invest in the blockchain now, or risk losing everything later? Seems like a no-brainer to me.