How can two people, say one in China and another in Australia who haven’t met each other or even know anything about each other engages in a commercial transaction in the absence of a credible third party? How can we tell that a certain unit of digital cash has not been expended without the presence of a central intermediary? How can we get two people to work together even if they don’t trust each other?
These were some of the questions that best describes the state of affairs in the digital cash realm at the time the Bitcoin white paper was published. For decades, the actualization of digital cash was stalled by these problems which can be summed up into the double spend problem and the Byzantine generals’ problem. These two problems made it difficult for peer-to-peer digital cash systems to reach fruition. Then a revolutionary technology showed up: an error proof, authentic and indelible way of keeping records – the blockchain: a list of records linked by cryptography. Blockchain solved the Byzantine generals’ and double spend problems via a distributed and decentralized ledger based on algorithmic self-policing.
Since blockchain is a giant ledger maintained by thousands of “miner accountants”, the responsibility for maintaining authenticity is distributed across a giant network. The implication of this is that information stored on the blockchain cannot be easily altered. In fact, it is almost indelible. To alter the information stored on the blockchain, more than half of the computers on the network would have to be compromised. And it’s hard, almost impossible to perpetuate a scheme at that level if you consider the fact that the computers powering a blockchain belong to individuals scattered across different countries and sometimes in different continents. To compromise a mega blockchain (like Bitcoin), you’d have to gain access to at least half of the computers that power it. Firstly, you would have to know at least 50% of the computers powering it and secondly, you need access to those computers; a difficult, almost impossible task (in the case of really large blockchains). A blockchain will continue to be resistant to attack as long as the majority of the network is controlled by nodes not cooperating to undermine it.
The blockchain is going to prove just as revolutionary and disruptive as the internet. The impact of blockchain in finance is just the beginning. This impact will spread to other areas of society and usher in an era of decentralization. Since society is a giant matrix of transactions, most of our dealings with each other are basically transactions. Hence an authentic system such as the blockchain will disrupt many facets of our lives. But there’s another fact.
If blockchain is a record of transactions in the most authentic way possible and society is a giant matrix of transactions, then we are inching closer to a major technological revolution.
The relevance of blockchain is at parallels with the internet. Just as the internet ushered in peer-to-peer exchange of information, blockchain will democratize the peer-to-peer exchange of value on a large scale.
Abraham Jimoh is a tech enthusiast with an almost maniacal interest in emerging technologies with disruptive potential.