Exploring The Curious Realm Of Blockchain TechnologyNovember 29, 2017
By Joe Rstom, Interactive Director
Over the past few days, we’ve seen an unprecedented rise in the value of the largest cryptocurrencies in circulation. Most notably, the original Bitcoin has surged over a thousand percent this year. I don’t want to discuss price or valuation of these currencies as a commodity, but rather I’d like to shed some light on what they are, how they work and where they might be heading as a technology.
Whenever the topic of bitcoin comes up among family or friends, most people ask: “What is it?”. Simply put, bitcoin is a specific “brand” of blockchain technology. Blockchain is a combination of three pre-existing technologies: An encrypted private key, a peer-to-peer network and a protocol. The protocol is what is unique to each “brand” of blockchain.
When these three technologies combine, it provides a system of anonymously providing access to a specific portion of a database that exists in the cloud. Essentially, the entire world maintains the ledger, but requires your encrypted key to access your portion of the ledger. The network then provides authorization of the access, and the protocol confirms transactions or receipt of access & authorization. The unique protocol is where innovation happens and where use-cases are put to the test.
Okay, did I lose you? It’s all right, it’s confusing to me as well!
Imagine you have a safe-deposit box at a bank. You have a unique key to that box. You walk into your bank and put 2 bars of gold in the box. As you’re walking in and out of the bank, your friend Jim authorizes your access to your box and records your entrance/exit, but they didn’t see exactly what you put in your box. Blockchain takes this concept and distributes copies of your box so that the box exists in every bank, everywhere in the world. When you take out 1 bar of gold, that exact bar disappears from every copy of your box. Additionally, your friend Jim never saw you enter the bank.
This is a horribly simplistic analogy and not entirely accurate, but you get the gist.
Beyond the basic application of allowing value to be stored as a commodity, there are many technical use cases for blockchain:
- Tokenization: Associating physical items with digital items, not unlike QR codes but more secure.
- Decentralized data management: Cloud-based data storage, but again, infinitely more secure.
- Personal identification: No more Social Security numbers, but rather unique/changing encrypted keys.
- Privacy: The personal data corporations keep for/about you can now be protected (re: Equifax breach, or medical records)
- Smart contracts: Legal agreements can have digital “collateral” or be sent/held securely so both parties are protected.
- Inventory management: Large-scale distribution networks can utilize more complex logistics without errors.
- Transportation coordination: Fleets of trucks or rental vehicles can be tracked in an automated way.
This is just a short list to give you an idea of where blockchain technology is heading. Developers are innovating this technology every day in big ways, and it will affect everyone in the world, including those of us in marketing and advertising. We’ll soon be able to pair audience interactions with blockchain to do simple things like verify a purchase or even an entire physical/digital experience. More complex things, like crowdsourcing content, messaging systems and voting mechanisms in broader contexts, will be made possible.
It’s exciting to think about where this will take our society and our work lives. There’s no doubt blockchain technology will enter your life soon, whether you’re ready for it or not!