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| # Blockchain | ====== Blockchain ====== |
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| <caption> | <caption> |
| _Lots of videos out there introducing blockchain. This is a good one._ | _Lots of videos out there introducing blockchain. This is a good one._ |
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| </caption> | </caption> |
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| </WRAP> | </WRAP> |
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| Put another way, it’s a distributed database (or ledger), with cryptography built in, so that anything written to that database is secure, and can be trusted, without having to trust individuals or institutions. Bitcoin and other [cryptocurrencies](http://lowimpactorg.onyx-sites.io/lowimpact-topic/cryptocurrencies/) are not blockchains – they’re based on blockchain technology. | Put another way, it’s a distributed database (or ledger), with cryptography built in, so that anything written to that database is secure, and can be trusted, without having to trust individuals or institutions. Bitcoin and other [cryptocurrencies](/cryp/cryptocurrencies) are not blockchains – they’re based on blockchain technology. |
| ### History | ### History |
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| </figure> | </figure> |
| </WRAP> | </WRAP> |
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| ## What are the benefits? | ## What are the benefits? |
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| Blockchain transactions are transparent, immutable, immediate and irreversible. They allow transactions to occur securely between people who don’t know or trust each other. This is in contrast to transactions in the conventional (fiat) economy, where mediation between parties is required for trust; or a [mutual credit](http://lowimpactorg.onyx-sites.io/lowimpact-topic/mutual-credit/) economy, between known and trusted participants (payments in cash are immediate and irreversible too, but come with a whole new raft of logistical problems). | Blockchain transactions are transparent, immutable, immediate and irreversible. They allow transactions to occur securely between people who don’t know or trust each other. This is in contrast to transactions in the conventional (fiat) economy, where mediation between parties is required for trust; or a [mutual credit](/mucr/mutual_credit) economy, between known and trusted participants (payments in cash are immediate and irreversible too, but come with a whole new raft of logistical problems). |
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| Decentralisation: people can transact with each other without middlemen like banks. This removes the extra cost of banks, and helps to disperse some of the massive concentration of money in the banking sector. This is good for democracy too. As Supreme Court Justice [Louis Brandeis](https://en.wikipedia.org/wiki/Louis_Brandeis) said: ‘We can have democracy or we can have great wealth concentrated in the hands of a few, but we can't have both.’ | Decentralisation: people can transact with each other without middlemen like banks. This removes the extra cost of banks, and helps to disperse some of the massive concentration of money in the banking sector. This is good for democracy too. As Supreme Court Justice [Louis Brandeis](https://en.wikipedia.org/wiki/Louis_Brandeis) said: ‘We can have democracy or we can have great wealth concentrated in the hands of a few, but we can't have both.’ |
| Because blockchain is distributed technology, it means that we don’t have to look to a central authority for trust. This has a lot of potential – perhaps for distributed governance, so that we don’t need centralised authority at all – removing the risk that that centralised power be seized by a totalitarian regime, or bought by concentrated wealth (actually, this one is less of a risk than a reality in today’s world). This was a strong motivation for the blockchain pioneers. | Because blockchain is distributed technology, it means that we don’t have to look to a central authority for trust. This has a lot of potential – perhaps for distributed governance, so that we don’t need centralised authority at all – removing the risk that that centralised power be seized by a totalitarian regime, or bought by concentrated wealth (actually, this one is less of a risk than a reality in today’s world). This was a strong motivation for the blockchain pioneers. |
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| No-one can ‘own’ the blockchain technology – it’s [open source](http://lowimpactorg.onyx-sites.io/lowimpact-topic/free-open-source/) (and can be found in [GitHub](https://github.com/bitcoin/bitcoin), an open source code repository). It’s about the freedom to know, rather than to own. | No-one can ‘own’ the blockchain technology – it’s [open source](/foss/open_source) (and can be found in [GitHub](https://github.com/bitcoin/bitcoin), an open source code repository). It’s about the freedom to know, rather than to own. |
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| Blockchain can help prevent fraud. The [Honduran land registry](https://uk.news.yahoo.com/honduras-build-land-title-registry-using-bitcoin-technology-162701917.html) was put on the blockchain to stop gangsters making fraudulent claims on farmers’ land, and politicians claiming beachfront properties. [Estonia](https://coincentral.com/estonia-e-residency-blockchain-governance-explained/) is doing some funky things with the blockchain too, such as blockchain-registered digital passports. There have been scams and thefts involving cryptocurrencies, but this isn’t the fault of the blockchain – it’s to do with errors in the writing of applications. | Blockchain can help prevent fraud. The [Honduran land registry](https://uk.news.yahoo.com/honduras-build-land-title-registry-using-bitcoin-technology-162701917.html) was put on the blockchain to stop gangsters making fraudulent claims on farmers’ land, and politicians claiming beachfront properties. [Estonia](https://coincentral.com/estonia-e-residency-blockchain-governance-explained/) is doing some funky things with the blockchain too, such as blockchain-registered digital passports. There have been scams and thefts involving cryptocurrencies, but this isn’t the fault of the blockchain – it’s to do with errors in the writing of applications. |
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| <caption> | <caption> |
| A closer look at how blockchains work. | _A closer look at how blockchains work._ |
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| </caption> | </caption> |
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| A downside is that the ‘proof of work’ consensus algorithm used by Bitcoin, Ethereum and other blockchain-based currencies requires an [awful lot of energy](http://lowimpactorg.onyx-sites.io/how-much-electricity-does-bitcoin-consume-and-what-are-the-alternatives/). Some cryptos are now moving to an algorithm called ‘proof of stake’, which doesn’t require huge amounts of number-crunching, and requires a tiny fraction of Bitcoin’s energy use. Examples include [EOS](https://eos.io/) and [FairCoin](https://fair-coin.org/); but there are technical challenges with this kind of algorithm, which is why they’re not so prevalent. | A downside is that the ‘proof of work’ consensus algorithm used by Bitcoin, Ethereum and other blockchain-based currencies requires an [awful lot of energy](http://lowimpactorg.onyx-sites.io/how-much-electricity-does-bitcoin-consume-and-what-are-the-alternatives/). Some cryptos are now moving to an algorithm called ‘proof of stake’, which doesn’t require huge amounts of number-crunching, and requires a tiny fraction of Bitcoin’s energy use. Examples include [EOS](https://eos.io/) and [FairCoin](https://fair-coin.org/); but there are technical challenges with this kind of algorithm, which is why they’re not so prevalent. |
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| </WRAP> | </WRAP> |
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| Author Melanie Swan, in her book, [_Blockchain: Blueprint for a New Economy_](http://lowimpactorg.onyx-sites.io/categories/blockchain/books), describes Blockchain 1.0 – for cryptocurrencies; Blockchain 2.0 – for financial applications on the blockchain (not just crypto, but any kind of distributed financial activity, like share dealing, token exchanges etc.); and Blockchain 3.0, on which any applications can be run, beyond finance. [Ethereum](https://ethereum.org/) is an example of Blockchain 2.0 / 3.0, with an associated cryptocurrency called Ether. It’s different from Bitcoin and other cryptos in that you’re able to run any application code, in theory to do anything you like, on the Ethereum blockchain itself. | Author Melanie Swan, in her book, [_Blockchain: Blueprint for a New Economy_](/bloc/blockchain), describes Blockchain 1.0 – for cryptocurrencies; Blockchain 2.0 – for financial applications on the blockchain (not just crypto, but any kind of distributed financial activity, like share dealing, token exchanges etc.); and Blockchain 3.0, on which any applications can be run, beyond finance. [Ethereum](https://ethereum.org/) is an example of Blockchain 2.0 / 3.0, with an associated cryptocurrency called Ether. It’s different from Bitcoin and other cryptos in that you’re able to run any application code, in theory to do anything you like, on the Ethereum blockchain itself. |
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| She, and other enthusiasts, see blockchain as the solution to all the world’s problems. We wouldn’t go that far, but we can see its benefits in lots of situations. For example, it’s often claimed that most humanitarian aid or charity donations end up in the wrong hands because of corruption. It’s difficult to prove or disprove, but it would be clear whether this were true if transactions were carried out on a blockchain. | She, and other enthusiasts, see blockchain as the solution to all the world’s problems. We wouldn’t go that far, but we can see its benefits in lots of situations. For example, it’s often claimed that most humanitarian aid or charity donations end up in the wrong hands because of corruption. It’s difficult to prove or disprove, but it would be clear whether this were true if transactions were carried out on a blockchain. |
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| <caption> | <caption> |
| Ethereum explained, including differences from Bitcoin and relationship to blockchain technology. | _Ethereum explained, including differences from Bitcoin and relationship to blockchain technology._ |
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| </caption> | </caption> |
| </WRAP> | </WRAP> |
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| For the uninitiated, if you’ve been advised that a blockchain is just the thing you need for your business (for example), better talk to a blockchain developer. It’s a new and growing industry. But you can have a go at using [cryptocurrencies](http://lowimpactorg.onyx-sites.io/lowimpact-topic/cryptocurrencies/) without so much technical expertise. | For the uninitiated, if you’ve been advised that a blockchain is just the thing you need for your business (for example), better talk to a blockchain developer. It’s a new and growing industry. But you can have a go at using [cryptocurrencies](/cryp/cryptocurrencies) without so much technical expertise. |
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| If you’re of a geeky persuasion, and think you’d like to work as a blockchain developer, [here’s a good place to start](https://web3js.readthedocs.io/en/v1.2.7/). There are courses, but it might be better to learn by doing. You could volunteer on open source projects – contact Steve (below), who is often looking for volunteers. | If you’re of a geeky persuasion, and think you’d like to work as a blockchain developer, [here’s a good place to start](https://web3js.readthedocs.io/en/v1.2.7/). There are courses, but it might be better to learn by doing. You could volunteer on open source projects – contact Steve (below), who is often looking for volunteers. |
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| ## Further resources | ## Further resources |
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| | - [Faircoin](https://fair-coin.org/) - proof-of-stake coin |
| | - [Silicon Angle](https://siliconangle.com/2015/05/17/honduras-to-use-bitcoin-blockchain-tech-to-run-its-land-registry/) - how Honduras uses blockchain to run its land registry |
| | - [What is the Blockchain](https://pixelprivacy.com/resources/what-is-the-blockchain/) - intro to blockchain in plain English |
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| ## Specialist(s) | ## Specialists |
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| **Thanks to [Dr Steve Huckle](https://glowkeeper.github.io/) for information.** | |
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| [Dr Steve Huckle](https://glowkeeper.github.io/): I'm an accomplished developer, educated to [Doctoral level](https://glowkeeper.github.io/PhDWorks/), my [thesis](https://glowkeeper.github.io/PhDWorks/assets/docs/sHuckleThesis.pdf) asked whether blockchains can help overcome some of the most urgent problems facing humanity. In short, my conclusion was that they could, but it's impossible to solve all of humanity’s issues by diversifying technical operations; we need to change political, economic, and cultural goals, too. | |
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| _Date on Lowimpact:2020-05-10_ | |
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