Last month, as part of the Music City Legal Hackathon, which I did not participate in, I sat in on a blockchain bootcamp. I’m tech savvier than my parents, for sure, but I know my limits, and blockchain was most certainly beyond them. Blockchain? As in bitcoin, right? That’s about as far as my knowledge went, and even that I was wrong about. Here’s what I learned about blockchain, from two experts who know a lot about blockchain: Jack Shaw, a CEO, founder and executive director of the American Blockchain Council, and Tom Brooke, a lawyer and legal hacker (his term, not mine) from Charlotte, North Carolina.
First of all, blockchain refers to a distributed ledger technology. Its databases are distributed, which means that they don’t connect to any single server, but lots of servers that could be located anywhere in the world.
A blockchain is basically an ordered list of records, or blocks. Each block has a timestamp and links back to the block that came before it. In Shaw’s words, “a blockchain is the infrastructural glue that transforms a series of points in an integrated whole.”
What makes blockchain such a compelling technology with myriad applications are a couple of things: First up, security. It’s not that a blockchain couldn’t be hacked, it’s that it would be very, very, very, very, very difficult, and nearly impossible to do, for a couple of reasons: the blockchain’s perpetual link back to its previous blocks requires near-constant synchronization. According to Shaw, nodes synchronize every 10 minutes, so, theoretically, a hacker would have about 10 minutes to change every single block in the blockchain. But then these theoretical hackers have already run into problem no. 2, which has to do with the geographical distribution of the servers on which the blockchain exists: They’re not in one place. That’s why no blockchain has ever successfully been hacked. “Blockchain raises the bar on security,” Shaw explained.
The second thing that makes blockchain so compelling is the collaboration aspect. Blockchain allows for shared information without the need for an intermediary or stored information. A blockchain records the time, as well as the identity of the collaborator who created a new block. And only the owner of the block can alter that block. Since the event I attended was part of a legal hackathon, you can imagine that most of the applications these speakers talked about were legal (i.e. smart contracts).
But they did point out that blockchain technology is “threatening” to disrupt most every other industry, as well.
“For example, your smart thermostat might communicate energy usage to a smart grid; when a certain number of wattage hours has been reached, another blockchain automatically transfers value from your account to the electric company, effectively automating the meter reader and the billing process,” explains Bernard Marr in this Complete Beginner’s Guide to Blockchain on Forbes.com.
“Or, it might be put to use in the regulation of intellectual property, controlling how many times a user can access, share, or copy something, he continues. “It could be used to create fraud-proof voting systems, censorship-resistant information distribution, and much more.”