The Missing Piece of the Internet
In describing the Internet age, Walter Isaacson borrows a phrase from the poet William Wordsworth: “Bliss was it in that dawn to be alive.” In the two decades since its public inception, the Internet has remade the world of ideas and commerce, sparked revolutions, destroyed industries, and creatively remade them. Rooted in the Internet’s ability to disperse information quickly and vastly, the Internet era has empowered ordinary people and wrestled influence away from traditional gatekeepers.
And yet, assets of value — such as currency, licenses, votes, or titles - have faced a unique difficulty. These assets require greater care. Unlike informational content, each asset must be wholly transferred from one owner to another, not duplicated in the process of distribution. This demands greater security and transparency — a promise that each penny will be transferred and every vote counted. Otherwise, they lose their worth and the system crumbles. Our collective solution so far has been to rely on institutions to act as trusted intermediaries for holding and transferring these assets. Banks ensure that each side upholds the terms of a transaction; governments certify votes and public records. But what if they are not reliable guarantors? Banks are slow and, like other intermediaries, prone to hacking. Government malfeasance and corruption is a fact of life for far too many people around the world.
The Innovation of the Blockchain
The innovation of the Blockchain begins with the fact that no central entity owns or controls it. Data is stored across a global network of computers. When we put an asset of value onto the Blockchain, these transactions are cryptographically linked in data blocks, providing a complete history for every piece of data in the system. Each transaction on the record is digitally signed so we know who submitted it to the network. Avery asset can also be directly transferred in a secure, fast, and transparent way.
The Blockchain provides unprecedented data security. The Blockchain system self-guarantees the authenticity of all the data within it, eliminating the need for trust in other parties. This prevents double spending, falsified asset ownership, and other forms of data tampering. Whenever a new ‘block’, or a bundle of transactions, is created, it is added to the Blockchain, creating an increasingly long list of all the approved transactions since the creation of the asset on the network. An industry of ‘miners’ applies a digital seal, known as a hash, to each new transaction block. It confirms that this block — and every block after it — is legitimate. This makes it exceedingly hard for any one actor to threaten the integrity of records.
The Blockchain is highly transparent; a record of all transactions is permanently available. All users on the system can see in real time as new transactions are added to the database. Meanwhile, individual privacy is protected without jeopardizing the legitimacy of asset transfers since users work under numerical pseudonyms. Since assets in question are verified by the system through previous transaction blocks, trust is established without the need for personal information sharing in advance of a transaction. This is a powerful breakthrough, protecting sensitive information while facilitating accountability.
The Blockchain is also entirely auditable. Every time a new transaction is added to the record, it is also cryptographically linked to every previous transaction Therefore, the Blockchain ledger cannot be altered once it is verified. Since the record is both transparent and uncorrupted, a trail of digital breadcrumbs allows for monitoring and auditing of all the data within the network.
The Future of Blockchain
In the past year alone, applications for Blockchain technology in the finance sector have attracted over $1 billion in investment. Yet the potential of Blockchain technology goes far beyond finance. With the right partners and support, Blockchain can be used to expand opportunity, the rule of law, transparency, and reduce corruption and fraud. Pilot projects are already starting to use the Blockchain for land titling, storing health records and vital statistics, voting, and other critical social and political functions. We believe that it has the potential to reshape democracy and development worldwide.