Blockchain, the new mysterious platform riding on the coattails of bitcoin
We recently had a visit from Vitalik Buterin, the cofounder of the Ethereum foundation. He lead us through some particularly illuminating thoughts on how he thinks about blockchain, so we thought it’d be a good chance to write a long article delving into how blockchain works, and why it’s still compelling.
I think what intrigues me most about Bitcoin and Blockchain technologies is how hard of a mathematical problem it is to solve. When my mind tries to wrap its head around the ideas behind the blockchain, I remember grappling with the idea of general relativity and the idea of quantum mechanics. Pieces of the whole make sense to me, but the whole still obscured me.
And in the end, it’s examples like Einstein’s Twin Paradox and Schrödinger’s Cat that give me the picture my brain needs to conceptualize these world changing yet difficult theories. They’re mathematical thought experiments.
The same is true for blockchain and the Byzantine General’s problem. Byzantine’s General’s problem or Byzantine Fault Tolerance is a mathematical thought experiment. Understanding the general’s problem is helpful for understanding blockchain.
The Byzantine General’s problem
Imagine 10 generals working together to attack a city together. Each general has 100 soldiers. So that’s one thousand soldiers. The city has 700 defending soldiers inside.
But there are a few key problems that the attackers will face:
- Number of forces
The key is all the generals have to attack to outnumber the city forces. But if 4 generals are traitors together, they might pretend to attack but actually hold back. That leaves 6 generals. They’re outnumbered. They’ll die. They also have to make sure they all agree on the same time to attack. This is especially constrained by the fact that back in the Byzantine era, they had to send messages via horse messenger.
So the whole thought experiment boils down to: how can you get everyone to agree on the same time to attack while “traitor-proofing” the agreement? This was thought to be mathematically impossible until blockchain came.
What blockchain does
Now, let’s assume we’re still constrained by the above: messengers, traitors, soldiers, etc. But now each general has a computer. The generals don’t have the internet though. Just USB’’s they can hand off to their messengers. And the message still has to go from one general to the next in a row.
Each new message to a new general must have the old message within it, with the use of a computer. Add to this that it takes only 10 minutes to generate a new message. This makes it very hard for any general to fake a new message and embed the wrong time to attack. I think Doug Campbell puts it best:
Every General has got no more than 10 minutes to provide the next General with something that would take more than 10 minutes to fake if they were trying to be dishonest. If they can’t deliver it within 10 minutes, everyone knows they’re dishonest and ignores them, rendering their attempts to mislead others useless.
In other words, blockchain prevents anybody passing around counterfeit information. Unfortunately, it doesn’t solve the problem of one or two generals refusing to attack at the time of attack in the message chain, but it’s a thought experiment, not reality.
A world without blockchain
Some of us have been in the situation where our emails have been hacked or our social media accounts were hacked. Someone can assume your identity and hijack you. A strong case for blockchain is rating systems.
Ecommerce sites, sharing economy sites, and even rating sites like Yelp are rife with false ratings from users attempting to juke the results or spam or just nefarious activities. And companies have few ways to combat this. Fradulent users can easily hide their IP addresses and create technical instances which make it very easy to repeatedly rate an item online.
Imagine that you are Yelp, and you’re getting tons of fake negative reviews on all the Chinese restaurants on the site. It would be very damaging for the site, and Yelp deals with this by using Facebook and Google or email as passageways to create a new user. Now, what if Yelp didn’t have to depend on them? What if they oculd verify peoples’ identities without being married to the dominant platforms in the world? This is where blockchain.
Now, this gives us a better picture of where blockchain is powerful, why it is so disruptive, and how it could reorganize the internet.
At the end of the day, what this means for security, software, and the world is an online way to theoretically log and monitor change safely, securely, and publicly.
Imagine if a local bank in a small town made its ledger public. Everyday, people could make transactions but they could also see what time other people made transactions throughout the day (they wouldn’t see who did, but they’d know that other people did, and how much was transacted). And since everyday people are taking a look, they are verifying that the ledger is still correct. They can only add to it, they can’t edit or erase it. Everyone’s writing in pen.
This also makes the data verification decentralized. This is an oversimplification, but it gets to the heart of why blockchain is potentially so groundbreaking.
Now, a decentralized online ledger has endless applications. It can be used to track transactions and interactions at a highly abstract level. Here’s some examples:
- Trading stocks, money, etc.
- Unhackable digital identification (Voting, Access systems, etc.)
- Digital storage systems
- Digital asset signatures
- Smart contracts
- Internet of Things
- It can even be used to generate random codes gambling!
The hope here is that blockchain would provide a fundamentally more secure internet that developers can build new solutions on. And most things like digital identity, transactions, and digital assets are foundational technologies of the internet. It’s foreseeable, as blockchain gets picked up more and more, that blockchain will become one of the steady rockbeds of our digital life in the future. It’s just not going to make it in the way people thought with Bitcoin, which was a candle burning too bright.
The overarching question will be if blockchain can find a killer app or series of killer apps. Blockchain is certainly a groundbreaking and compelling mathematical and computer solution.
But is it a solution in search of problems? Time will tell.