What Is the Blockchain and Why Do I Care?

bydeelilah

1.4K followers

3 years ago

It All Started with Crypto

Several months ago I made the statement: It all started with crypto-- Then I wrote a series of loosely related articles trying to explain it-- and never did. I say loosely related because the concepts presenting themselves grew like weeds in summer. The research included so much history, so many variables, and so many acronyms, AR, AI, VR, and Web3 to name a few.

AI is the biggie, i.e., ChatGPT, which is teaching itself, one hopes, all things good and useful, but is, in fact, teaching itself what its creators want it to learn. Do we trust Bot's creators? Duh!

Bot is this AI genius's name. I asked him.

CBS reports "Billionaire Elon Musk, Apple co-founder Steve Wozniak and former presidential candidate Andrew Yang joined hundreds calling for a six-month pause on AI experiments. . ."

Oh what a web we weave. . .

But before we can take more deep dives into AI, Web3, information theory, or human nature, we need to understand the basics of blockchain and its purpose/s. Its inventor, Satoshi Nakamoto, envisioned the blockchain as the vehicle serving to control and distribute Bitcoin. (See, it all started with crypto.) As we will see, it has evolved far beyond that.

Follow the links below for more information.

"Bitcoin is a crypto asset that began as a concept described in a paper published on the Internet in 2008 by someone assuming the name Satoshi Nakamoto.

Through the use of a distributed ledger known as a blockchain, Bitcoin can store and transfer values over the Internet without the need for an issuing authority or administrator.

Because Bitcoin has the highest market capitalization of all the numerous crypto assets, it is not an exaggeration to say it is the most prominent crypto asset. There are many currencies that split off from or are derived from Bitcoin, and it is the cornerstone of crypto assets."

Why Should We Care About Blockchain/s?

If you said, "That's about crypto, why should I care?" You would be half correct. Using latest data, around 80% of the U.S. population and over 95% of the global population don't care about crypto as an instrument for investment, meaning they don't own any. (Don't read too much into that-- most in the don't care group are too poor to care.)

I would venture further to guess, among crypto investors, not too many know, or care, what a blockchain is, or its purpose. However, there is a difference between investors and traders. Crypto trading is a complicated subject, and traders need to understand what they are doing.

Traders might get it. Or not--

I know, I'm slow. OK.

But until recently, I did not know the difference between a cryptocurrency exchange built on the blockchain and one set up like Bank of America.

But I am an early adapter. I bought crypto. Yay for me.

It's sitting there in the largest U.S. centralized exchange waiting to (go back up) be moved to a decentralized exchange, or a hard-wallet, as soon as I figure out how to do it.

Satoshi designed a financial system, but it is at its core, where we can find freedom from various tyrannies. The key expression in the above quote is "without the need for an issuing authority or administrator".

What is the answer to the other half of that question?

Even for less informed traders or investors, non-investors, and low-income people, it is important to understand the concept of BLOCKCHAIN-- in that programs built on it are decentralized.

When I started reading about "Biden Bucks" and other government digital coins, I woke up. China has a digital coin. This means it controls its citizens money.

It is not the scent of a rose I smell.

I am not going to explain the mechanics of blockchain here. That is truly a convoluted tongue twister. You can google it. Rather I will wrap this up with more rhetorical reasoning in favor of decentralized.

The fact is, like just about everything else in life, this is not as easy as it may sound. There are many gray areas. There are already a mishmashes of technologies in the works or waiting in the wings. Apparently, it is easier to build software than a platform on which to run it. Just ask Bitcoin and its rival, Ethereum.

Centralized

Consider Bank of America. which uses a fairly traditional corporate structure. There is a Chairman-CEO at the top who is the boss. And under him sit. . . chairs. And under them sit. . .. And under them are a multitude of local branches, managers, loan officers, tellers, etc.

There is room for human error or bad intent at each one of those human points of entry. Of, course, computer technology mitigates the risk to a very large degree. And for that, we are fortunate.

The subject of security, or lack thereof, I leave for another day. Suffice it to say, blockchain solves most security issues, far more than is widely believed, also a subject for another day.

Before you bring up the FTX and Sam Bankman-Fried, crypto exchange scandal, that was a centralized exchange. He was a crook and a lot of people smarter than me lost money. I did not own crypto in FTX. But it managed to bring down two other exchanges, in which I did.

Decentralized

I believe the United States is meant to be a form of decentralized government, leaving its 50 states mostly autonomous. Well, that's the way it's supposed to work. We won't go there today. The reason I mentioned it is to show there are degrees of both centralization and decentralization.

Satoshi's blockchain is based on a truly decentralized algorithm. There is one block per person, or company, and there is one transaction. There are no middlemen. The transaction is transmutable and eternal. No more doctoring the books. And it does this in a few minutes.

In the case of money, it touches no extra hands.

I encourage you to try to understand this a little, especially the dangers of government digital currency.

Thank you for reading my post.