Blockchain is a term that first emerged in the context of Bitcoin. Bitcoin is a digital currency technology that was invented and first published on the internet in 2009 by an anonymous person or group known as Satoshi Nakamoto. Today there is much talk about its so called underlying core technologies commonly referred to as blockchains or distributed ledgers. In spite of being eight years old, the general knowledge and broader understanding of the subject is still evolving. We are convinced that it has the potential to lead to fundamental changes in our existing economic, legal, and political systems.
Depending on the respective context the term Bitcoin can mean different things:
In a strictly technical sense a blockchain is only a data structure used by bitcoin or a similar application to publicly record the history of digital currency transactions. The blockchain data is constantly synchronized and extended by the computers in the network and anyone can retrieve a full copy. The blockchain itself is thus simply a public and replicated data structure. But a mere database is neither rocket science nor particularly interesting.
More interesting – and often overlooked – are the procedures that generate this database and make it reliable and unforgeable. A blockchain is created by a distributed network of separately controlled computers that taken together exhibit an emergent consensus without the need for any central authority. Each participant sees a common collective history and can verify new incoming transactions transparently and independently.
Yes, the data is stored on a blockchain, but it is the clever combination of cryptography, peer-to-peer networking, game theory, and economics which adds up to this powerful dynamic system.
The developers of the first bitcoin blockchain have built an open source software which is now running a resilient global financial network. The network protocol was purposefully built in such a way that even those developers themselves cannot manipulate the network once it is operational. Open blockchains are public autonomous networks and append-only ledgers without administrators.
Anybody can participate in these open blockchain networks without asking for permission and anybody can fully verify the history of transactions without having to trust a central authority. There is no developer, no system administrator, no company, and no institution that is needed to verify the shared history of transactions. At the same time these networks have redefined what’s possible in regards of security, robustness and immutability of publicly shared data by aligning the incentives of all participants.
These properties of blockchain technologies might sound like pure magic to many of us. But they are real and have created a wave of inspiration in many communities throughout the world in the recent years. Of course there are many misconceptions and there are trade offs that have to be made to achieve these extraordinary properties:
By substituting computationally expensive but automated security for computationally cheap but institutionally expensive traditional security, Satoshi gained a nice increase in social scalability. (Nick Szabo, 2017 in “Money, blockchains, and social scalability”)
The security and trust models of these distributed consensus systems are very different from what we are used to. They allow us to unleash self-enforcing systems of governance. While social implications are hard to predict, the inherent neutrality of the technology has inspired thousands of developers to take part in this experiment.
We now have transnational digital currencies and open peer-to-peer networks that allow people to transact with each other without the need of intermediaries or centralized authorities. It doesn’t get more disruptive than that and it is not likely to go away anytime soon.
How can journalists, publishers and the broader content community make use of these new technologies? We have launched the content blockchain project to explore and actively take part in this new environment and find new answers to old questions. Let´s push innovation for the content community.