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Shortly after the 2008 global financial crash,
a mysterious white paper emerged from an unknown entity, a person or group calling themselves
Satoshi Nakamoto
In this mysterious white paper, a new peer-to-peer
financial system was discussed. It was to use a digital cryptocurrency
called Bitcoin
It was an omen to people being sick of centralized power
meddling with economic systems. Many perceive this new system as a better way of doing things
The technology invented to power this new system was called blockchain and Nakamoto's paper was its grand unveiling
In this video we'll talk about some exciting implications of this technology and the impact it could have on all of our lives
So what is blockchain? It's the underlying technology behind crypto currencies like Bitcoin and Ethereum, but its uses go far beyond that
It all sounds complicated, but let me try and break it down to one sentence, an important concept that you need to remember
Simply put: blockchain is a continuously updated record of who holds what
These records are split into linked blocks, and then secured using cryptography. The cryptography part
just means that you can be sure about the records
This is dubbed as automated trust, or trust that's inherently built into the system
The list of records, known as a distributed ledger, is decentralized and available to everyone to see and verify
In addition, the blockchain is tamper-evident and unhackable due to its distributed nature
Everyone knows when a block has been messed with because it is rejected by the rest of the system
If you want to know more details I've already done a video about the basics of how blockchain works in regards to crypto currencies
I'll leave that video and other information sources in the description below
Blockchain has a social perception strongly related to Bitcoin and other cryptocurrencies
And most people view the blockchain as something for intellectual tech-savvy criminals or people that are anti-government
But the emerging truth, is that the blockchain has applications far beyond cryptos and as a whole will be nothing short of revolutionary
I've invited Dr. Adrian McCullagh, a blockchain lawyer
who's at the cutting edge of what's going on in the industry to speak to us today.
I'm a lawyer of 30 years experience
I'm the only lawyer with a PhD in IT security
my thesis involved
Technical analysis of digital signatures and hash algorithms which happens to be the underlying technology for blockchain
So a blockchain is just a special type of data repository that is in itself tamper evident
Blockchain technology has been called the next stage of the Internet by many
But I believe that this is now the next generation of the Internet and that it holds vast
promise for every business every
society and for all of you individually
Let me break it down. Our current Internet is an Internet of information. It's based on the concept of copying and distributing information
Be it video
Email or data
All of these are copies. For example, if you want to watch a video on YouTube or receive an email, you're looking at a digital
copy of the original
But what if we take this further to the next stage? What about assets that provide real value?
Like contracts such as a house or car ownership, a stock, a bond, money, votes or digital identities
The problem is you don't want to have these things as copies. For example, you don't want to send someone
$5,000 yet still have the original $5,000 under your name. This was called the double spending problem by cryptographers.
Despite the name, this basically means the problem of having two digital copies of something that should only have one unique identity
The cryptography element of the blockchain enabled it to be the first technology of its kind to solve the double spending problem.
Now for the first time we can build a new stage of the Internet based on real value
And this is partly why it's such a big deal
So where can the blockchain be applied? In my talk with Dr. Adrienne, he discusses the FITS model of blockchain application. FITS is an acronym
Using this model, the best places to use blockchain are places with high possibility of fraud, an intermediary or middleman
environments with high throughput and stable data. I'll let Dr. Adrian explain further
Um you should try to run
against your
environment, what's called the FITS model, F-I-T-S
The FITS model stands for, F stands for fraud. If you are in an environment
where there is a history, propensity,
likelihood of fraud involved in various
transactions
Then the blockchain can assist in reducing the likelihood of fraud actually occurring
Adrienne goes on to say that this is why blockchain is being used for international finance
transactions. The next area of the FITS is the I. If you have an environment where there are
intermediaries involved
then you may be able to
disintermediate those parties if they really don't provide value
He goes on to say that we can get average transaction settlement times from two days down to 15 minutes by taking away middlemen
Throughput, or number of transactions per second, is another consideration
It turns out that Bitcoin can only do ten transactions per second while MasterCard and Visa can do about eighty thousand
But researchers are currently looking into increasing the throughput. You then look at things which, what
Vincent Grimaldi from the University of New South Wales has developed. He's been able to
increase the throughput to four hundred thousand transactions a second through what's called
decentralized computing, using a hundred
Laptops
PCs to do the processing power. And next is the stability of data. For a blockchain
application you don't want volatile data
You want things that are going to stay the same for at least a while, things such as land ownership titles and personal information
So that's the theory about what systems you should look for in regards to using blockchain applications
But where is the blockchain actually being used today?
Here's a quick fire round of applications underway
Blockchain land registries are being looked at in Honduras and Sweden
Diamonds are looking to be tracked by the blockchain to stop things like blood diamonds
The Nasdaq Stock Exchange will soon begin a blockchain system to record the trading and privately held companies
The Bank of England has stated that the blockchain is a significant innovation that could have far-reaching implications in the financial industry
not only this, but six banks including Barclays, Credit Swiss and
HSBC are all planning on making a single digital cryptocurrency to clear and settle transactions using the blockchain
Microsoft is even getting in on the action by building a framework using the Ethereum blockchain
On the social media front, the Steemit, a reddit competitor, and its video companion
DTube, a YouTube competitor, both are blockchain based platforms where you can get paid in cryptocurrency for creating content
This is showing a new direction and where social media could go. As a matter of fact
I've actually just signed up for Steemit myself
Okay, so this is all good, but let's turn things up a notch
Blockchain goes even further when we talk about something called a decentralized autonomous
organization, a D-A-O, or DAO for short
Because of blockchain technology, we now have the capability to create huge company
organizations that are distributed and automated for the first time in history. This has never been done before and could provide near limitless potential
Before the blockchain
we were already halfway there
We have organizations like YouTube that are a mix of the old-style central management with a decentralized user base creating content
A DAO would have computer code that runs the rules and decisions instead of a central management team at the top. The people in the
decentralized network would decide on the rules, form a consensus and create something called a smart contract
Basically a set of computer coded rules that a computer would execute later when needed. In other words
a DAO is like a democratic company that's automatically run
So, a DAO is meant to be a
Decentralized, so it's on the blockchain, there's no central management involved
Autonomous, in that the code will run the transaction. And it's meant to be some form of organization
The difficulty from a legal perspective is that no one at this point in time
has been able to classify
exactly what a DAO is. It may be that in a few years time
DAOs will become so popular
that
legislators will need to
create special legislation that will recognize what a DAO is, but at this point in time no one knows
Let's take a look at a basic hypothetical example of how this might work, but just with one smart contract
So say in the future, when the blockchain is readily established, you want to buy a used Tesla Model 3
Traditionally, you'd go to a dealer or an individual, you'd make sure that the details in the history of the car are correct
You'd hassle for a price with the seller, take some money out from the bank, transfer the money, sign a lot of paperwork
wait for the money to clear, and then you can finally have the car. This will take around a few days to do
Now, with the blockchain, using a smart contract, you could have this order all carried out in real time
The car would be uploaded to the blockchain
so that you would already know that the details are correct because trust is built into the system
You could buy this car with a cryptocurrency
that's attached to your bank account, and all of the ownership and other details about the car is
executed in a smart contract, so everything would happen in a matter of minutes instead of days
Your ownership of the car is now attached to your digital identity on the blockchain
The global records in the blockchain system is now updated so that everybody in the system now knows that this car was sold to you
You can take all of this a step further by linking up different smart contracts into an
organization, similar to Airbnb or Uber, so the whole process is automatic, with rating systems of service and customer satisfaction
etc. Although that setup is a sharing economy model, according to Dr.
Adrian, a group of smart contracts can easily be arranged in this way
So I hope that you're beginning to see the importance and potential of such technology. But it's not all roses
Right now there are still some downsides
Malicious smart contracts for example. These can theoretically be designed to clog up the entire system
In addition, if there are actual coding errors within a decentralized autonomous
organization itself, this could create massive problems
Another thing is that the blockchain is also permanent: every record of a transaction is stored there for all time
And this doesn't sit well for those concerned of privacy and the right to be forgotten
Dr. Adrian did state that there are going to be some entities called Oracles, and these guys have special clearance to make edits on
the blockchain, but overall this is still an issue that needs further looking into
As I tell people, you know, when we talk about blockchain, and we talk about DAOs, and ICOs and things of that nature
we are at this stage in the blockchain
ecosystem
probably the equivalent of 1993
When the internet was opened up by President Clinton in the National Science Foundation prior to 1992
the internet was only open to
research organizations, government agencies
defense contracting organizations. Who would have thought in 1992 that we would have companies like Google, Amazon
All of those companies have taken advantage and looked at the internet and said how can I use this piece of technology?
I have no idea what some really smart
masters, PhD student is going to do and
And say we could use the blockchain or smart contract or a DAO to do this
May come from the University of Queensland
Curtin University in WA
Stanford
You know, who knows what
someone is going to think about in the future, and say "wow, we can use this technology to do this"
I don't believe it's going to be me, I'd love it to be me
But there will be some smart people out there who will look at this
technology and say "let's do this", and the rest of the world would say "wow, that's really something
I want to get on board and I want to utilize that service"
So while everyone's focused on the buzz of artificial intelligence, I really think that the blockchain is a dark horse
that's going under the radar, mainly because it's not as romanticized and the concept is a little bit harder to grasp
Regardless, blockchain is the next step of the Internet, a complete overhaul of how things in our world are going to be recorded
organized and run. In the end
I personally think it's going to be a combination of artificial intelligence and the blockchain that will be our future
So what do you guys think? are you looking forward to things changing in this way? Or are you hesitant? let me know your thoughts below
Also, if you know someone that's going to be interested in this topic, feel free to pass this video along to them. Anyway
That's it. Thanks for watching. If you've just stumbled across this channel, feel free to subscribe
This has been Dagogo, you've been watching ColdFusion
And I'll see you again soon for the next video. Cheers guys. Have a good one
ColdFusion
is new thinking