Summary

Blockchains extend beyond cryptocurrencies, offering a decentralized platform for various applications including shares, identity management, and more, potentially disrupting traditional systems.

Abstract

The article "Blockchains for Technophobes: Part 2" builds upon the foundational concepts of blockchain introduced in Part 1, emphasizing its versatility beyond Bitcoin. It suggests that blockchain technology can be applied to represent company shares, personal identity, and other assets, potentially replacing traditional paper documentation and centralized systems. The author posits that blockchain could revolutionize how we manage identity and assets, providing individuals with sovereign control over their digital representations, which could be particularly transformative for the unbanked and those without official identities. The piece hints at the disruptive potential of blockchain technology, foreshadowing the introduction of smart contracts in the next part of the series.

Opinions

The author believes that blockchain technology can democratize access to financial services and identity management.
Venture Capital funding in blockchain start-ups indicates a strong belief in the technology's potential.
The article conveys that blockchain's ability to create digital safes using cryptography is both innovative and complex, akin to quantum physics.
The author is optimistic about the future integration of blockchain in various aspects of life, including medical data management.
There is an opinion that blockchain technology could lead to a single, globally-recognized digital identity under the user's control.
The author anticipates that blockchains will be highly disruptive, comparing their potential impact to that of the Internet on information.
The piece suggests that blockchains could empower individuals by giving them control over their assets and data, free from the control of large corporations or governments.

Blockchains for Technophobes: Part 2

In Part 1 of this series, I introduced the basic concepts behind a blockchain and how one is used to power Bitcoin. Now I’m going to make things more interesting.

Remember that I likened a blockchain to a book. What if it wasn’t a currency transaction in the book, but it was a share in a company? If you stop to think about it, it’s not that different. If you own 10 shares in Apple then you can send them to other people (for a price!), but you can’t make them up from thin air and you can’t send the same shares to different people. We could have a decentralised blockchain for company shares instead of using paper documents or trusting a big software company and paying all their fees.

Bitcoin is just an application on a blockchain, little different from an app on your phone.

We can make apps other than Bitcoin, sometimes on the same blockchain and sometimes on a new one. Indeed, Venture Capital funding in blockchain start-ups is well over $1 billion and now major institutions and governments are getting involved.

Money and shares sound close enough to be understandable, but now I’m going to really stretch your brain cells. What if our very identity could be on a blockchain. That sounds like something from a William Gibson cyberpunk novel. Indeed, it probably makes no sense whatsoever. Yet I’ll tell you in advance that several companies are hard at work doing exactly that. It’s inevitable in my view, we just don’t know the precise shape yet.

I need to explain what I mean by identity, so I’m going to return to bitcoin as money again. When I sent you $10, how did you know it was me? Perhaps it had my name on it but anyone could claim to be me. After all, I told the entire world I was sending $10 but how did they know who I was? Or who you were for that matter. How did they make sure only you got the money?

This is going to sound a little… odd. I basically gave myself a random number which I keep private. I then used some software to turn it into another seemingly random number, which can be shared in public. My original number was so big, stupidly big, that it’d be impossible for you to guess it.

The first number, the private one, is like the code to my safe, and the other number, the one we generated and can share in public, is the address of the safe — it’s where to find it. Yes, I somehow just magically created a digital safe. Out of the ether. Sorry, this is like quantum physics again but if you want to know more, you’re going to need to delve into cryptography. Basically, very clever maths.

I’m never going to remember this number, however computers are really good at remembering big numbers.

When I sent you $10, I knew who you were because you gave me your public number, which you’ll remember is your address. And you know who sent the money because I had given you my address — maybe over email or an app. When I sent the money, I had to open the vault with my private number, which only I know. A bit of software does this clever opening and closing of the vault so that no one else can steal my money. Put all this together and I can send $10 to you.

If you’re still with me, now you’re really an expert in blockchains!

Getting back to identity, you know that I have a public address of, let’s say 1tunaVMNEHUZapqiiyudKYtxoAro1eB5y (this is one of my real addresses — send tips here!). You could think of it as my blockchain identity. Any money sent from this address has to come from the same person because only that person has the key. Me.

Not only is this ‘me’, but I’m in sole control of it. Not Facebook or Apple or anyone else. Me.

I stated earlier that a blockchain can work with shares just as easily with money, and so it can with tickets, games, apps, even your medical data. I’ll explore how it can do some of these things in future posts. Blockchains could put you in control of the things you own, the things you do, the money you have, even the data about you. You can share it, sell it, give it all away if you want, but what can’t happen is for other people to take it away from you or ban your account. Ever. It’s yours to use when you like, where you like. In perpetuity.

It’s almost like having just one login for everything, one which only you control, one identity — you. All this for everyone, regardless of where they live. All they need is an internet connection.

In part 1 I stated that Bitcoin could provide banking for the world’s unbanked, many of whom had no official form of identity. Now you can see how the same technology could provide an identity too, one which could be used across the world. There are many ways to view identity and it’s something I hope to come back in a future post, but I hope this starting point has got you thinking.

I also hope you can see that a technology with such power is inevitably highly disruptive. The Internet changed information forever, what do you think blockchains will change?

In the next part I’ll introduce the concept of smart contracts, which allow us to implement incorruptible laws on a blockchain, and which may empower the public even further.

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