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  • Writer's pictureJVC

Blockchain 101

Updated: Oct 30, 2023

As I've delved more into the studies of university life and expanding my business practices for Van Clief Media, I have been more than fortunate to meet some amazingly talented and well read individuals. From professors, to programmers, and CEOs, I have been attempting to make my self a sponge for every bit of conversation I find.

However among many of these impressive individuals I've come upon a common theme that has made itself more than apparent.


Understanding Blockchain, the fundamental technology behind Cryptocurrency and NFT's, does not come naturally to most.


This is no fault of their own, as with all new technologies, the mass adoption and more importantly mass understanding of them takes time.


This adoption is further hindered by the overwhelming number of scam artists, greedy business owners and shady legal practices within the blockchain space.


The concept of blockchain technology was first introduced by the pseudonymous individual or group known as Satoshi Nakamoto in a 2008 whitepaper titled "Bitcoin: A Peer-to-Peer Electronic Cash System." This groundbreaking paper laid the foundation for the development of Bitcoin, the first and most well-known application of blockchain technology.


In the whitepaper, Nakamoto proposed a decentralized digital currency system that enables peer-to-peer transactions without the need for intermediaries, such as banks or payment processors. By leveraging cryptography and the consensus(explained further later on in this article) mechanism, Bitcoin's underlying blockchain technology ensures the security, transparency, and immutability of transactions.


This new technology has been approached with the age old skepticism that surrounds all new technologies.


The 1980's and 1990's adoption of internet technologies is the best way to conceptualize this skeptisim. Just as the early internet was met with skepticism and resistance, so too is blockchain technology on its path to widespread consumer adoption.


People were wary of the "internet" or "world wide web" because they were unfamiliar with its workings and how it could be used. They were also concerned about security and privacy, as well as the potential negative impacts that the internet could have on their lives.


"How am I to know that the Email I'm receiving is coming from the person I want to talk to?


"What is an Email to begin with and how could you possibly send it instantly without issues?"


"Isnt the world going to end when all the computer clocks hit a minute after 1999 December 31st 11:59? "(this one actually had a small amount of truth behind it that led to millions of dollars begin spent to fix programming issues, seriously)


The fundamentals of how we transferred information changed and thus the fundamentals of our society begin to change.

In this exact way many people today are skeptical of blockchain technology because it is a relatively new and complex system. They may be concerned about the security of their personal information and worry that the technology could be used for illegal activities. In many cases it currently is.


Additionally, some people may be hesitant to embrace blockchain technology because it has the potential to disrupt traditional business models and industries. (I hold this as its greatest strength, but I digress)

These same arguments were, and still are, made about the very technologies we use in our every day life.


Regardless, how humans use technology for bad or for good are not reasons to ignore research of these technologies, and blockchain is no exception.


The fundamentals are yet again changing for our society through the advent of new technology, and with this fundamental change so must our theories of the future. Not only economically, but politically, psychologically and even culturally.

On The Dimensionality of Business.


Before I give details on how Blockchain technology operates I think it's important to get in the right head space to understand it conceptually. It is fundamentally different than anything we as humans have used before. (unless of course, you are a believer in the Akashic Records).


Just as ships, railroads and the internet added new dimensions in which to move goods and information, so does the conception of the blockchain.


Businesses built before the invention of railroads, before the invention of the internet, and finally, before the introduction of blockchain, all behaved and worked fundamentally different before each new technology was introduced.


These changes can be understood as the Third, Fourth, and Fifth dimensional movements of goods and information.

Before the widespread use of railroads, businesses operated mainly in third dimension means, that is, the physical movement of goods and information relied on horse-drawn carts, steamboats, and telegraphs. Profit was made only in the immediate movement and sale of goods and their was only small value found in the ability to move and transport these goods to the larger populace.


The slow speed of transportation and communication limited the size and scope of businesses and made it difficult to coordinate activities over large distances.


With the advent of railroads, we find a distinct shift in commerce, not only from the speed at which goods and services could be moved but also how we fundamentally looked at selling these goods and services. Shipping and transportation became an even greater focus to the point where entire empires of business were built around not just selling of goods but the transportation of them as part of the company model. The Vanderbilt's and Flagler's of this generation created new ways of thinking about business and realized the money was in the movement not just production.


Profit and use could be extended beyond just the good you were selling. In fact part of the value of the good was how far and easily it could be transported, this is still within this "three dimensional view" of movement but it begin the shift into the fourth.( Again the use of three four and five is more of a useful concept rather than a physical importance of the actual numbers).


This movement into the vertical and horizontal integration of business continued through much of the 20th century and ended up defining the basics of what it meant to be a "successful" company.


With the invention of the internet, we see this shift into a fourth dimension of movement, that is, the virtual movement of goods and information.


The internet made it possible to communicate and conduct transactions with anyone, anywhere in the world, in real-time. This revolutionized the way businesses operated and allowed for the creation of new business models, such as e-commerce, which led to the overwhelming success of companies like Amazon or Alibaba.


Now a single company can garner value from a product in not only the product it self, or how fast you can move and sell it but even further by marketing and selling that product through the digital space. This digital space becomes a place of profit in its own right, through marketing and distribution the inherent value of a website and the products sold on it combine. This is the fourth dimension in which value is created and moved when compared to previous "modes of transportation".


The developers and leaders within these companies understood that the internet was the new "railroads" of the early 2000s and ensured their models and companies could capitalize on this.


Each push into a new dimension of value and movement was preceded by the subsequent elimination of the "middle man".


In other words with railroad technology instead of paying others to move and ship goods or rely on slow methods of transport, companies could purchase train-cars themselves or work together on railroads to move their own goods or even make their own railyway company.


Then with the internet, instead of a production company relying on other stores or businesses to sell and market their goods, they could simply use the internet to create their own "store front" and ship and sell to a world market directly. This exponentially sped up the ability to reach customers and move value. (yet again slowly pushing out the middle man of the previous dimension of business and creating a new path in which to move value)


If you do not understand the models of these companies I recommend a deeper dive into the ways in which they make profits, but more importantly how they make others profit. (this concept is important to the blockchain success).


With the advent of blockchain technology, businesses are moving into a fifth dimension of value and transportation, that is, the secure and decentralized movement of goods and information.


By removing even the need for a financial institution to control the movement of money or companies like law firms to ensure funds and goods are moved properly, more individuals and people can connect and sell goods on a massive scale.

The reason this is possible is due to finally finding a solution of The Byzantine Generals Problem.


The Byzantine Generals Problem is a classic problem in distributed computing that illustrates the challenges of reaching consensus in a decentralized network.(How can we all agree on something if I cant talk to you directly).


Imagine a group of generals who need to coordinate an attack, but they can only communicate through messengers.


Some of the generals might be traitors who want to sabotage the attack by sending false messages. The challenge is to develop a communication protocol that allows the loyal generals to agree on a common plan, even if some messages are corrupted by traitors.


Blockchain technology addresses this problem through a consensus mechanism, such as Proof of Work (explained later in this article). This mechanism allows nodes in the network to validate transactions and agree on the state of the blockchain, despite the potential presence of malicious actors.


This allows for the creation of decentralized networks that can securely store and transfer information and assets without the need for intermediaries.


From this lack of a "middle man" small companies or even individuals have the ability to share, control, and move information and assets in manners never thought possible before. Allowing us to develop entirely new platforms that can connect in ways that were nearly science fiction just a decade ago.


So What Is Blockchain Anyway?


Blockchain can be described as a decentralized digital ledger(a ledger is just a term for a record book) that records transactions across a network of computers, known as nodes. Each node in the network has a copy of the entire blockchain, which is constantly updated as new transactions occur.


This decentralization ensures that no single entity has control over the information, making the system more secure and resistant to tampering. The data is stored in a series of blocks, with each block containing a set of transactions.


When a block is completed, it is cryptographically (lots of math) linked to the previous block, creating a chain of blocks. This chain ensures that once a transaction is recorded, it cannot be altered retroactively without the consensus of the network, making blockchain technology highly secure and reliable.


In other words, the same way your bank tracks your money, or you go onto your computer and move files around, blockchain does the same thing but instead of one single computer or one single server, the information is moved along multiple computers and servers as a whole.


Now this may sound like a normal internet connection but the difference is the blockchain creates a mathematical output, or "hash", each time it moves in between these computers, or "nodes". This information is required to continue moving through the network and for the network to exist in the first place.


Each computer can then generate its own block on this same chain allowing for an exponential growth and tracking of information rather than a logarithmic or linear growth we see on less developed networks. (Think of the difference between how a calculator processes information and how our brain does).

Imagine a spreadsheet that is duplicated across a network of computers. Each time a new transaction is made, it is added to the spreadsheet and the network of computers verifies and approves it.


This creates a chain of blocks, each containing multiple transactions, hence the name "blockchain".


Once a block (again think of a "block" simply as information, like a file or transaction) is added to the blockchain, it is extremely difficult to change or delete its contents. This is because each block is linked to the previous one, forming a chain of blocks that represents a complete history of all transactions.


In order to make changes, a large portion of the network would need to agree and update the information simultaneously. This is what creates the consensus method known as "Proof of Work".(more recently there are new methods being used such as "Proof of Stake", I go a bit more in depth on these in this article if you are more curious.)


Proof of Work is a consensus algorithm used by many blockchain networks, including Bitcoin, to validate transactions and secure the network. In this system, nodes in the network, called miners, compete to solve complex mathematical problems that require significant computational resources.


The first miner to solve the problem gets to add a new block to the chain and is rewarded with newly minted cryptocurrency. This process is known as mining and is the source of all the hub bub you see on the news and internet about "crypto miners". Although many people who are "mining" today have no idea what they are doing and are simply chasing dollar signs, it is an important process that both creates value in the currency its self and combats inflation of a currency. (I recommend reading Satoshis's Bitcoin Article i linked early to better understand its anti-inflammatory abilities)


Proof of Work not only ensures that transactions are validated but also discourages malicious activity (creating a fake chain, stealing money, making false transactions), as any attempt to alter the blockchain would require enormous computational power and be economically infeasible.


In an interesting way this actually incentives the need to put computational power and effort into mining honest nodes over malicious activity due it it simply being more profitable to put time in effort into the chain itself.


The transparency and security of blockchain technology allow us to explore a whole new concept of systems and models, including cryptocurrencies, supply chain management, and voting systems.


The key advantage of blockchain is that it provides a secure and tamper-proof way to store and transfer information without the need for a central authority.


This is not to say that a central authority needs to be removed, but rather that the need for a middle man or traditional authority is not necessarily required for a system to run effectively. Meaning we can create new and more efficient models around this fundamental change that do not require a complicated bureaucratic system to handle the human element of self interest..


This translates to the ability of creating voting systems that can't be manipulated, banks that are not controlled or run by outside interest, or my own personal favorite, the complete transparency of journalism and politics. Allowing users to not only see and track where information comes from but track where the money is flowing, and in many cases, allow the consumer to control where funds go. (To the arguments that block chain is supportive of socialist ideology I'd argue this could be the most pure form of a "free market" we can find)


This allows us to understand the bias of any information or articles in an instant or even further generate so many articles bias becomes a good thing. Forcing us to think more critically and have proof of this bias innate in every human, hopefully eliminating the effect of this bias. This is especially useful in dealing with the massive influx of misinformation and AI generated articles.


This influx of misinformation, believe it or not, will actually have more benefits to our society than it does negative effects. But that's a topic of discussion for another article.


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I hope this gave you a better understanding of not only what blockchain is but the importance of it within our future. The complexities of these systems far exceed anything I could fit into a single article so I urge you to do your own research, apply it to your own life, and find ways in which to create a better future for us all.


Stay tuned for some articles I have cooking based around Blockchain and its effects on Governments, Education and even our own understanding of consciousness.





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