Here’s how blockchain works and how it’s going to change the way we do things.
Are you a fan of HBO’s Silicon Valley? If you caught Season Five (no spoilers, don’t worry), you probably already have a handle on what blockchain is. But on the off chance that you weren’t swept off your feet, then maybe we can help.
The short explanation: In general, servers are computers accessible over the Internet. So a blockchain is just a new way of storing data on servers. We’ve been storing data on servers throughout our digital lives. Facebook posts, Instagram photos, Candy Crush scores and our banking data are just a few examples.
So, what’s the big deal then? The big deal is that this new way of storing data could change everything about how our current systems work.
Let’s take this article as an example. You’re probably reading this right now on a web browser on your phone or laptop.
When you clicked on the link that opened this article, you connected to Mantle’s servers, which then sent the data that made up these words over to your device. If we stored it on a blockchain, this data wouldn’t exist solely on Mantle’s servers. It would instead be stored multiple times on multiple nodes—or on other people’s computers that are also connected to the blockchain.
Why does this matter?
When data is hosted on a specific server, whoever controls that server controls the data. Imagine if your Internet service provider or a malicious hacker wanted to prevent you from reading this article. They could block access to Mantle’s servers or force it to go offline, and you would be unable to access this article anymore.
If this article were stored on a blockchain instead, blocking just one node wouldn’t work. To take it down, we would need to take down ALL the nodes. This makes our data tremendously hard to censor.
Still a little vague?
Author Ori Brafman offers an analogy: the spider and the starfish. Cut off a spider’s limb, and you permanently cripple it. Do the same to a starfish though, and it not only survives, but the severed leg regenerates into a brand-new starfish.
Digital systems before blockchain are spiders, and systems built on blockchain are starfish.
Now, everything on the Internet is just data. This article you’re reading, that YouTube video you’ll watch later, and that mobile game the person beside you is playing—all of that is just data being sent from a server to your device.
You know what else is data? Digital currency.
You probably heard about blockchain when you read all the news about cryptocurrencies like Bitcoin. Bitcoin uses a blockchain to store financial transactions, thereby creating an uncensorable currency that no central banking authority controls.
This leads to a whole bunch of other questions — how can we be sure that our data is secure on a blockchain? What would motivate people to put up nodes? What gives cryptocurrencies their value? These are all important questions.
The short answer is that blockchains are designed exactly to address these issues. There’s been a lot of research and experimentation on these questions, and Bitcoin is a testament to the technology’s resilience (check out this link [https://99bitcoins.com/obituary-stats/ ] to see how many times journalists have predicted Bitcoin’s death).
The more complicated answer is that blockchains and cryptocurrencies are rapidly evolving fields and are grand experiments in economics and psychology. We’re at an early stage of the technology’s adoption, and only time will tell how exactly they will change our lives.
Here’s the bigger question: why does blockchain matter?
New technologies have had profound effects on society. They have the capability to uplift our lives but, left unchecked, they can also have negative effects such as destabilizing economies and influencing elections.
The Philippine government has been receptive of the technology, setting up blockchain-friendly zones such as the Cagayan Economic Zone Authority. The SEC has also been open to discussing the technology with local blockchain startups. This progressive outlook may be a core competitive advantage for the country.
In contrast, other Southeast Asian countries like Vietnam and Indonesia have been initially hostile to the technology, banning cryptocurrencies outright. Singapore, on the other hand, has been more open to the technology and, consequently, has become the epicenter of blockchain development in the region.
Nevertheless, Filipino entrepreneurs are leading the way. Startups that enable remittance using blockchains like Bloom Solutions and Coins.ph have already gained significant traction, while software developers such as Mergecommit and Proudcloud are building solutions using the blockchain. We also have vibrant communities being formed around the technology, with groups such as Makati Digital Currency Meetups and EOS Philippines, and the interest is steadily growing.
As with any new technology, disrupted incumbents will try their best to stop it, and those who don’t understand it will demonize it.
The more people understand blockchains, the more likely they’ll be used positively.