“The blockchain technology that underlies Bitcoin is a major technical breakthrough that could, in time, revolutionize both the Internet and the financial industry as we know them,” writes Evans on TechCrunch, “and the first steps of that potential revolution are now under way.”
In a previous TechCrunch article, Evans explained concisely why Bitcoin technology can turn the cloud inside out:
“The ‘blockchain’ – the engine on which Bitcoin is built – is a new kind of distributed consensus system that allows transactions, or other data, to be securely stored and verified without any centralized authority at all, because (to grossly oversimplify) they are validated by the entire network. Those transactions don’t have to be financial; that data doesn’t have to be money. The engine that powers Bitcoin can be used for a whole array of other applications…”
Evans quotes a technical essay about Bitcoin technology, written by Michael Nielsen. Nielsen is a respected scientist with a knack for explaining abstruse technical stuff and the author of a textbook on quantum computing. His explanation of just how and why Bitcoin works:
“For [the blockchain] to have any chance of succeeding, network users need an incentive to help validate transactions. Without such an incentive, they have no reason to expend valuable computational power, merely to help validate other people’s transactions. And if network users are not willing to expend that power, then the whole system won’t work. The solution to this problem is to reward people who help validate transactions.”
Of course, the same underlying technology and built-in incentive system can be reused for other applications. Evans offers a roundup of interesting new developments in bleeding-edge, Bitcoin-like blockchain based technologies.
Ethereum, which recently raised some $15 million with their Ether sale, uses a Bitcoin-like blockchain. While Bitcoin has limited scripting features (by design), Ethereum plans to create a “blockchain operating system” by adding to the blockchain a Turing-Complete (TC) programming environment for “smart contracts.” The simplest examples of smart contracts are multiple signatures and escrow transactions. Both are also permitted by Bitcoin scripting, but the Ethereum concept is more powerful and general purpose, with possible applications to e-government and Distributed Autonomous Organizations (DAOs).
The MaidSafe team wants to build a free, open, decentralized, crowdsourced, fully distributed Internet. Imagine: websites don’t live on central servers that can be blocked, switched off or seized, but are streamed by thousands or millions of personal devices worldwide. TechCrunch reporter Natasha Lomas thinks the server needs to die to save the Internet:
“What that means in practice is a network that does away with an intermediary layer of servers and datacenters – replacing that with peer-to-peer infrastructure […] the users of the network are also acting as the network infrastructure by donating a portion of their spare hard drive capacity – with built in incentives for them to do so in the form of a network specific cryptocurrency.”
Ethereum and Maidsafe are still small, but IBM is big. IBM’s Adept combines a blockchain, the BitTorrent protocol, and a simple application library into a proposed substrate for the Internet of Things.
Images from Shutterstock.
Last modified: September 26, 2014 08:02 UTC