blockchain

Blockchain is an exciting new technology that has attracted large amounts of capital and developer time. According to evangelist Vitalik Buterin, it provides the following affordances:

1. High Data Availability
2. Trust Between separate entities
3. Non-specific hardware required to access

Buterin gives blockchain a jargon free definition:
“A blockchain is a magic computer that anyone can upload programs to and leave the programs to self-execute, where the current and all previous states of every program are always publicly visible, and which carries a very strong cryptoeconomically secured guarantee that programs running on the chain will continue to execute in exactly the way that the blockchain protocol specifies.”

Sounds like a paradigm shifting technology! According to experts at Andressen Horowitz, this technology is still in its infrastructure stage, and requires myriad apps and implementations until its true potential is realized. The most well known and widely used application of blockchain is the cryptocurrency Bitcoin which is the first application of the technology. At the time of this writing, Bitcoin’s market valuation has been at the hundreds of billions, containing almost countless transactions. It involves a process called mining, where a miner can exchange processing power in return for some Bitcoin. This processing power is used to increase Bitcoin’s supply and provide security. You used to be able to profitably mine on small, cheap computers like microcontrollers. As bitcoin has scaled, it requires a system of global server farms that use highly specialized hardware called ASICs to mine bitcoin for a profit.

As it grew to its current size, it has encountered numerous issues that the community has had to collectively solve. These solutions come in the form of legislation called BIPs (Bitcoin Improvement Proposals) that specify a change to the protocol that members must simultaneously adopt, facilitating its execution. This simultaneous adoption is called consensus, and it mimics the way governments must come to consensus in order to affect change.