Despite the widespread belief that Bitcoin is used primarily for money laundering and other crimes, the popularity of blockchain has increased phenomenally over the last decade.
Many are oblivious of this new ground-breaking technology. Blockchain’s increased popularity is not to be trivialised as it is set to become as integral to our daily lives as the Internet.
In 1989, e-mail became the first public use of the Internet. Satoshi Nakamoto or Dr Craig Wright broke onto the scene and invented Bitcoin, the first cryptocurrency in 2009.
Bitcoin is a creation of blockchain technology; blockchain technology was invented for Bitcoin. The relationship of blockchain to Bitcoin has been likened to e-mail and the Internet.
Bitcoin mining does not involve dredging with earth-moving machines. It is a process of solving intense mathematical puzzles to create or mine blocks of data that are linked to form a blockchain. This involves the distribution of multiple copies of a ledger across a decentralised network of computers called nodes.
New transactions or inputs to the distributed ledger undergo a validation process during which miners work independently to solve a complex mathematical puzzle. Each time an entry is solved, miners validate the solution, a new block is created and linked cryptographically to the previous block; all subsequent blocks are created with dependencies on previous blocks.
Miners’ computers with synchronised copies of the ledger are updated in real-time with new entries and new blocks.
The linked blocks contain the immutable details of validated transactions and data. The incentive for solving the puzzle is a reward of Bitcoins and this goes to the first miner to solve the puzzle and broadcasts the solution across the network.
As we go about our daily lives, we expect or assume that trust underlies our transactions with our banks, our utility companies, our professional and business relationships. Sadly, this is not the case.
Trust has been the cornerstone of civilised existence. Diminishing trust has become a matter of grave concern in our dealings and this demands a redefinition of trust. Trust beyond human interaction - digitally generated trust presents an attractive prospect.
The validated data held in the linked blocks in a blockchain hold a single source of truth; it is tamper-proof, it cannot be duplicated, changed, corrupted or lost.
The collective operation of miners and the network generate this digital trust.
New transactions or data entries on the blockchain are transparent to all miners on the network. Wallet addresses are pseudonymous. While transactions can be traced to their digital wallet addresses, wallet holders’ identities are revealed only when they receive goods and services.
Data stored or shared on a blockchain is extremely secure. Any attempt to tamper with a block will result in tampering with all blocks.
Rogue behaviour would require the insuperable task of tampering with all blocks in the chain and bypassing all miners.
To corrupt or manipulate the network, a minimum concentration of 51 per cent of network computing power is needed. The computing power of the blockchain network is spread across the network, ensuring that no entity controls more than 51 per cent.
Cryptocurrencies - Blockchain is the underlying technology for cryptocurrencies.
Public Procurement – Transparency of a public procurement system can be achieved using blockchain.
Land registry – Indentures and title deeds stored on a blockchain would eliminate fraud and questions of ownership.
Healthcare – Blockchain in healthcare records timestamping could enable the detection, reporting and prevention of diseases.
Pharmaceuticals – Providence in the drugs supply chain can be achieved using blockchain. Blockchain would help eliminate or counteract the trade in counterfeit drugs.
Agriculture – Blockchain-based supply chain management system would result in the immediate and easy verification of origin and produce data.
Voting in elections and voters’ register – Qualities of security, transparency and immutability would be key to the creation of a robust voters’ register.
Voting using a blockchain-based system would also guarantee the security and integrity of the result.
The writer is a barrister and founder of Pan-African Tech Foundation