Blockchain Expert Explains One Concept in 5 Levels of Difficulty | WIRED

My name is Bettina Warburg. I am a transformative technology researcher and co-founder of Animal Ventures. I have been challenged to explain a

concept

in five

levels

of increasing complexity. My topic is

blockchain

technology. Blockchain is a new network and it will help us decentralize commerce, allowing us to make many of our transactions much more directly between peers and reduce our use of intermediaries such as companies or banks. I think everyone can fail to understand something about

blockchain

on some level these days, you know what? We are going to talk today it is called blockchain what is blockchain that is a very good question actually it is a way in which we can trade do you know what trade is?

It's when you take turns every time that's when you give up most of what I want just when you give up most of what you want, well sometimes that definitely happens for sure. What if I told you there was a type of technology I work on that meant you could trade with any child around the world? Actually, yes, if I could. I would exchange with any child. I would exchange well. I would look for something that I don't like so much. It's probably a good idea. Maybe someone else will like it more than you. Normally when people trade they have to go to the store or they have to know about it. the person so they can get what they asked for with blockchain, you can do the exact same exchange, but you don't need the store and you don't even necessarily need to know the other person, really, so you know what blockchain?

No, have you ever traded or sold anything? In fact, I'm selling my computer on eBay right now. It's amazing what made you decide to trade on eBay. Well, I mean, I've heard of it and I trust it a lot because they have I like all their guarantees, so I know I'm going to get money and the person is going to get what they want. So what if I told you that blockchain technology is basically a tool where you can do the exact same thing, but it's for you and me? You wouldn't directly need an eBay or a brand in between, that's great and there are a lot of those types of intermediaries in our society today, we have a lot of banks, we have a lot of companies that help us ensure that our exchanges happen, but if If we could guarantee the same trade using technology as a kind of technological trust, then we wouldn't really need all those middlemen in the middle.

How does it work? It is basically a network of computers that have the same transaction history. So instead of there being one company with one database that has all the information, all these different people maintain the same type of list, like you can have it on your computer and then everyone validates it and basically that becomes the next part of the list, so it's constantly updated, for example, how do you make sure it's safe for you to use crypto and that helps you basically encrypt all the transactions so you can't see exactly what happened, but already knows?

It happened because it's like a marker, so you could say, I don't know, trade, trade apples, but you'd just see random letters, yeah, so you couldn't follow it, I guess exactly that's cool. So it's like a really big ledger or accounting system for all kinds of things that are traded, but instead of being owned by one company, it's owned by everyone, that's cool, yeah, let's talk about the technology blockchain, have you heard of blockchain? I've heard of the words blockchain, but I'm not sure I know what it is. When we were much smaller societies, you and I could trade in our community quite easily, but as the distance in our trade grew, we ended up inventing institutions. you use uber or airbnb or you use amazon, even these are just digital marketplaces and platforms that help us facilitate the exchange of value, but today we have a technology that allows us to trade one to one but at scale and it is called blockchain technology. there's some kind of interface for it, you could have an app or you could use your computer to do it, but instead of there being a company in the middle or what helps you make that transaction is a bunch of software code, so It's being run by all these different computers that they have like a node, so they're all running the same software and guaranteeing their transactions as they happen, I mean, I would assume that this technology is taking business or activity away from these middlemen in some cases. , Yeah.

It is and a lot of people in the financial industry in particular are looking at it from the banking side of how we use this technology to exchange things like bitcoin or other tokens that are easier to use instead of the current currency. of people think of blockchain as bitcoin because it's in the news a lot and it's this new cryptocurrency and it's kind of exciting, but we're actually seeing a lot more use cases for blockchain that aren't related to currency. Learn more about how you can take any asset and be able to trade it using the same technology.

Is there a mechanism to verify that that person is a legitimate seller or producer of the item? Therefore, today many people are working on how to create identity structures. that leverage blockchain and one of the tools to do that is to be able to cryptographically sign a certain attribute so that your government can sign that you have a US passport or a university can sign that you are a currently enrolled student and then they can hand it out. that information and control it yourself and be able to show people those certifications as needed, so today we're going to talk about blockchain technology.

Have you ever heard of blockchain? I do it every time we have a transaction and let's say I buy something. from you, this information is recorded and verified by a third party or a third party and then if all this information is verified and everything matches correctly, the transaction is done without any intermediary, basically it is correct and stored and when we carry out further transactions This information is already incorporated, it's in the ledger, yes, that's exactly right and you can add it, you can add new information that is more current, but you can't actually delete anything absolutely right, the way technology is changing , nothing will be like it used to be and there is no similar company and then the buyer and the seller and we will basically have to rewrite a lot of rules and economics, and for sure a lot of the assumptions will not be true regarding who the who are actors are no longer just people, they are machines absolutely we are going to have to create completely new

concept

s about how they trade and how they work with us also what kind of barriers or obstacles do you imagine are going to happen in the blockchain space, so at least when we talk With bitcoin there are some trust issues, there have been some hacks and obviously there is a need to work on trust and feel that it is the secure technology, yes one of the problems that Bitcoin has faced is the theft or loss of bitcoins, but A lot of that is actually coming from people trying to recentralize Bitcoin in different ways, which makes them a pretty easy target, so education will be a big part of it before we can use the technology to a large extent. the broad sense, yes, to make the transition into the mainstream and make it useful for average people to use, we will need to make sure we have a lot more education, a lot more standards and probably work with a lot of companies to create kind of user experience in around that this is a technology that is secure, usable and understandable what is the current state of blockchain in its understanding, what will have to happen next, the current state is this, the state of research and is being developed to be applied in many areas, it could be used almost everywhere, where we can't even imagine how we live without it, but I'm not sure where it will go, I mean, no one really knows well, we have a lot of uh. public blockchains like we have bitcoin, we have the ethereum nxt network, but many companies and consortiums are coming together to build private blockchains, so that they are more closed at first and then they can evolve to a public network when people feel comfortable using it and some they are also proof of concepts in the real world, projects in energy, pharmaceuticals and retail, and many different fields are starting experiments and we will see in the coming years how they all interact and what we learn about the best ones. blockchain use cases and what it means for commerce, so tell me your version of a technical definition of blockchain.

A technical definition of blockchain is that it is a public, transparent and persistent ledger that is only aggregated, so it is a system that you can add data to and it does not change the previous data within it, it does so through a mechanism to create consensus between dispersed or distributed parties who do not need to trust each other, but only need to trust the mechanism by which their consensus was reached in the blockchain case on which it is based. some kind of challenge such that no actor in the network is able to solve this challenge consistently more than everyone else in the network, so it randomizes yes, yes, it randomizes the process and in theory ensures that no one can force the blockchain to accept a given entry in the ledger that others disagree with one that is based on a mechanism for a peer-to-peer network that can maintain updates to the ledger and then verify those updates in such a way that it is impossible to defraud and impossible to alter after the In fact, do you see it as the definition of a new type of discipline or where will we see blockchain emerge in the real world first?

I mean, as an example, one thing that I think about a lot in terms of possible applications of blockchain. Is electricity the next generation of distributed smart grid technology? Sure, and people are already working on that, yes, yes, exactly, and it's a very fruitful area of ​​research and you may find yourself 20 years from now where you have a huge amount of In electric cars, you have all these batteries like that It was essentially a distributed peak load electrical grid, just like cars connect and disconnect at different times, if you have a mechanism that is capable of distributing energy automatically and autonomously based on the batteries.

They are scattered throughout the grid and used for other purposes, their owners don't even necessarily need to be aware, you start to have something that looks like a much more viable society that still has a lot of electricity needs but is able to base them much more on energy. renewable energy is able to make up the difference during periods of peak load or during differences in climate, you can have energy much closer to where it is needed rather than having to distribute it over great distances, something that would be enormously difficult. problem to solve and it's not that blockchain makes it easy, but it makes it possible that a lot of people are seeing blockchain in the news and maybe seeing many types of initial coin offerings, this type of monetization opportunity around blockchain and they are being very exciting. about it and some of that enthusiasm is real and should be encouraged, but some of it is also hype.

How do you feel about the hype cycle around blockchain today? I'm glad you mentioned initial coin offerings, because to me, those really exemplify The kind of problem we're having at this exact moment is an idea with enormous potential significance in the future; However, the promise of the initial coin offering has been hijacked in this series of basically pump and dump scams. or sort of desperate gold rush schemes, the quicker we can, we can shift from this fantasy of what will make you rich into some sort of 1920s tulip bubble, um, that's right, the sooner we can get it. honestly, and I say this with all the hope in the world, people are disappointed with blockchains like, oh, I didn't get rich, it's just being used now to facilitate transactions of goods and services securely over the borders, this is not exciting. and then we'll see it become part of the everyday infrastructure of the world in a way that I think will be very significant, but I think now almost every aspect of the concept of money is wildly overrated. um and it also creates a problem which is that people get really excited about this and then they're waiting for the world to change yeah, where is this technology?

Why haven't I seen anything that changes? Yes, yes, because we have had a lot of proof of concept, but yes, honestly, this is more of a science, right, it will be developed, it will take five years, it will take 10 years, that kind of time is necessary, one of the areas that I led to supply chain investigation. is the fact that not only will we see blockchain emerge, we will see artificial intelligence continue to evolve, we will see connected devices and this kind of growing Internet of Things machinerythat can do much more. and having a wallet and transacting on your own, so I think a big part of where blockchain and other technologies are going is this interesting synergy that will help us elevate the types of institutions that we've used in the past and that we've cobbled together. to create that. identifiable and verifiable trust, yes, and one of the most interesting ideas to me that came from the monetary side of the blockchain project was the notion that coloring coins correctly assign properties to a particular currency and, in particular, assign those properties of way that they allow you to do things like bring up the graph of past transactions, you know, there's kind of an obvious application for this, which is something that would look a little bit like an extreme version of a boycott, divestment and sanctions approach, a model in which It's like I wouldn't touch it. money, my wallet automatically won't touch money that's been exchanged with the following as kind of a very extreme way to eliminate those things, but there are also ways that I think it could be applied to clean up the whole logistics process of many types. of bad actors, but trying to improve a supply chain in some way depends a lot on who is the better version and what exactly qualifies, but also on how you quantify, say, some kind of smart contract system, there are Multiple ways I could see this being counterproductive and one is the way it's implemented, for example leaving certain types of bad behavior untouched or unexamined, or one that seems even more serious to me in some respects, is creating a scam. extremely inflexible, such as because humans enter into legal contracts. are actually very flexible, like there's a lot of room to move and renegotiate, yes, but we already have real world versions of some of these nightmare scenarios where, for example, your child has a medical emergency and you can't unlock your car because We are two days behind on payments, so the car system will no longer respond to the app mechanism that you are supposed to use to drive it.

The barrier is a kind of rigidity in the structures that may not adapt to the real ones. life scenarios very well as you and I have been talking, one of the things that keeps coming up is that we tend to hold new technologies to an unrealistically high standard in terms of what they are supposed to offer, rather than comparing them to systems really existing where we can start to see the possibility that even a slight incremental improvement would still be a huge gain, the system we have today is also broken, right? It's hard to compare it to a perfect future, just like we compare, you know, autonomous vehicles to this one.

Very high standard because the machines are doing it, it should be perfect, there should be no car deaths and when you say, well, there are hundreds of billions of car deaths on the roads due to human error today, I think we're at a similar place. We're going to see problems with this technology and we're going to need to develop multiple types of standards that also have some flexibility, but there will also be a version of a system that will allow us to fix some of the things that don't work. Today, blockchain may seem complicated, but at its core it is just another tool for humans and eventually robots and other types of identities to trade at scale and make that trade more decentralized and is part of our future, for what's important for people to have these kinds of conversations and start learning about this