Blockchain 101
Non-technical introduction to blockchain (Internet 3.0 or Internet of Value)
Blockchain is the Next-Generation Internet
The Internet was created to share information. During the Cold War, the United States government needed to mitigate the risk of nuclear attacks on centralized communication infrastructure after the Soviet Union launched their Sputnik 1 satellite. This led the U.S. Department of Defense to introduce the Advanced Research Projects Agency Network (ARPANET) on October 29, 1969.
Other computer networks emerged for specific purposes and eventually they adopted a standard protocol called Transfer Control Protocol/Internet Protocol (TCP/IP) on January 1, 1983 which is considered the official birthday of the Internet.
Internet 1.0 = Email and Websites
Websites didn’t exist until August 6, 1991 but very quickly millions of people all over the world were able to easily share information via email and basic websites.
Internet 2.0 = Video and Mobile Applications
Facebook went live February 4, 2004 and emphasized user-generated content, ease of use, participatory culture, and interoperability for end users. Richer multimedia like video became much more popular for consuming content and YouTube officially launched on December 15, 2005. Apple introduced the App Store on July 10, 2008 and mobile apps are currently used for everything from communication and social media to e-commerce and on-demand services.
Internet 3.0 = Value and Decentralized Applications
Blockchain is often called Internet 3.0 or the Internet of Value. Instead of transferring information or content, blockchain technology enables the reliable transfer of value without the need of a central intermediary.
Early adopters are already using decentralized applications (dapps) for protecting their personal data with self-sovereign identity, proving property ownership with immutable records, and generating wealth with innovative financial products that lack equivalents in traditional finance.
Blockchain = Distributed Ledger Technology
A public blockchain is simply open-source software running on a global network of computer nodes and Distributed Ledger Technology (DLT) refers to the functionality of a decentralized database.
Instead of a relying on a centralized system to manage records, a global peer-to-peer network shares and updates data in real-time which makes the process more secure, faster, and cheaper. Full transparency provides a high-level of trust and fraudulent activity is disincentivized.
Cryptography secures data on the blockchain using advanced mathematical functions and ensures it can never be modified or deleted. Imagine a cloud-based spreadsheet accessible by anyone where all previous data is permanent and new data is append-only.
There are many types of blockchains, just like there are many types of computer networks such as private corporate Intranets. The best known public blockchain is Bitcoin and my next article will explore decentralized digital assets.