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What Is A Blockchain? Is It Hype?

A technology based on a decentralized network may offer more control over what people do online.
Maybe you’ve read about the blockchain and don’t get the fuss. (I am sheepishly raising my hand.) Maybe you’ve never heard of it.
My colleague Nathaniel Popper will explain what you need to know and separate the blockchain hope from the hype.

Nathaniel spoke about why some technologists can’t shut up about the blockchain and, in researching his latest article, what he found about how it might — or might not! — help people remodel the internet with less control by giants like Google and Facebook.

Shira: I need this explained to me repeatedly. What is the blockchain? And how is it different from Bitcoin?

Nathaniel: The blockchain in the simplest terms is a ledger — a method of record keeping — that was invented for Bitcoin, which is a cryptocurrency. Unlike conventional records kept by one bank or accountant, the blockchain ledger uses a bunch of computers that each add new entries visible to everyone.
The blockchain design that Bitcoin inspired has been adapted for other kinds of records. The underlying principle is there is no central authority controlling a single ledger. Everyone who is part of the system controls a decentralized and shared record.

What’s an example of how this might work?

A normal currency exchange might take your money, hold it and also hold the currency you buy. If it gets hacked, you could lose your money. With decentralized financial exchange based on the blockchain design, like what Bitcoin uses, you don’t have to trust an authority with your money. Two people are automatically matched up through software, and they make the exchange directly with one another.

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Blockchains sound pie-in-the-sky.

That’s what I believed for a long time. But these blockchain ideas are shifting from concepts to living — though still clunky — experiments.

On social networks like LBRY and Minds, people can see for themselves how it’s different from YouTube or Facebook. The concept is that no company is in control or can delete your account. Each user can see that a posted video or other material wasn’t altered by anyone else.
Whether you agree or disagree with Twitter for kicking out Donald Trump’s account after the attack on the Capitol, it’s an interesting idea that under a blockchain-based design, he might have been able to take his more than 80 million Twitter followers to another social network instead of losing them all.

It’s going to be awhile before people can assess whether these blockchain applications really do what they propose and are an improvement over the status quo. Bitcoin has been around for a while and smart people still disagree about whether it’s useful.

There are always downsides. What are they for the blockchain?

One big downside is that central authorities are efficient at building reliable software and fixing it when things break. With a decentralized network of computers and programmers, there’s no boss to say that this flaw must be fixed in 20 minutes.

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And when there’s a centralized system in finance or social networks, a government or another authority can stop terrorists or other criminals from using it. With blockchain-based designs, it’s harder to exercise control.

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Why is there such fanatic devotion to Bitcoin and blockchains?

Bitcoin is like a social movement. The people using the system feel like they’re in charge because in essence they’re making the system run. That’s true for blockchain designs, too. They make people feel empowered in a way they aren’t with conventional software.

Bitcoin started with a lofty idea to democratize money. But now it’s like Beanie Babies — a thing people buy to make money. Will the blockchain concept also degrade into something less pure?

It’s true, many people using Bitcoin are just betting it will go up in value. But Bitcoin also gives people an incentive to get used to the weird concept of big systems that aren’t controlled by a single authority. It’s likely that the excitement and even some of the greed around Bitcoin helped fuel these blockchain experiments.

Source: Nytimes (Shira Ovide)

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