Blockchain 101
BLOCKCHAINS
Blockchains basically solve one major problem, double spending. Imagine if you had a $100 bill. You could only spend it once in a store. If that $100 existed in a digital currency format, you could run into a scenario where you could enact multiple transactions with just $100, multiple times. This can be done because digital currency can be easily reproduced.
Enter, the blockchain.
"Block chain does not need to be perfect, it just needs to be better than whatever the alternative is."
BLOCKCHAIN JARGON
Before we delve into the technicalities of a blockchain, we must first learn its jargon.
Hash — It is a unique signature that is generated from data. Hashing algorithms are utilized. They hash the data such that it is mathematically impossible for two different data sets to output the same hash.
Node — These are computers or actors on the network which talk to each other. For the sake of a decentralized ledger, each node holds a copy of the blockchain.
Decentralized, Distributed Ledger — This means that the data or blockchain is not stored at a central server; however, a copy of the blockchain is stored at all the nodes participating in the blockchain.
Transactions — It is a record of an event executed, in this case adding a block to a blockchain will be a transaction.
Smart Contracts — These are computer programs on a blockchain that automatically follow rules and complete agreements (like payments or trades) without needing a middleman.
Consensus Mechanism — These are algorithms or techniques that make the blockchain further secure by adding another layer of consensus, the consensus is usually "a rule" that all the nodes on the network agree on.
Gas Fee — This is a monetary amount or capital that the actor must put up while executing transactions on the blockchain. On platforms like Ethereum, a gas fee in ETH is charged (usually ~$1). This further adds another level of security since the participating actors have some stake in the blockchain.
THE GOOD
Are blockchains needed?
Imagine a world where you can visit any state, city, and country and if you get hurt (god forbid) and have to go to the hospital and you don’t speak the language or are unconscious, all of your medical records are easily accessible in an instance and not have to worry about filling out paperwork. That is one of the many things blockchain can offer.
But you really have to understand what the internet is in the first place.
At first, when you hear about what the blockchain actually is (just a ledger, a database, basically), it sounds underwhelming, but when you realize the true nature of what the internet is, i.e., a method of communication between different devices, you start to realize that blockchains and the internet itself aren't that different; they are highly complementary.
In the future, it's quite possible that the blockchain becomes a bottom layer, much like TCP/IP for which communication between computers, phones and other electronic devices are based on; so it will be used by literally everyone without people even knowing what it is (just like most people don't have a clue what TCP/IP is).
The blockchain has an additional benefit of being able to attach a currency on it, which means that not only can you communicate between different devices around the world like the internet, you can also seamlessly exchange value.
After the advent of AI, we began to put AI in everything, in some areas it made sense; breast cancer detection, weather prediction, customer help-desk, in some areas not so much; AI-generated art, AI-powered writing tools that deliver sub-par articles with no originality, etc.
More often than not, companies like to ride the buzzword wave to attract rich and dumb investors. Funnily enough, sometimes they club these buzzwords together; AI Blockchain, Cloud AI, Cloud AI-powered Blockchain using Deep Learning in Web3. Hearing this, your average millennial investor will lose their mind. The engineer will look at you crazy.
This was the reason every project in 2009–2013 had "Blockchain" in it. The same reason why we have "AI" in everything in post-2023; Hype.
When the self-driving drones that are delivering your food and coffee to your doorsteps arrive, they can, through blockchain verification, chat with your front door to prove their authenticity, and your front door (that has AI technology) will check with the blockchain and allow the delivery of your goods.
etc etc etc.
That's just some of what's possible in the future, not counting some of the more traditional uses like normal banking, or hiding assets and tax evasion for rich people (which is like a 100+ trillion dollar market).
But that all depends on a lot of things like AI development (which is growing extremely quickly) and other things. It's not going to happen in the near future, but the blockchain WILL become ubiquitous in the future and become Internet 2.0.
THE BAD
There are plenty of problems or issues that may arise with blockchains — the 51% attack where double spending could still be done theoretically, high energy consumption that comes with maintenance of nodes — but the bigger reason why I think blockchains are not really needed:
Overhyped.
Talking to a few people who worked in the blockchain field can only describe it as either a funded research project that leads nowhere or a scam or a front for money laundering.
A phrase I came across in my research was "Blockchain was always a solution looking for problems." Firstly, the phrase goes hard. Secondly, it makes sense.
Since the advent of blockchains in the global scene, for all the problems it solves, where is it actually being implemented today except cryptocurrency? A rational person would think "Why don't we use blockchains to vote?"
tl;dr — it's a very bad idea. Anon on Reddit explained it well.
"Voting electronically, in general, is a terrible, terrible idea. Just off the top of my head here are a few issues."
"First, your secret key eliminates the anonymity of the voting booth, which is a massive flaw..."
"Your secret key system makes it trivially easy for you to show someone else how you voted..."
"Someone makes a worm that steals your key when you put it in? Congrats, they stole your vote..."
"Lastly, a blockchain would add all of the usual issues with electronic voting, but also the added benefit of being subject to some form of 51% attack which... yikes."
Well, that’s just someone on Reddit — what do they know? MIT experts have said more of the same thing.
MAKING OUR OWN BLOCKCHAIN
If you’re someone normal, you would just use a pre-existing blockchain platform for your project. Platforms like Ethereum, Hyperledger, and IBM Blockchain are the "standard" for blockchain applications.
However, with the safety of a large and recognized blockchain comes its own disadvantages; high operating cost and slow processing (transaction) times.
If you're someone like me — someone who, at the thought of building something from scratch, building something out of nothing, makes you feel a good tingle in your spine — then you should make your own blockchain.
I did, sort of. It works. A little bit, but it works.
The codebase is a mess, venture at your own peril