Blockchain in business | Executive People

Blockchain’s brief history is inseparable from cryptocurrencies. When Satoshi Nakamoto *) wrote a white paper on bitcoin in 2008, the underlying blockchain was the real technical innovation. The technique was developed in the 1990s. In 1991, Stuart Haber and W. Scott Stornetta wrote a paper called ‘How to Time-Stamp a Digital Document’. With every cryptographic task, a timestamp scheme is an important part of ultimate security. The premise of Stuart and Scott’s paper was that it is almost impossible to make ‘fake’ timestamps, especially if you connect them in consecutive blocks.

Share documents

The basis of their paper was that it was not reliable to store digital documents centrally on a computer. A better way was to distribute these documents, possibly in parts, across multiple computers. Their challenge was to find a way to verify the authenticity of data without revealing the content. When a document has been timestamped and compared to another document with the same timestamp, the two documents should be nearly identical. The chance of a comparable document having the same time stamp was small.

This method of comparison was not really secure because the person comparing the documents could also see the content. Therefore, the cryptographic hash function was introduced. By creating a hash code of the document’s digital content according to an established algorithm and linking it to the relevant time stamp, both the time of creation and the content of a document became unique. After all, if just one word or letter in the document was different, a different hash code would result. In addition, a hash code was relatively small and could easily be sent digitally. Finally, a digital signature could be added redundantly, which the ‘creator’ unequivocally registered. Hashcode and timestamp were quickly recognized by judges as digital ‘authenticity’ of documents.

Content Addressable Storage

Stuart and Scott’s paper was the basis for CAS: Content Addressable Storage, which I already mentioned in a previous ‘content addressable storage’ blog. Developed in early 2000 by the Flemish Paul Carpentier and Jan van Riel at the Belgian company Filepool in Wavre and taken over as a company in 2001 by EMC Corporation. He released this storage technology under the name Centerra. The contents of a file were converted to a cryptographic hash function like the document’s ‘key’ or ‘fingerprint’ and linked to a time position. Exactly as described by Stuart and Scott in 1991.

In 2008, Nakamoto – as he notes in footnotes – used the original 1991 paper from which he developed the final blockchain concept. The story of this is beautifully described on this website. Subsequently, Nakamoto launched bitcoin as a virtual currency in January 2009. And many other digital currencies followed, all based on the blockchain principle. However, blockchain technology can be used much more broadly than ‘just’ for cryptocurrencies. We can see that it is becoming a serious business technology right now. A new database technique for storing digital data in an open, secure and immutable distributed manner, based on cryptographic hash functions described above. Blockchain has a great future in any business organization.

Exchange of value

In a previous blog, I described how with blockchain – as an immutable, distributed database – we can for the first time capture and distribute value via the Internet. Value captured in tokens, such as bitcoin or other coins, but also value as proof of ownership, such as an NFT, or value in a transaction, such as a smart contract, or value in an application, such as a dApp, or value in an organization such as a DAO. With these important functional elements in Web3, we can organize our processes, internal value creation and a value organization in a much more integrated, but above all safer way. Partly because the database is by definition immutable and should preferably be built decentralized. A paradigm shift from the top shelf.

We see the use of blockchain technology entering the business world in many places. It is a time comparable to the late 1990s, when we were first able to connect data to each other using hyperlinks. HTML, SGML and XML were the ‘mark-up languages’ that we needed to make digital data organized for human use usable for the first time. Human-readable and understandable data that the computer also understood and could manipulate. The basis for search engines, websites, digital publications and programmable transactions. You can see blockchain – like the revolutionary hyperlink back then – as a comparable new paradigm shift for the Internet.

Web2 and Web3

We have built our current internet world over the past twenty years on the basis of inventions and innovations from the eighties and nineties. And integrated with a completely new mobile world around the fixed infrastructure of the old internet design, which we later called Web1. Just as the old Web1 world still exists, but has been supplemented with the mobile Web2’s new features and capabilities, Web3 is now becoming the added value to existing Internet networks, cloud and especially edge solutions. It is not a question of either-or, but one-and. And just as Web1 was superseded by Web2, Web3 will do the same for the current Web2 world for the next twenty years. Web3 will be the dominant experience.

Therefore, we see the first Business Web3 solutions, which usually also have the ability to function in the ‘old’ Web2 world. Practical for new technology: in case of problems, you can fall back on the old, familiar options. Still, Web3 technology will quickly gain traction. Especially because we can do so many things much faster, safer and more protected. As someone said, ‘it’s a much more efficient way of condensing things that are currently illiquid’.

Privacy

Blockchain has the potential to bring more privacy to a privacy-starved world. Provide information about ourselves every day. Both voluntarily and without knowing it. Blockchain makes it possible to tokenize and even pseudonymize a person’s identity. This gives companies a way to establish ‘decentralized identities’, giving users full control over when, where and with whom they share their credentials. This sovereign identity even makes it possible to identify or log in decentralized, mobile and without a password, based on your actual, verified identity.

By unleashing AI and machine learning algorithms on the river of data flowing through both private and public blockchains, we can discover patterns we could never find otherwise. We can share data more securely and help ‘democratize’ AI, making it more accessible and usable. Conversely, AI can make the blockchain consensus process more efficient and energy efficient. The possibilities for applying AI to blockchain data are literally endless. Blockchain has the potential to be the enterprise platform that will end all current enterprise platforms.

*) Whether Satoshi Nakamoto was a real person or a group of people is unknown. The name is also seen as an abbreviation of the companies: Samsung, Toshiba, Nakamichi and Motorola. Others see cryptography and digital privacy pioneer Hal Finley (1956 – 2014) as a possible developer. He lived close to ‘Dorian Satoshi Nakamoto’ in Temple City, California for 10 years and received the first bitcoin transaction that Satoshi sent. In a final interview in 2014, already seriously ill with ALS, Hal denied being the developer of bitcoin. So we may never know…

By: Hans Timmerman (photo)

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