Bitcoin, as the first successful blockchain implementation, is not an unprecedented breakthrough, but it is the first to be applied and adopted at a global rate. The blockchain technology comes from a history of cryptography and security research. The Merkle Tree and distributed hash tables, hit upon in the 1970s, meant autonomy, fault tolerance and scalability for distributed systems. Bitcoin built upon this loose tradition.
If it weren’t for those tools, the world would not have BitTorrent, Napster and Freenet, all of which are used in great deal by the modern web user. What Satoshi Nakamoto did first was combine these above-mentioned distributed communications systems and file sharing systems with the notion of digital currencies, many of which had been tried and failed leading to Bitcoin.
Hashcash, a key component of Bitcoin, was proposed in 1997 as a means of limiting and suppressing email spam and denial-of-service attacks. Hashcash, an algorithm requiring the sacrifice of processing power as a security mechanism, is a proof-of-work that creates the incentive structure and network verification that now powers cryptocurrencies. The hashcash proof-of-work algorithm requires a certain amount of work to compute something.
Smart contracts are a much theorized possibility for the blockchain. Smart contracts, the notion of which first written by bitgold theorizer Nick Szabo in 1993, are algorithmic. The smart contract, albeit mostly theoretical at this point, is a self-executing code for complicated asset transfers and the exchange of rights. A “smart contract” can be written and made to execute at a certain time in the future. This is an exciting possibility in the minds of the Bitcoin enthusiast, though not everyone sees the purpose.
The largest benefits of the blockchain are its security applications. Unknown variables – such as people – can transfer data and value securely thanks to cryptography, distribution, peer to peer, and open source. There’s no need for them to know each other, as identities – or non-identities – can be confirmed via cryptography.
After the implementation and development of Bitcoin, projects like Ethereum came about. Today, so-called “middleware”, such as ConsenSys, which seeks to enable new services and businesses models atop a blockchain. ConsenSys seeks to solve identification, acquisition, and other problems.
One of Bitcoin’s biggest assets is the fact that it gained first mover advantage in 2008 when it was first implemented. There are dozens upon dozens of so-called “alt-coins” or digital currencies which were inspired by Bitcoin. One that has been receiving much attention is Ethereum, a Turing-complete application, which hopes to introduce programming capacities into the blockchain beyond Bitcoin.
Guardtime is among the first private blockchains, with cross-vertical programming instead of the RSA digital signatures. A Keyless Signature Infrastructure (KSI) uses hash-function cryptography for signing off on transactions.
Similar to the Bitcoin protocol, KSI uses a blockchain public ledger for data transactions. The project seeks to get rid of key management and third parties.
Inter Planetary File System (IPFS) represents a new internet protocol meant to replace Hypertext Transfer Protocol (HTTP). IPFS seeks to solve some security challenges HTTP cannot.
IPFS uses context-driven storage, self-certification and an incentivised blockchain mechanism. This new “hypermedia distribution protocol,” looks to enable the creation of completely distributed applications, and make the internet “faster, safer, and more open.”
Enigma from MIT, based on the Bitcoin blockchain, strives to allow any code to be encrypted. In the MIT model, data can be stored, shared and analyzed without a third party being privvy. Created by MIT grad students, Enigma seeks to create a marketplace where users are able to sell the rights to use encrypted data in bulk computations and statistics without raw access to the underlying data itself.
“With guaranteed privacy, autonomous control and increased security, consumers will sell access to their data,” the creators suggest in the white paper. “For example, a pharmaceutical company looking for patients for clinical trials can scan genomic databases for candidates. The marketplace would eliminate tremendous amounts of friction, lower costs for customer acquisition and offer a new income stream for consumers.”
Another solution, Colony.io, strives to allow people to create companies online which use the wisdom of crowds and AI. Colony represents a social collaboration for distributed organisations. Users can start projects and build a workforce online. The platform distributes crypto-equity in the form of “nectar” to inspire people to work for the organization.
These solutions are all new, made possible thanks to the revelations of the Bitcoin blockchain. This means new forms of online interaction as well as cybersecurity. As Ben Rossi writes for Information-Age:
A holistic view is necessary to maintain today’s connected world. The past decade of digital transformation across industries has put our lives and livelihoods in data.
Where individuals, businesses and governments are constantly locked in a battle against bugs, fraud and malicious actors, blockchains propose an alternative.
The paradigm shift blockchains represent can offer true data integrity, advanced digital identity systems and a new way for business to offer transparency for audit alongside access for third parties.
Its not just online where the blockchain is making a difference. As CCN.LA recently covered, blockchain cybersecurity solutions could be used to secure UK nuclear power plants via the abovementioned Guardtime.