The potential benefits of the blockchain
are more than just economic—they
extend into political, humanitarian,
social, and scientific domains—and the
technological capacity of the blockchain
is already being harnessed by specific
groups to address real-world problems.
For example, to counter repressive
political regimes, blockchain technology
can be used to enact in a decentralized
cloud functions that previously needed
administration by jurisdictionally bound
organizations. This is obviously useful
for organizations like WikiLeaks (where
national governments prevented credit
card processors from accepting
donations in the sensitive Edward
Snowden situation) as well as
organizations that are transnational in
scope and neutral in political outlook,
like Internet standards group ICANN and
DNS services. Beyond these situations
in which a public interest must transcend
governmental power structures, other
industry sectors and classes can be freed
from skewed regulatory and licensing
schemes subject to the hierarchical
power structures and influence of
strongly backed special interest groups
on governments, enabling new
disintermediated business models. Even
though regulation spurred by the
institutional lobby has effectively
crippled consumer genome services, 3
newer sharing economy models like
Airbnb and Uber have been standing up
strongly in legal attacks from
incumbents. 4
In addition to economic and political
benefits, the coordination, record
keeping, and irrevocability of
transactions using blockchain technology
are features that could be as fundamental
for forward progress in society as the
Magna Carta or the Rosetta Stone. In this
case, the blockchain can serve as the
public records repository for whole
societies, including the registry of all
documents, events, identities, and assets.
In this system, all property could
become
notion of encoding every asset to the
blockchain with a unique identifier such
that the asset can be tracked, controlled,
and exchanged (bought or sold) on the
blockchain. This means that all manner
of tangible assets (houses, cars) and
digital assets could be registered and
transacted on the blockchain.
As an example (we’ll see more over the
course of this book), we can see the
world-changing potential of the
blockchain in its use for registering and
protecting intellectual property (IP). The
emerging digital art industry offers
services for privately registering the
exact contents of any digital asset (any
file, image, health record, software, etc.)
to the blockchain. The blockchain could
replace or supplement all existing IP
management systems. How it works is
that a standard algorithm is run over a
file (any file) to compress it into a short
64-character code (called a
unique to that document.5 No matter how
large the file (e.g., a 9-GB genome file),
it is compressed into a 64-character
secure hash that cannot be computed
backward. The hash is then included in a
blockchain transaction, which adds the
timestamp—the proof of that digital
asset existing at that moment. The hash
can be recalculated from the underlying
file (stored privately on the owner’s
computer, not on the blockchain),
confirming that the original contents
have not changed. Standardized
mechanisms such as contract law have
been revolutionary steps forward for
society, and blockchain IP (digital art)
could be exactly one of these inflection
points for the smoother coordination of
large-scale societies, as more and more
economic activity is driven by the
creation of ideas.
Blockchain 1.0, 2.0, and 3.0
The economic, political, humanitarian,
and legal system benefits of Bitcoin and
blockchain technology start to make it
clear that this is potentially an extremely
disruptive technology that could have the
capacity for reconfiguring all aspects of
society and its operations. For
organization and convenience, the
different kinds of existing and potential
activities in the blockchain revolution
are broken down into three categories:
Blockchain 1.0, 2.0, and 3.0. Blockchain
1.0 is
cryptocurrencies in applications related
to cash, such as currency transfer,
remittance, and digital payment systems.
Blockchain 2.0 is
slate of economic, market, and financial
applications using the blockchain that
are more extensive than simple cash
transactions: stocks, bonds, futures,
loans, mortgages, titles, smart property,
and smart contracts. Blockchain 3.0 is
blockchain
currency, finance, and markets—
particularly in the areas of government,
health, science, literacy, culture, and art.
What Is Bitcoin?
Bitcoin is digital cash. It is a digital
currency and online payment system in
which encryption techniques are used to
regulate the generation of units of
currency and verify the transfer of funds,
operating independently of a central
bank. The terminology can be confusing
because the words
three parts of the concept: the underlying