Taking Blockchain mainstream takes more than coding skills
Blockchain is a genuinely new technology, but the transition period from now to Blockchain nirvana requires that a bridge between old and new technology be built. Building this bridge requires more than just great technical skills, because old and new systems of thought must be brought together to bring businesses, consumers and citizens value propositions they both understand and cherish. Building such value propositions requires an understanding of business and people that few exceptional coders possess. It is unlikely that these few can do all that needs to be done.
- By: Rasmus Winther Mølbjerg og Mads Stolberg-Larsen
- Published: 13-09-2017
Blockchain hype and reality
If the Blockchain hype has not hit you yet, rest assured - it will. To demonstrate that just look at the graph below, which shows Google searches for Blockchain, Bitcoin, Ethereum and Distributed Ledger Technology.
In our view, the number of Google searches will keep rising for one simple reason: Few people seem to understand the technology and since consultants, coders and other people, who like to consider themselves ahead of the curve, are yelling “BLOCKCHAIN” at the moment, many people will try to find out, what they are yelling about.
As a service to readers unfamiliar with Blockchain, we would like to provide a quick rundown of what you will find out through one hour of average to above-average desk research:
- Blockchain is the technology powering Bitcoin, a cryptocurrency invented by the mysterious Satoshi Nakamoto (who is he?!?).
- It has huge potential to disrupt financial markets, governments, businesses, society and everything in between, because it is really revolutionizing (great).
- It is a distributed ledger (what is that?), which uses cryptography (okay) together with game theory (what does prisoners have to do with this?) to ensure that all nodes in the network are in sync and value can be transferred between them (now I understand! Or wait, maybe not...).
- If you invested in it five years ago, you would be a millionaire or richer (bummer).
To put it bluntly, there is not much value in trying to desk research your way to great Blockchain understanding unless:
- You understand what a cryptographic hash function does.
- You understand the basic security principles of public-private key cryptography.
You may be able to infer some parts of the basics by reading easy digestible blog-posts, more difficult to understand Wikipedia articles and 5-minute YouTube videos, but beyond that it is our experience that intense courses that distil the online information overload both supplies better and quicker understanding of the topic. This is because any such topic will provide you with at least a high-level understanding of both what a cryptographic hash function does and what the basic security principle of public-private key cryptography is.
With that being the case we would first like to lay out these two concepts under one simple dogma: We cannot use any words that are academically correct.
Blockchain explained without using a single academically correct term
To give a high-level explanation of what Blockchain is, we first explain the problem that the infamous Satoshi Nakamoto solved when he created Bitcoin. We then introduce the central building blocks of a Blockchain in the form of the “digital fingerprint generator” (cryptographic hash function for the technically inclined), “digital safe” (public key/wallet address) and “digital safe-key combination” (private key). Finally, we relate the concepts to each other in order to explain how Satoshi Nakamoto solved his problem and thereby created Bitcoin.
Satoshi’s problem: How to not copy digital information?
The problem that the good Satoshi Nakamonto faced is peculiar because we don’t normally think about how the internet works, we just use it. However, when you want to create a digital currency, it is pretty darn central how the internet works, and the central problem that Satoshi faced was that normally, when we send information over the internet we don’t actually send it. We send a copy of the information.
For example, when you send an e-mail to Janice in Accounting what happens is that you send a copy of the text that you have written to Janice. The e-mail is stored on both your and Janice’s computer. That of course is not a problem when we are talking about e-mails, but when we are talking about money, we would like to be sure that we don’t create DKK 42 every time we send DKK 42 to Janice in Accounting. If we did, inflation would spiral out of control and the digital currency would be worthless.
How do we solve this digital copy problem today? Well, we have banks or other central parties that credit/debit accounts. When sending DKK 42 to Alice, Bob or Janice, the banks act as a central third party that makes sure to adjust Alice, Bob or Janice’s account as well as your own account.
But what do you do when your goal is to not have a central third party but a decentralised system instead? You create a shared “notebook” that credit/debit people’s accounts. Before explaining how such a notebook works, we need to first explain its central building blocks.
Central building blocks of a decentralised accounting notebook
As already mentioned, the central building blocks for a Blockchain notebook are:
- A digital fingerprint generator
- A digital safe and a digital safe-key combination.
The digital fingerprint generator does one simple thing. It takes a digital input of arbitrarily length and converts it to a number. The number is written with a computer science numerical system, which means that it does not look anything like a normal number, instead it looks like a random series of letters and numbers, which is exactly what ...
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Rasmus Winther Mølbjerg
Rasmus is Blockchain Lead for Deloitte Copenhagen. He works in Deloitte Digital, which is driving the future of digital in companies, governments and NGO's. Rasmus' specialties include Organizational Change Management, Innovation strategy and implementation as well as Blockchain.
Mads is part of the core Blockchain team in Deloitte Copenhagen. He works in Monitor Deloitte, which delivers strategic advice to companies, governments and NGO's so they can grow with confidence. Mads is interested in creating business cases around Blockchain technology and recently helped his team win the corporate case in a Blockchain-hackathon sponsored by Maersk, Nordea and Nets and a number of startups.