Opinion: Bitcoin, not Blockchain


I had been waiting a while before writing this, because I wanted to capture the essence of why so many people confuse blockchain with distributed ledger technology.

My goal today is not to call "crypto" -experts "for propaganda misinformation (intended for wordplay), but to explain to each of you why you understand the correct definition of blockchain and consensus arguments distributed

For me there is a fundamental difference between Distributed Ledger Technology (DLTs) and blockchains, so many technologists and marketers keep forgetting: the actual monetary incentive that keeps this database operating in a decentralized way

There is no easy way to say it, but most likely you lied

When you read about linkedin or twitter, post about how private- "blockchain" as hyperledger and the like will change forever supply chain and the financial sector, and as this technology will "fix" all the problems in most business sectors, you're probably eating crap.

Not c & # 39 it is no purpose in having a decentralized system controlled by a small group of people; if this is what you are looking for, why not just use DLT and cloud computing?

– this article should not be taken as financial advice as it represents my personal opinion and opinions. I have some savings invested in cryptocurrency, so take everything I write with a pinch of salt. Do not invest what you can not afford to lose and always read as much as possible on a project before investing. Never forget: with great power comes a great responsibility. Being one's own bank means that one is always responsible for one's own money

Commonly used data structures

Before jumping to the problem in question: how to distinguish between blockchain and DLT, first list the data structures most commonly used.

  1. Arrays : a matrix is ​​the simplest and most used data structure. Other data structures such as stacks and tails are derived from matrices.
  2. Stacks : Store the previous states of your work (which are limited to a specific number) in memory in such an order that the last one is displayed first. This can not be done simply by using arrays. Here's where the Stack is useful.
  3. Code : Similar to the Stack, Queue is another linear data structure that stores the item sequentially. The only significant difference between Stack and Queue is that instead of using the LIFO method, Queue implements the FIFO method which is the abbreviation of First in First Out.
  4. Linked Listings : a linked list is like a chain of nodes, where each node contains information as data and a pointer to the next node in the chain. There is a head pointer, pointing to the first element of the linked list, and if the list is empty it simply points to nothing or nothing.
  5. Trees : a tree is a hierarchical structure of data consisting of vertices (nodes) and the edges that connect them. Trees are similar to graphs, but the key point that differentiates a tree from the graph is that a loop can not exist in a tree.
  6. Charts : A chart is a set of nodes connected to one another in the form of a network. The nodes are also called vertices. A pair (x, y) is called edge which indicates that the vertex x is connected to the vertex y . An edge may contain weight / cost, showing how much the cost is required to cross from vertex x to y .
  7. Search for (they are actually trees, but it is still good to call them separately): Trie, which is also known as "Prefix Trees", is a tree data structure that turns out to be efficient enough to solve problems related to strings. It provides quick recovery and is mainly used to search for words in a dictionary, providing automatic suggestions in a search engine and even for IP routing.
  8. Hash Tables : hashing is a process used to uniquely identify objects and archive each object in a unique precalculated index called "key". Therefore, the object is stored in the form of a "key-value" pair and the collection of such elements is called a "dictionary". Each object can be searched using that key. There are different data structures based on hashing, but the most commonly used data structure is the hash table.

So observing the above we can quickly conclude that the blockchain is at a hash table level with a hierarchical tree format – this is, it contains blocks with input and output transactions (UTXO), recorded and sent in chronological order.

The important conclusion in this short section is that other cryptocurrencies may use different types of data structures to achieve objectives similar to those of the blockchain, yet the common denominator on all is the underlying cryptocurrency associated with it.

Blockchain: a definition

First of all; to correct people from saying "blockchain, not bitcoin" we should understand what blockchain is.

Usually, people put it as the ledger in which the bitcoin operates ; this and a little more:

Bitcoin and its blockchain are inseparable because one can not exist without the other. A blockchain without cryptocurrency is nothing more than a centralized database, which can be distributed between multiple regions and nodes, through cloud computing. Furthermore, a cryptocurrency owned by a small group of people is just a digital currency, something we are familiar with.

The concept of blockchain that many of you appreciate means: decentralized consent through a distributed protocol, without permission and without trust. .

Nothing more, nothing less.

See, it's easy enough to create a private database, kept under your private nodes / servers, designed to function as a blockchain without the actual cryptocurrency. But that's right: a database (like Oracle or SQL) a private group of people. They can give you read-write access to that ledger, but there's no decentralization whatsoever because there's no monetary incentive.

The most important part of the blockchain is what the white-collar workers, like the big cats of bankers and big companies, are trying to kill: the small, small, absolutely insignificant feature that gave birth to a world where the decentralized money is a reality – Bitcoin. [194590010]

Distributed Systems: A Definition

If I had to invent a single sentence to explain which distributed systems (and DLT) would be something like this: "the distributed system can be thought of as multiple participants acting as one for an external user ". It can consist of multiple moving parts, take on different roles at different times, cover one another, cooperate, transmit messages, temporarily store information for the other party, but eventually all these parts have the same purpose.

Another way to think of a distributed system: we have several participants (processes) and links between them.

How are the DLTs different from the blockchain?

Without going into many technical aspects, a DLT or distributed accounting technology is just a bunch of redundant databases distributed across different regions (think of cloud computing or ERP systems). The point of DLT is to have the same data distributed on multiple servers, which can be accessed and updated at any time and with certain timestamps, then follows a chronological order.

A central authority (system administrator) gives different permissions to different user groups (via roles), which gives them access to a common system (or ledger) that they can update.

Charming, is not it?

The blockchain, however, should not be put in the same box as DLT because it contains different properties; in reality, the DLT should be called Distributed Databases, just to prevent people from thinking that the word "ledger" refers to a real ledger; data storage can take many formats, so this blockchain is simply a data structure – think of IOTA and Circle Directed Acyclical Graph or Hashgraph & # 39; s ledger like other examples of alternative structures.

the brilliance of the first (and of all) blockchain is that it has a cryptocurrency associated with it. It is that cryptocurrency that works as a means of payment between the user, being the person who wants to write some data in that ledger, and the miner, who is the person who records the data in the ledger and validates it and protects it . [19659002] Without cryptocurrency there would be no incentive for the miner to keep the register safe

As you can see, the difference is that although both the DLT and Blockchain have a distributed infrastructure, the next decentralizes even governance and ownership – become yours as long as you have a key to open the door .

DLTs vs Blockchain

Are we going deeper into the rabbit hole? Wonderful!

Why do so many people confuse blockchain with DLT, so?

The answer is quite simple: because many people do not understand this technology or its purpose. Fortunately for me and some of you, we live in places where money is more or less stable (except during the financial crisis that almost never happens, lol); in the sense that we really do not see a reason for this technology.

We had to enter the blockchain frame without a real need, so we created ideas and concepts on how this decentralized technology could potentially change every aspect of our lives.

As I said in the beginning, the blockchain hype seems to be associated with a number of different sectors of activity. From the land register, to finance, people go crazy for this.

"It will make everything faster!", They say.

"It will change trade forever!", They say.

But when you ask those same people of Bitcoin, they shoot by saying "Bitcoin is just a clamor" and the real value is in the database where Bitcoin, the blockchain, operates.

How can it make sense, seriously ?!

The true value of this technology (a) is the fact that it introduces a cryptocurrency that allows us to decentralize everything, or (b) the database that keeps information secure?

The funny thing is that both (a) and (b) need Bitcoin to actually work (decentralized), so it was just a trick question for all of you skeptics.

What I want to say is that there is little purpose in having only half of this wonderful technology works for you, while the other half is removed from its wonderful properties.

The central problem m of all the misunderstanding about "Blockchain vs DLTs", is that people use the concept of decentralized consent protocol to talk about the blockchain – which is one of the many ways different to organize information in a given structure .

The blockchain today

The key to power is to know how to maintain it.

Google and Microsoft were once disruptive companies trying to change the world, each in its own peculiar way I think they managed to do just that, allowing billions of people to access information at low cost. But that information is kept under close surveillance and now it's time to pay the piper.

There is some new regulation, like the GDPR, which is trying to tackle the exact same problem, even if at the end – as usual with the laws of the EU – it will make the whole way The Internet is more inefficient and information hacking problems will continue to occur. In the end, the information will remain stored in the same previous locations: on the servers of private companies.

These cookie agreements prevented cookies from being stored in web browsers? No.

They simply made navigating through the network even more painful and time-consuming.

More however, we are not really benefiting from our stored data in so many different locations, besides not getting properly rewarded for participating in most networks.

If is the information then those that hold it are really powerful, right? Instead of earning money from the websites you visit or from your online behavior, some companies are compiling this information into a nice and presentable package and selling it to the highest bidder .

Of course, now companies have to give back data privacy, so you think you're in charge.

Except that, how can the EU or any other executor actually verify such statements? With the abundance of websites coming from different jurisdictions, it will not be an easy task to ensure that companies are actually eliminating user data or not selling them without permission.

Is setting up user data regulations the solution to mismanagement of information or data breaches?

The Power Of Decentralization

Probably a simpler and cleaner answer is to construct products that restore power to users instead of forcing companies to navigate in the website is even worse (cookies are so useless) and follow rules that are difficult to comply with.

This is precisely the goal of Bitcoin.

Is there anything special about that blockchain ledger?

Not really. As we discussed above, it is simply a data structure, a bit like a giant spreadsheet, which keeps track of what everyone has.

What do you need to access that spreadsheet?

Bitcoin .

Without cryptocurrency there would be no way to write in the blockchain, because since it is a decentralized network, it needs some sort of currency that people pay to protect their information – which in this case is how much money they own.

But wait! C & # 39; it's more!

We will soon discuss why it is so important to believe in the power of decentralization, but in the first place, what do you think should happen for the mass adoption of cryptocurrencies?

Is a technical problem ? How the scalability that is usually represented by the shadow of transactions per second?

Or could it be a philosophical question ? Like the fact that it is difficult to earn / get cryptocurrency, because companies still ask you to buy some tokens instead of giving them as a reward for user participation

The Killer App For CryptCurrency

If we want to understand how this decentralized the register it can change the world, we must reflect on its properties and how they can be applied to most companies.

As you know, decentralization means that more people can participate in all aspects of governance; if I had to guess, does the democratic system seem efficient?

This is because it is not. There is really no way to allow for better redistribution of wealth and at the same time have the most efficient system in place.

It makes little sense for most organizations to exchange typical IT infrastructures with a blockchain-based system – unless their goal is to decentralize value in some way.

We arrive, therefore, to two important conclusions:

  1. DLT are great for centralized organizations and products [19659011] Blockchains are great for decentralized organizations and products.

Now that the whole image is starting to take shape, we can begin to understand what the killer application might be: something that changes the way organizations are structured and the value is created .

Combining the power of a distributed infrastructure with decentralized governance and autonomous consent rules that enable peer trust we get a complete An innovative way to create and distribute value.

Not just money, but literally everything we want.

Of course, it will be great to monitor the origin of products on a public ledger or have my identity safely stored somewhere I can only access; I'm really excited about all those amazing use cases. Yet, at least for me, the true disruptive nature of blockchain is how we can now better distribute value across a network.

The path to the new internet must be paved with a new meaning to gain value.

Hum …

But how would it be?

The Web 3.0

There are currently hundreds of projects that create decentralized versions of platforms known as Google, Twitter, Facebook or Linkedin. Some projects such as Steemit, the Brave browser or the Wabi milk detection app have already implemented real-world applications that work in a decentralized way.

The trick for any product, platform or company that creates a decentralized network is to implement incentives correctly so that most of the benefits go to users.

Why would not you like to be paid for your online contributions? Or to share your data with third parties? And if we start evaluating everything we do online?

The reason why blockchain technology is needed will not really be understood by most until we reach the point where we do not remember how it used to be without its existence.

Just like the Internet or cell phones.

The blockchain we know today, as a database or ledger used to store bitcoins, will change in the coming years as more people create ways to decentralize the distribution of value. Perhaps all the blockchain will interact with the Bitcoin blockchain and will remain a standard, as was the first one.

Or not.

The point is that, whatever the blockchain, we have to change the way we measure the value to allow this technology to grow. The more we struggle to keep it under a central authority, the more difficult it will be to leave that mentality.

If tokens can represent virtually anything sooner or later companies will start to tie those in their business models and the transition from to the value of users to give value to users . As long as there is a symbolic representation of a particular company, product or idea, there are several ways to move from a centralized structure to a network, where all token holders benefit in the same way.

If our vision is to decentralize the value is there a better way to do it then changing the way we earn it?

The Web 3.0 is nothing but a new way for companies to give back value to users (the legitimate owners

Why enrich the few when we can enrich the many?

If the goal final is to better redistribute the value, there is definitely no blockchain without Bitcoin .

I am sorry to disappoint!

As I said at the beginning, the reason why I'm writing on this topic is to eliminate the confusion between DLT and Blockchain – my goal is not to undermine those who think differently, but I want you to know that any technology can have positive and negative outcomes. blockchain associated with centralized digital money, we are giving away all our privacy to third parties.We do the opposite, we take back what is rightfully ours – the ability to freely exchange value online, which for me is the only oneway to use this technology.

If you have a different view on the subject, please do not remember to let me know

Any comments, feedback or ideas are always welcome!

Connect with me on twitter @febrocas!

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