What on earth is Blockchain?
Twenty years ago, many services were revolutionised with the advent of the internet. Then came mobile computing. Now, it seems that the next revolution lies in Blockchain. While the general public could conceive what the internet and mobile services would bring about, many are at a loss as to what Blockchain means to them. Much of the mystery lies in the fact that moving a service to Blockchain will change the way the service works behind the scenes. How it will change our lives is less obvious.
The main underlying change is the concept of decentralisation. Many services we use depend on central authorities such as an identity card (government) or a credit card (bank). The downside of a central authority is one of trust. What happens if banks limit how we use our money? Recently, some local banks decided to block cryptocurrency related transactions, despite it being legal to do so in Malta – an instance of why trust is often questioned.
This is where Blockchain promises change. Many services can be decentralised, with trust being delegated to the Block-chain – a network of computers operated by anyone that choose to take part. To further explain, consider the first Block-chain application – that of decentralised money, or cryptocurrency.
Money can be seen as a service which allows for the exchange of goods and services. I need not exchange my working time directly for food, but I accept money in return for my time, which I can later exchange for food. Being physical, money guarantees single ownership and also guarantees it is used once at a time – I cannot give a €10 note I own to two persons to get both a €10 sandwich and a €10 book.
In 2009, a digital currency that guarantees these properties without requiring a central trusted authority was proposed called Bitcoin. Decentralised management of digital assets was ensured in a tamper-proof manner by using a distributed ledger stored across the network.
One need not trust any institution when using Bitcoin – the underlying framework guarantees that the cryptocurrency can be transferred and used as one would expect with normal money. The interaction with the currency has not changed at all. But the underlying system has changed to make away with central authorities and associated trust. This underlying system is the Blockchain. Its use is not limited to currency. For instance, it can be used to keep track of property ownership, allowing transfers of ownership to be made without the need of any official rubber stamp.
There is more to Blockchain than this – smart contracts, regulation, public policy, applications, etc. The Blockchain Research Group at the University of Malta is organising two units as part of the Liberal Arts and Sciences Programme.
One aimed at the general public which provides an introduction, while the other is aimed at IT professionals who want to learn to develop Blockchain and smart contract systems. Contact firstname.lastname@example.org to receive more information.
Dr Ellul and Prof Pace both lecture with the Department of Computer Science at the University of Malta.
• Researchers from MIT are looking at ways of improving digital currencies through a set of clever protocols that prevents the Blockchain from being coopted by malicious hackers, in particular, to prevent identity theft. Since the Blockchain relies on distributed information, it is possible, albeit unlikely, that the data can be compromised. The protocol requires that every Bitcoin transaction that logs a public assertion must involve an actual bitcoin transfer.
• Ransomware is malicious software that blocks the victim’s computer and a payment is demanded before the computer is unblocked. Recent attacks such as WannaCry demanded payment in Bitcoin. Researchers are now looking at ways of exposing the paths of ransomware payments so that law enforcement can track cyber criminals. Since most ransomware victims are not bitcoin owners, they would need to set up a bitcoin wallet through which such users are given a unique payment address. Researchers tapped public reports of ransomware attacks to identify these addresses and correlated them with Bitcoin transactions, which are publicly available.
• For more interesting science news listen to Radio Mocha every Saturday at 11.05am on Radju Malta 93.7FM.
Did you know?
• On October 31, 2008, a research paper named ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ was posted to a cryptography mailing list under the pseudonym Satoshi Nakamoto. The paper details the methods required to use a peer-to-peer network (decentralised) system for electronic transactions without relying on trust.
• The proposed system is open-source and allows anyone to download the code and install it on their machines, thus becoming a node in the Blockchain.
• Laszlo Hanyecz, a Florida programmer, conducted what is thought of as the first real-world bitcoin transaction, paying 10,000 bitcoins to get two pizzas delivered.
• Bitcoins are generated at preset intervals, with the algorithm releasing new bitcoins into the network. Initially this stood at 50 bitcoins every 10 minutes, with the pace halving in increments. It currently stands at 12.50 bitcoins every 10 minutes, thus generating 1,800 bitcoins per day.
• As of April 1, 2018, there are 16,952,513 Bitcoins in circulation.
For more trivia see: www.um.edu.mt/think