Demystifying Blockchain

David Aldolfatto: Demystifying Blockchain-- so I thought of this just yesterday. You are-- I'm going to experiment on you here. So consider a history textbook published in 2016 about events that transpired in, say, 2014 and 2015. And so there's chapter 1 and just chapter 2. Maybe it's the history of St. Louis the past two years. So we can denote this like this-- chapter 1, chapter 2 equals our history book at-- in the year [2016].

Then [2016] transpires. A bunch of stuff happens-- could be transactions, could be all sorts of stuff, not just transactions. We record all of these events that are relevant to the community in chapter 3. And in 2017, we publish the history.

2017-- pass it-- you get the idea. Notice this history book is growing over time, chapter by chapter. And I would describe this as history of this particular community as time-stamped blocks of information contained in chapters in an ever-expanding history book that people call the blockchain.

So this is kind of like how the bitcoin blockchain works, in a visual sense. This is the blockchain. And it just contains a sequence of time-stamped blocks of information. In the case of blockchain-- bitcoin, I should say-- it relates to transactions histories. But in general, all sorts of information could exist in these chapters.

Any sort of database management system has to answer two questions. It has to specify parameters governing two things. One, who gets to read the history book? Who gets to read this history? Do we place this book in a public library, where everybody has access to it? Do we post it online so that everybody can download it online, or do we require some permission, some sort of-- do we need a gate that only trusted people are permitted to read the history? That's the one thing.

In the bitcoin blockchain, everybody is free to look at the history of transactions. But that's just a parameter in the code that-- other types of blockchains might have some sort of restrictions, these so-called permission blockchains.

More important is the next question. Who gets to write history? That's very important. The power to write history can be abused. It's a very powerful privilege. It's called the right privilege.

Who gets to write history? Do we trust a PhD historian, perhaps, in the case of somebody schooled in the history of St. Louis-- to do the writing? Can we count on this person not to go back and fabricate some of the history, rewriting events, perhaps with the idea of increasing the status of his or her family in the community, or are we going to entrust the writing to the community at large?

That's the second model. And that's kind of how bitcoin, the blockchain, works. Who gets to write history is a communal responsibility. We're not going to delegate any trusted historian. We collectively are going to be the historians. And we collectively have to somehow find some way to achieve consensus on what actually transpired in each of these dates. So that's the basic idea.