Blockchain Technology: Cryptocurrencies and beyond

by Lindsey Winsemius - Posted 3 weeks ago


When we first started talking about building CryptoComics, one of my first questions was "Why call it CryptoComics?" Besides the amazingly catchy use of alliteration, the answer was simple: It is named after the technology we use to make this comic book marketplace truly revolutionary.

The past few years have seen a huge increase in the global adoption of cryptocurrencies. What were once obscure terms used mainly in tech communities are now becoming household words. Bitcoin, Ethereum, Lightcoin, Ripple… The cryptocurrency market has become a hot topic, with Facebook recently announcing their own coin Libra to be launched in the first part of 2020.

What you may not have heard as much about is the technology behind cryptocurrencies: Blockchain.

I first started researching cryptocurrency and blockchain technology in depth about a year ago. I interviewed investors and scientists that were involved in the industry. I found it quite fascinating, but complex, especially for someone like me, who has a background in Psychology and English, not programming or computers.

What was obvious to even me, however, was the potential of blockchain technology. Not just on currency exchange and the financial industry, but on the tech world as a whole.

Let’s talk about the basics of blockchain, called by Harvard Business Review ‘the quiet revolution’, and then discuss possible applications you can expect to see in the future.

What is a blockchain?

A blockchain is essentially a digital ledger. This ledger is designed to be resistant to modification. That means once an entry is “filled”, it cannot be altered.
 
Each entry is verified by a network, and since the blocks or entries are connected, one cannot be altered without altering the entire chain. 

The word "Crypto", as in cryptocurrencies or cryptocomics, comes from the word Cryptography. Literally translated from its Greek origins, the word means "secret writing". In computer science, cryptography refers to secure information and communication techniques derived from mathematical concepts and a set of rule-based calculations called algorithms to transform messages in ways that are hard to decipher

When it comes to blockchain, extremely complicated algorithms are used to verify each new entry to the blockchain (more on this below). 

"Crypto" might sounds cool and mysterious, but really it is based on some boring, complex math principles. (Ok, ok, I shouldn't call math boring. Not when it is being used to do something as amazing as publishing comic books).


What is revolutionary about blockchain?

For the first time, there is a way to turn a virtual object into a unique digital asset

How does blockchain technology work? I once had it explained to me in very simplified terms that helped me to understand. I’ll explain it in the same way:

Blockchain Basics: Apple Explanation


I have an apple. I give it to you. We both know without a doubt that the apple is now in your possession.

Blockchain Basics: Digital Apple Example


What about a digital apple? If I send it to you, over email or in a Facebook post, how do you know I didn’t send a copy to someone else?

You don’t know. Unless we keep track of that exact digital apple.

How could we do that?

We could keep track in a ledger. 

But couldn’t someone make changes to that ledger? Not if that ledger was open source, and thousands of people had the ledger themselves. And every time another exchange is made, it is checked against all of the thousands of ledgers held by people all over the world. It would be very difficult to cheat the system, right?

That is a very simplified explanation of how blockchain works. Every transaction is checked against the thousands of ledgers held by people all over the world in a complex algorithm that requires computers to complete. 

1) The ledger is open source. That means it is public and maintained by many people. The total number of apples are listed within the ledger, and each apple assigned a “transaction number”. Each unique number was defined in the public ledger at the beginning. I know the exact amount that exists. Within the system, I know they are limited(scarce).

2) When I make an exchange I now know that digital apple certifiably left my possession and is now completely yours. The exchange has been recorded by thousands of public ledgers around the world. I used to not be able to say that about digital things. It will be updated and verified by the public ledger.

3) Because it’s a public ledger, I didn’t need a third-party to make sure I didn’t cheat, or make extra copies for myself, or send apples twice, or thrice… People from any country can make an exchange of assets without a third party, like a bank, to act as middleman. The public record held by thousands of people verify the exchange that, once it is complete, cannot be undone. 

According to authors Don and Alex Tapscott of Blockchain Revolution, “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

Valuable things like comic books.

This is the network of ledgers we talked about above in our apple example.

Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.

Information held on a blockchain exists as a shared — and continually reconciled — database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.

I’ve included a little infographic below for you visual learners:

Blockchain Basics: How does blockchain work infographic


Where can you expect to see blockchain being used?

The applications for blockchain are only just starting to be realized.

Initially, banks recognized the importance of having a virtually indestructible digital ledge of transactions. They’ve been researching ways to use the technology. Cryptocurrency platforms and ICOs sprang up all over the world, causing a huge fluctuation in the market and rising skepticism of the technology.

However, the uses of blockchain is far greater than the financial industry.

Using blockchain is a great way to create value in a digital object. 

How does blockchain work for CryptoComics?

CryptoComics is a marketplace for comic book sellers and buyers that uses blockchain to track each comic issue published on the platform. This makes “first editions” published digitally retain their value in the same way a print copy would, since that edition will be assigned a permanent space on the ledger, or blockchain. 

Each time a digital version is sold, that new transaction will be recorded on the blockchain, while still tracking the exact copy (and allowing the creator to receive the 7% royalty from the resale.)

In the example above, I talked about a digital apple being sent, and each copy is recorded and tracked. In the same way, we are recording and tracking digital issues of each comic or art book a creator publishes on the CryptoComics blockchain.

What are the benefits of using blockchain to publish comic books?

Unlike many publishing platforms that will duplicate your digital book as many times as people wish to purchase it, and make it possible for the copies to be pirated or shared anywhere on the web, CryptoComics tracks each issue of your comic or art book. Collectors can purchase specific digital issues, and resell those issues. No matter how many times a digital issue is resold, the system tracks that issue as if it were a physical copy, making it impossible to cheat the system. 

Essentially, CryptoComics Marketplace is using blockchain to make digital comics into collectible digital items, bringing back the days of physical comic book collecting on a digital platform.


Other examples of future blockchain applications

Expect to see blockchain applied in many more settings as a way to track digital actions.

Voting: Verifiable voting by smartphone or other device could be possible using the blockchain technology.

Automotive: It would be simple for sharing ownership of autonomous vehicles using blockchain to keep track.

Licensing and royalties: Digital assets management would become simple and easy to track. Like in the comic book publishing example above, comics published on the blockchain cannot be sold without a percentage going to the creator.


The infographic below illustrates even more potential uses of blockchain:

Blockchain Basics: More Uses of Blockchain Technology


Blockchain Benefits:

1. Increased transparency and traceability
2. Faster transactions
3. Elimination of intermediaries
4. Lower costs

What are some of the barriers to applying blockchain?

Regulatory issues

The technology is so new, the laws and governmental regulations haven’t been able to keep up.

Complex technology and Lack of Trust

It is difficult for people like myself to trust a complex technology like blockchain that I don’t understand. The job of businesses like CrytpoComics that are using the technology will be to alleviate the concerns of their users. 


Conclusion:

Blockchain: The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.

Currently, blockchain is being primarily used in the digital currencies market, but companies are starting to apply the technology to other areas.

The value of blockchain is in its transparency, it is robust (difficulty in hacking / altering records), faster and lower cost than alternatives.

Some of the barriers we see is the lack of regulation since the technology is so new, difficulty in collaboration, the complexity of the technology makes it difficult to apply along with lack of trust from the general public.

If the barriers can be overcome, which I believe they will, just like any new technology, the potential for blockchain is truly amazing and revolutionary.


What do you think about blockchain? Share your thoughts or questions in the comments.