Blockchain Revolution

Breakthrough: The energy costs of overpowering the bitcoin blockchain would
outweigh the financial benefits. Satoshi deployed a proof-of-work method that
requires users to expend a lot of computing power (which requires a lot of electricity)
to defend the network and mint new coins. He was inspired by cryptographer Adam
Back’s solution, Hashcash, to mitigate spam and denial-of-service attacks. Back’s
method required e-mailers to provide proof of work when sending the message. It in
effect stamped “special delivery” on an e-mail to signal the message’s importance to
its sender. “This message is so critical that I’ve spent all this energy in sending it to
you.” It increases the costs of sending spam, malware, and ransomware.
Anyone can download the bitcoin protocol for free and maintain a copy of the
blockchain. It leverages bootstrapping, a technique for uploading the program onto a
volunteer’s computer or mobile device through a few simple instructions that set the
rest of the program in motion. It’s fully distributed across a volunteer network like
BitTorrent, a shared database of intellectual property that resides on tens of thousands
of computers worldwide.
To be sure, this shields the network from the hands of the state, which could be
good or bad depending on the situation—say a dissident in a totalitarian country
fighting for women’s rights versus a criminal in a democratic country conducting
extortion. Totalitarian regimes could not freeze bank accounts or seize funds of
political activists. States could not arbitrarily seize assets on the blockchain as
Franklin Delano Roosevelt’s administration did through FDR’s Executive Order 6102,
which required citizens to turn their “gold coin, gold bullion, and gold certificates”
over to the government or risk fines or imprisonment.
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Josh Fairfield of Washington
and Lee University put it bluntly: “There’s no middleman to go after anymore.”
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The
blockchain resides everywhere. Volunteers maintain it by keeping their copy of the
blockchain up to date and lending their spare computer processing units for mining.
No backdoor dealing. Every action or transaction is broadcast across the network for
subsequent verification and validation. Nothing passes through a central third party;
nothing is stored on a central server.
Satoshi also distributed the mint by linking the issuance of bitcoins to the creation
of a new block in the ledger, putting the power to mint into all the hands of the peer
network. Whichever miner solved the puzzle and submitted proof of work first could
receive a number of new bitcoins. There is no Federal Reserve, central bank, or
treasury with control over the money supply. Moreover, each bitcoin contains direct
links to its genesis block and all subsequent transactions.
So no intermediaries are required. The functioning of the blockchain is mass
collaboration at its best. You have power over your data, your property, and your level
of participation. It’s distributed computing power enabling distributed and collective
human power.

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