Blockchain Revolution

Breakthrough: Satoshi required participants to use public key infrastructure
(PKI) for establishing a secure platform. PKI is an advanced form of “asymmetric”
cryptography, where users get two keys that don’t perform the same function: one is
for encryption and one for decryption. Hence, they are asymmetric. The bitcoin
blockchain is now the largest civilian deployment of PKI in the world, and second
overall to the U.S. Department of Defense common access system.
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Pioneered in the 1970s,
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asymmetric cryptography gained some traction in the
1990s in the form of e-mail encryption freeware such as Pretty Good Privacy. PGP is
pretty secure, and pretty much a hassle to use because everyone in your network
needs to be using it, and you have to keep track of your two keys and everyone’s
public keys. There’s no password-reset function. If you forget yours, you have to start
all over. According to the Virtru Corporation, “the use of email encryption is on the
rise. Still, only 50 percent of emails are encrypted in transit, and end-to-end email
encryption is rarer still.”
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Some people use digital certificates, pieces of code that
protect messages without the encrypt-decrypt operations, but users must apply (and
pay an annual fee) for their individual certificates, and the most common e-mail
services—Google, Outlook, and Yahoo!—don’t support them.
“Past schemes failed because they lacked incentive, and people never appreciated
privacy as incentive enough to secure those systems,”
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Andreas Antonopoulos said.
The bitcoin blockchain solves nearly all these problems by providing the incentive for
wide adoption of PKI for all transactions of value, not only through the use of bitcoin
but also in the shared bitcoin protocols. We needn’t worry about weak firewalls,
thieving employees, or insurance hackers. If we’re both using bitcoin, if we can store
and exchange bitcoin securely, then we can store and exchange highly confidential
information and digital assets securely on the blockchain.
Here’s how it works. Digital currency isn’t stored in a file per se. It’s represented
by transactions indicated by a cryptographic hash. Users hold the cryptokeys to their
own money and transact directly with one another. With this security comes the
responsibility of keeping one’s private keys private.
Security standards matter. The bitcoin blockchain runs on the very well-known
and established SHA-256 published by the U.S. National Institute of Standards and
Technology and accepted as a U.S. Federal Information Processing Standard. The
difficulty of the many repetitions of this mathematical calculation required to find a
block solution forces the computational device to consume substantial electricity in
order to solve a puzzle and earn new bitcoin. Other algorithms such as proof of stake
burn much less energy.
Remember what Austin Hill said at the start of this chapter about never using the
newest and greatest in algorithms. Hill, who works with cryptographer Adam Back at
Blockstream, expressed concern over cryptocurrencies that don’t use proof of work. “I
don’t think proof of stake ultimately works. To me, it’s a system where the rich get
richer, where people who have tokens get to decide what the consensus is, whereas
proof of work ultimately is a system rooted in physics. I really like that because it’s
very similar to the system for gold.”
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Finally, the longest chain is generally the safest chain. The security of Satoshi’s
blockchain benefits greatly from its relative maturity and its established base of
bitcoin users and miners. Hacking it would require more computing power than
attacking short chains. Hill said, “Whenever one of these new networks start up with
an all new chain, there’s a bunch of people who direct their latent computer power, all
the computers and CPUs that they took offline from mining bitcoin, they point at
these new networks to manipulate them and to essentially attack the networks.”
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