Stephen P. Williams, author of Blockchain: The Next Everything recently spoke to Financial Sense Newshour about his new book explaining how blockchain is changing the world.
Stephen says, although there is a lot of confusion about what blockchain is, it's really quite simple when you understand it, firstly, as just a piece of software that runs on your computer.
Secondly, this software is unique in that it operates through a distributed network of computers across the globe used to record transactions and other types of important information.
Thirdly, this distributed network of computers operating the blockchain software acts as an immutable online ledger that is not owned or controlled by anyone person, nation, corporation, or entity—it is distributed.
Stephen explained the importance of the distributed nature of blockchain in some detail but emphasized the simple fact that the blockchain is a ledger since this is something that we can all understand and relate to.
“The internet that we have now is the internet of information meaning you can pass a lot of information to and fro. But with the internet that’s based on blockchain you can actually pass value, currency, property, intellectual property, physical property and all sorts of data.”
In the same way ledgers account for business transactions, blockchain functions in the same fashion with a few key differences. “Blockchain is on the internet and is immutable, meaning it can’t be altered once you enter information onto it.”
Aside from just recording business transactions however, the blockchain can record economic data, show status such as citizenship or employment, confirm membership, show ownership and track the value of things. Williams explained, “We never really think about how often we need to record information and make sure that it’s secure and so what blockchain does is make it so that we don’t have to rely on third parties to ensure that information is as it was put into the ledger.”
After explaining what blockchain is and what it can be used for, Williams described how it works at a more technical level through what is called hashing.
The hash is a representation of cryptographic code, it’s a series of letters and numbers that represent data. You can create your own by simply typing ‘256 hash’ into Google and experiment with it yourself.
Williams explained: “If I were to put the manuscript for my book through that website, I would be given a hash of a certain number of letters and numbers that represents it. Now, you couldn’t take that hash and reverse engineer it to get my book. But you could use that hash to check that my book is the copy that was originally put on the blockchain, so that if someone were to make a counterfeit copy that was slightly different, it would not produce the same hash and the alarm bells would go off.”
In the above example, blockchain wouldn’t be storing the entire book, it’s essentially registering it, sort of as a thumbprint of the actual data. That thumbprint or registration code is then stored in the blockchain in a way that is nearly impossible to alter or manipulate. Thousands of years ago, civilizations used to record their most important transactions in stone. In the future, it will all be done through blockchain.
To read Stephen P. Williams' new book, Blockchain: The Next Everything, click here to purchase a copy on Amazon. To hear our full interview with Williams, see Book Interview: Blockchain - The Next Everything. Not a subscriber? Click here for more information on our premium weekday podcast.