Blockchain

TechnologyDAVID MARCHENKO

Distributed Ledgers

Essentially a database that is

consensually spread and verified across

network with various points

Allows transactions to have public

‘witnesses’, which makes cyberattacks

more difficult

Distributed ledgers are able to accurately and securely store

information using complex

cryptography, and can be accessed

using keys or other cryptographic

signatures

Security of Distributed Ledgers

Public-key cryptography is very popular

in distributed ledgers

This technique encrypts the information

using a public key that anyone has

access to

Because this information cannot be

decrypted without the recipient’s

private key, only the recipient has the

ability to decrypt and access the information.

Security of Distributed Ledgers

Other reasons why distributed ledgers

are more secure:

If an attacker were to try to

manipulate the ledger in some way,

they would need to simultaneously

change or remove every distributed

version of that piece of information,

which is extremely difficult.

In addition, Blockchain has

mechanisms that make information

more resistant to changes by one

party as opposed to multiple.

Smart Contracts

Distributed ledgers, like

blockchain, can be used for smart

contracts, or self-executing contracts.

These contracts facilitate the

exchange of money, property, or

anything of value in a transparent, conflict-free way while avoiding

the services of a middleman.

Smart Contracts

Smart contracts can be compared to vending machines.

Instead of going through a middleman to pay for and receive goods, (i.e. a cashier), you can simply use the smart contract to do a quick exchange.

Smart contracts also define and enforce rules and penalties around an agreement.

Blockchain’s Major Problems

Environmental Cost

Lack of Regulation

Complexity → Difficult to Understand

Environmental Cost

Encrypting and Decrypting large chunks of

information requires immense computing power

Bitcoin, for example, required more energy than

159 of the world’s nations to maintain its network

Of course, smaller blockchain platforms, like

proprietary ones that companies can use,

consume a fraction of that

Lack of Regulation

Lack of oversight and expertise in blockchain

in government has resulted in a more volatile and risky environment

Scams and market manipulation with

blockchain are abundant due to lack of

regulation

Ex. Oncecoin

Ponzi Scheme; targeted at investors making

hasty generalizations trying to get in on

Blockchain

Difficult to Comprehend

Many technology experts praise blockchain

and its ability to cut out the ‘middleman’ in many transactions

This has lead to innovation across many different

industries with the implementation of Blockchain

However, the ‘middlemen’ we have today,

such as banks, governments, and other

institutions work adequately, so there is no

significant demand for this change