It seems that not a day passes without the announcement of a new blockchain conference or token sale, whatever that is. Everyone is talking about “the blockchain” and trying to sell its benefits to an often bewildered audience. “It’s not just Bitcoin, you know,” and so on.
CB listened to a podcast, read some articles and watched a baffling UK TV ad about blockchain “controlling your house”. In search of clarity, we spoke to Oliver Hopton, founder of FunFair Technologies, to discover What are The Facts.
CasinoBeats: Please explain briefly – in terms a child could understand – what is the blockchain?
Oliver Hopton: The blockchain is a distributed digital ledger. It contains details of every transaction that has ever been completed upon it. The information is held in a logical, historical, secure and unchangeable way, in what are called blocks.
These blocks are linked in a chain, hence the blockchain, with each block of information referencing the previous one, ensuring that the information cannot be altered as they are linked to one another. You can think of it resembling, in some ways, a house of cards, where you can’t remove a card without the whole thing tumbling down.
“Decentralised refers to the fact that the majority of blockchains do not rely on a single point of control“
CB: Can you explain the term decentralised and its relevance to blockchain?
OH: Decentralised refers to the fact that the majority of blockchains do not rely on a single point of control. Therefore, rather than allowing a central body to deal directly with users of the technology as banks, for example, might do, thousands of ‘nodes’ (effectively hosts of the entire blockchain’s information) validate transactions and record data in a much more secure manner.
The fact there are several thousand of these nodes means that one can be compromised yet the blockchain’s information remains present and correct. This means that there is no doubt that the information held on a blockchain is true, because there are multiple copies which require consensus to alter them.
Attempts to disrupt the blockchain are pointless as attacking one point of storage doesn’t affect the many others out there, unlike in the case of a centralised system. Anyone can add their computer storage to the blockchain and for each extra copy of the blockchain added, the chance of failure – which is extremely unlikely – reduces even further.
CB: What is the relationship between blockchain and cryptocurrency? Is there one blockchain for every cryptocurrency?
OH: The blockchain is the ledger which cryptocurrencies are traded or utilised on, and a cryptocurrency is a medium of exchange that holds value and sits on the blockchain. Most blockchains do have their own cryptocurrency but every cryptocurrency doesn’t have its own blockchain. Bitcoin, the most recognisable cryptocurrency, uses its own blockchain, whereas Ethereum, a more adaptable and intelligent blockchain, allows for various cryptocurrencies to be used simultaneously on it, including its own.
“Some blockchains allow for more complex information to be shared, while others are far simpler”
CB: Thus far nothing seems to have proved unhackable, how can blockchain be so secure?
OH: The blockchain is secure by its very definition of being distributed. To shut the blockchain down, effectively every node in the world would have to be wiped out simultaneously. But, even if the global internet network went down, these copies would still be stored remotely and could then be updated once live again.
There are situations where companies and individuals heavily involved with the blockchain have been hacked, but there is a common misconception that the blockchain is at fault. Instead, these issues generally arise from weak points in personal information security and data breaches, as with standard hacking techniques.
There have been occasions where fraudulent transactions have been committed, because one aligned group controls over 51% of the nodes, and could in effect ‘change history’, but these are rare and the more popular and distributed the blockchain, the less likely this is to happen.
CB: Is each blockchain the same size or do sizes vary?
OH: Each one differs by the amount of information on it. Some blockchains allow for more complex information to be shared, while others are far simpler. The actual size or the amount of data held on it, which can be calculated in bytes like any computer software, also depends on its popularity.
“As more investment is plunged into blockchain, its use cases are becoming more apparent”
CB: Banks have been wary of blockchain technology, why do you think that is?
OH: First of all, they’re concerned, as would any industry be, by a disruptive technology which could alter the face of their industry. A successful blockchain currency exchange market is a significant threat to their wider business model. However, some are more open-minded than others.
As more investment is plunged into blockchain, its use cases are becoming more apparent. As we’ve seen, one of these is gambling where it can verify fairness and security, but financial institutions are also becoming more interested in its use. Billions have been invested in the sector by some of the biggest banks in the past year, and while they may not have practical use cases just yet, they’re well on their way.
A distributed bank, powered by blockchain technology, is currently being developed in Malta, a world-leading country in its progressive regulation for blockchain, and when this is live, will remove the need for costly banking middle men and empower the masses to have fairer banking technology.