I realize this is a basic information post for members of the Hive community, but there may be some people new to blockchain technology who can benefit from this information.
Parts of the following post is an excerpt from my forthcoming book titled Cryptosocial: Is Social Media Ready for Decentralization?
Why This Content is Important
In a previous post, I disclosed that I've managed to snag a book deal with a small business book publisher for a book I'm writing on the intersection between and social media and cryptocurrencies. One of the first things one has to do in order to convince a publisher to take you on as an author is define your audience. In simple terms, I've segmented my audience into four categories:
- Blockchain developers working on social media projects
- Blockchain technology enthusiasts
- Users of mainstream social media platforms
- Cryptocurrency enthusiasts
While there is some overlap between these categories, one category in particular is made up largely of people who are not familiar with blockchain technology, has little or no interest in it, do not see the value in it, do not understand it, and probably are not aware that there is such a thing as blockchain-based social media. One of my aims is to educate this crowd on the benefits of blockchain technology and its uses for social media by taking a critical look at current and past social projects built on top of blockchains. Before I can get into that discussion, however, I'll need to educate the audience on the benefits and features of blockchain technology. You know, get them familiar with the basics.
It is for that reason that I've decided to make chapter 1 of my book all about the benefits and features of blockchain technology. It's imperative that future users of social media built on blockchains understand what they're dealing with, and why.
With that in mind, I've identified the following features of blockchain technology that I think people unfamiliar with it should have a basic understanding of before they start using it. For those of you already familiar with the technology, you can help by showing me what I've left out or by clearing up any confusion I might have on these features. Your assistance would be helpful, and I'd be ever grateful.
The 9 Basic Features of Blockchain Technology
While I've written a first draft of chapter 1, the following is a summary of its contents. Not the full contents because I don't want to bore you with details. Again, let me know where I might be off.
- Immutability - Blockchain technology is immutable in the sense that once a transaction has been recorded, it cannot be changed or deleted. They are irreversible. If Tom sends Rebekah 20 USD, for instance, Rebekah will receive that money in her digital wallet. A record of that transaction is made and there is no way to cancel it. If Tom meant to send that 20 USD to Sally rather than Rebekah, his mistake. He cannot cancel the transaction or retract it, in full or in part, after it has been completed. He is simply out of luck.
- Decentralization - Blockchain technology is decentralized, which means no individual or human entity controls the technology. The U.S. government, with its three branches, is centralized. The legislative branch consists of a body of elected officials entrusted with the power to pass laws. It is a centralized entity with a defined purpose. The executive branch of the government consists of a president, a vice president, the presidential cabinet, and several administrative offices responsible for executing the laws passed by Congress. It is centralized in the single authority of the president. The judicial branch of the government consists of nine justices whose responsibility is to settle disputes and interpret the law. Blockchain technology has no such structure. The technology is designed to operate with multiple computer nodes that reach a consensus in order to approve of transactions on the blockchain. There is no one entity that controls the process.
- Enhanced security - Blockchain technology is inherently more secure than ordinary internet assets. That doesn't mean it is perfectly secure. When you try to log into your Facebook account, you enter your password and are admitted based on correct entry. The longer and more complex the password—that is, combining upper case and lower case lettering with numerals and special characters—the more secure the password. However, because Facebook is centralized, there is only one attack point for hackers to use to break the security of the platform other than the number of entry points users create by the number of devices they use to access the site. No matter how strong your password is, that central attack point makes it easier for hackers to break in. While two-factor authentication is more secure, it is still fairly easy to hack for smart hackers. By contrast, blockchain technology uses something called cryptographic security that combines a public passkey with a private passkey known only to the user. Not even the platform each user is logging into keeps a record of those keys, which makes each user's access to the platform more secure.
- Distributed ledger - A ledger is an accounting tool used in business. There are different types of ledgers, but, generally speaking, the format is based on two sets of entries—debits and credits. The current standard in accounting is the double-entry bookkeeping system established in Medieval Europe. Double-entry bookkeeping requires an intermediary. Our modern centralized banking system is built on the double-entry ledger. When a loan is made, that transaction is recorded on one side of the ledger as a credit and on the other side as a debit. If the borrower can’t trust the bank, there will be no lending. If account holders, people who keep their money in banks to be used for lending, can’t trust the bank, then there will be no money to lend. A distributed ledger takes the intermediary, the bank, out of the picture completely and gives access to the latest edition of the ledger to all parties on the blockchain.
- Faster settlement - Today, bank-to-bank money transfers typically take three to five business days. International transfers take longer. Accounts at the same bank can take less than 24 hours. Blockchain transfers occur within minutes. Sometimes, seconds.
- Consensus - Consensus is the computing mechanism used by blockchains to approve and record transactions. There are different types of consensus mechanisms used by different blockchains. Each has its own set of advantages and disadvantages. I will not go into all of them here, but, in short, politics and personalities are not a part of the equation because it is the computers themselves and not the human agents that own them that are doing the heavy lifting.
- Increased computing capacity - Because blockchains involve multiple computers on a network working together or competing to keep the distributed ledger up to date, enhance the security of the network, etc., the entire network has access to more computing capacity than a single computer could achieve on its own. Essentially, computing power can be increased exponentially based on the computing power of all nodes on the network.
- Peer-to-peer interaction - This may seem redundant, but the peer-to-peer component of blockchain technology deserves its own explanation. In reality, it’s simply an extension of the other features, especially decentralization and distributed ledger. Because there is no need for an intermediary, participants can interact with each other without interruption or coercion from other members. For instance, when Tom sends Rebekah 20 USD, there is no need for any other party to be involved. The money moves seamlessly through the network from Tom’s wallet to Rebekah’s with no middle participant.
- Minting - Minting refers to the process of making money. Because blockchains involve cryptocurrencies, which can be spent on the blockchain network or traded on exchanges for other cryptocurrencies, there must be a method for creating those digital monetary units. Each blockchain has its own minting mechanism. One popular method for minting is called mining. Miners create blocks by solving mathematical calculations. The data created within each block involves a certain number of transactions and is encrypted for enhanced security purposes. Each time this happens, cryptocurrencies are minted and distributed among the different participants based on their level of participation.
These basic features of blockchain technology vary from blockchain to blockchain and platform to platform. Not every social media platform built on a blockchain has all of these features. Some utilize these features more successfully and efficiently than others. Even among those who make excellent use of the underlying technology, there are vast differences in style, design, and the benefits of using the platforms. In the next installment, I'll cover some of the basic benefits of blockchain technology as it pertains to social media.
This post was first published at Publish0x.
This post is not intended to be financial advice. I am not a financial advisor. Please seek the assistance of a financial advisor before investing your money into any cryptocurrency.