Since the beginning of commerce, currency has relied on one thing that we, as people, have a hard time giving. Trust. At its core, currency is about trusting in the value the giver assigns to that currency. Even timeless value like that given to gold or silver is largely dependent on what the going rate is agreed to be. With the right amount of trust, even rocks could be valuable.
Up until algorithms (the unicorn dust that made Google a household name) came on the scene, trust was reliant on having a record of values—or ledger—to maintain objectivity. The problem with these records, mainly, is that they could be tampered with (think: hanging chads) and that they rely on a centralized system of organization (think: your bank).
Algorithms, on the other hand, can crunch massive amounts of numbers in the time it takes for you to, say, read this next line. And they do so from anywhere there is a connected device. It is from this awesome calculating power that blockchains have been forged. A new, more reliable way to carry ledgers that might just help with making commerce more sustainable.
What the hack is a blockchain?
Exactly. Well, actually, hacking is exactly what the blockchain obliterates. Imagine creating a record of your next home purchase and giving it a completely random and wholly unique serial number. This number—let’s just call it a hash code—is encrypted to the record and will stay with it every step the record goes through. So, if anything is added to that record, like an inspection on the mortgage, or change of hands with the deed, then a new hash code is created that incorporates the original encryption.
Each new record is chained (get it? Blockchain) to the previous record by the hash code assigned to it. It’s considered tamper-proof because if someone messes with the chain, by removing or altering an entry, an obvious link will be missing. The encrypted code will be different or gone, and that irrefutable record creates a trust that doesn’t budge.
But how can random codes provide irrefutable trust?
Since hash codes are generated at random from an encryption, there is no way to predict the serial number of your record in order to attempt altering it. Encrypting each link in the chain makes the block completely reliable. It is because of this immutability of hash codes that makes blockchain technology perfect for things that require lots of trust, like where data security is a concern, or with currency.
The most common blockchain currency (or Cryptocurrency) you might have heard of is “Bitcoin.” Bitcoin are the digital representation of a unique set of hash codes—literally pulled from calculations as if conjured out of thin air—that hold value. How, you may ask, can they have value? That’s easy: because people value them.
Okay, let’s back up. Currency of any kind has worth because those who use it attribute value to it. Not to get philosophical, but consider the dollars in your pocket. They have no intrinsic value—the paper itself is not useful for industry or food, but you trust it will get you things. Why? Probably because you know the people you give it to will attribute worth to the numbers on it. The same is true for Bitcoin. It’s simply because people value them that they hold value.
Well, as a result of its growing value, Bitcoin “mining” (running millions of hash codes to find the ones that the online community values as Bitcoin) has become a hobby and livelihood for individuals and businesses across the globe. In fact, Samsung recently built a Bitcoin mining rig from a bunch of their older cell phones. Crunching all those numbers requires quite a lot of algorithm generation—which it seems their 40 phones are perfect for.
We love this new use of old tech and applaud Samsung for thinking outside the box instead of just buying new technology to achieve this end. We see the monetary value of old tech every day in what we do. But, what do you think? Is cryptocurrency eventually going to replace what’s in your wallet? Do you have a new use for old tech to share? If so, please comment below.