A webinar was organized on May 23rd by Government Blockchain Association – UAE to discuss the origins of blockchain. How was the idea of blockchain conceived?
Below is valuable knowledge shared with participants.
Back in the 80’s, a young scientist named Scott Stornetta was reading about a fraud case in the news, where fiscal evidence was tampered with. This raised a question in his mind. If anything on paper was tampered with, it could be detected. But what if something was digitally altered? At the time, Scott was working in XEROX and this laid the foundation for the creation of blockchain.
What Exactly is Blockchain?
“In short, blockchain is a decentralized database that is readable, writable and unalterable by participants. It’s about Trusted Records, meaning that it is being transparent; it is easy to trace and cannot be corrupted by a centralized system.”
“We needed to set up a trust free system that does not require any insiders vs. outsiders in the system. Everyone that is a participant is involved as a trusted party, hence linking records,” Scott said.
Scott then demonstrated the essence of a blockchain by using www.gizillion.com and he explained about the social incentive; where each of our own selfish and unaligned interests were collected and converted in something that creates a collective economic surplus.
“So collectively, we create a consensus that creates an immutable record, which is why the blockchain works and gives true value and digital trust,” Scott Said.
Make No Little Plan and Aim High
At the heart of really having an impact in the world for good, as Daniel Burnham’s quote goes, it’s the obsession of making the word a better place.
“That made me work on a problem that really mattered. It was not about getting a job; it wasn’t an attempt to claim glory,” Scott explained.
He added that making big plans is also at the heart of making an impact on the world.
“If you want talk skyscrapers, it’s an alignment of everyone’s selfish interest to create a collective good. This creates a thriving city like Dubai,” Scott said.
“We are living in a completely digital world. It bothers me how data could be changed. Anyone could alter the records after the fact, and this would cause uncertainty and anxiety. This bothered me tremendously and I felt that this was a problem that needed to be resolved.”
When Scott joined BellCore Research Labs, he discovered that systems could be broken into, and that was not good enough. There needed to be trust. Even though he did not have a background in cryptography, one of the things he learned is that it mattered enough to him to figure out something – and he pursued it.
How Important is Transparency in Today’s World?
“It is absolutely about transparency. It is all about making more information available more broadly, and that is the path to value creation. It decreases the likelihood of selflessly controlling data, and increases the likelihood that we will collectively be winners,” he said
“Our day to day job is about finding viable use cases; but we should demand that existing company records to be at least registered into the blockchain. So in the future, when we need to investigate things, we will need to be absolutely confident that these records are recorded at the time, and have not been altered after the fact.”
What is Your View on The Tokenization of Assets?
“In my opinion, we have been trying to focus too much on protocol instead of creating value. Anything that we can do to reduce friction in the system, that allows us to allocate resources, such as tokenization of real estate or other assets, can increase the ability of the market to function efficiently. Making not liquid assets more liquid is a net win for all of us.”
The World is Coming out of a Pandemic, When Do You See Blockchhain Being Implemented for Recovery?
“Don’t wait for someone to limit you. We have built institutions for so long that rely on data and records. Those are the institutions that are used to meeting face to face. The Pandemic has forced us to give this up on this temporarily. How much of the past has been useful? What did not require face to face and local interaction?, Scott asked.
“There is a level of trust that can be afforded across parties that have never met before, that will never be physically in contact, that the blockchain can afford and it does not have to be localized. Since we survived in this interaction at a distance, maybe we can have trust at a distance as well.”
“For example, in the supply chain, we don’t know the farmer who traded milk for wheat. We will never meet these people. We can create a transparent record, place trust in a more decentralized and adaptable system that has been possible before – and this is a major area for a blockchain opportunity.”
Do You Think Bitcoin Will continue to Dominate? What Do You Think We Will Be Using?
“We owe a lot to Satoshi Nakamoto. It is more of an art than engineering, and the time has come to move on. The real contribution of bitcoin is that it gave us a sense of what’s possible. Bitcoin has not succeeded as it was intended. There were some fundamental flaws largely around the mining concept. We need to recognize that is was a terrific first effort, but we can improve it. BITCOIN is dominant because we haven’t seen a better solution. It will be superseded but we don’t know when. I think that the notion of stablecoins, which is a half way solution, is the right intermediate step, and there are so many challenges that need to be overcome, in order to create a universal currency,” Scott explained.
How Do You Anticipate the Growth of Blockchain?
“There are lots of innovative ideas out there, but people have faced challenges in really adopting use cases. Successful and modest application of use cases is not being implemented, he said.
Quantum Computing – What is Your View on This?
“I am a huge fan of quantum computing. In the long term I don’t see this a challenge. The fundamental strength of blockchain is stronger than quantum computing. In our research, you can renew the validity of blockchain records, so they outlive any particular choice of technology,” Scott said.
“By 2022, at least one innovative business built on blockchain technology will be worth $10 billion. By 2026, the business value added by blockchain will grow to just over $360 billion, then by 2030 grow to more than $3.1 trillion. We have to learn that if we collectively share data, and this commonly shared data can be very useful. If we agree to pool our data, there will be so many new value added applications that will cause long term economic prosperity, but this needs a little leap of faith.”
Blog prepared by Maha Ahmad
With and M.A. in Marketing and a Diploma in Digital Marketing, from the UK, Maha has 15 years’ experience in project management, content development, branding, and Marcoms. Maha continues to blog for clients on a freelance basis.
About Scott Stornetta
Dr. Scott Stornetta, is a fluent Japanese speaker, and the blockchain co-inventor . He earned a B.S. in Physics at Brigham Young University, and Harvard then a Ph.D. in Physics at Stanford University.
Government Blockchain Association-‘GBA’ is an international nonprofit professional association that promotes blockchain technology solutions to governments.