Who is Blockchain?

ETHWaterloo hackathon participant trying to figure out who is Blockchain

Two weeks ago I barely knew what Ethereum was. I knew that it was different from Bitcoin and there were a ton of companies doing ICOs (Initial Coin Offerings) or now known as TGEs (Token Generation Events). I remember bursting into one of our blockchain meetings within our company asking:

Where is this money coming from?How much is Ether (ETH)?Is this a bubble?

The answers I got were, well… there are a bunch of people writing whitepapers and then asking people for money so they can build the future. I replied, WTF so they don’t even have a product?

Nope…

Just a bunch of idealist who have this philosophical view of what the future should be. By selling their tokens/coins they will be able fund their projects.

What’s the difference between this and setting up a table outside of Wal-Mart selling Girl Guide Cookies?

1. You can’t eat these tokens/coins
2. There is a limited amount of tokens/coins available
3. Each token/coin cannot be copied or reproduced

I’ll let that sink in a bit… you know the money you have in your pocket, that was printed from a machine owned by the government. If they need more they can print more (not a good idea but it’s possible). A token/coin generated on a blockchain has a finite amount and once it’s out, it’s really out. Each of these tokens have a certain value associated with it and that is determined by the market and how it’s useful beyond storing monetary value. Okay so now you kind of understand what a token/coin is, you need to understand how it’s finite, immutable, and fully secure.

Isn’t tokens/coins just PayPal money that can be spent on Amazon?

No…

What gives these tokens/coins special powers is the technology that runs in the background which are called blockchains (the system/rules that determines the utility of these tokens).

Here is my simple explanation of what blockchain is:

Imagine everyone in the company, restaurant, room had a piece of paper in their pocket. On this piece of paper every exchange or transaction is recorded. So… if Bob gave Angela an apple for lunch everyone would pull out this piece of paper and write that down. Now what does this look like presently? Bob gives Angela and apple and Steve writes it down in his book. Nicole gives Alex a banana and Steve will write it down in his book.

Do you see the difference between the two? One is decentralize and one is centralize.

In this metaphor, the paper is a computer. Each computer will download a copy of the ledger and will update every 10 seconds with all the new transactions. That means the first block of transactions aka the ‘Genesis block’ for Bitcoin is still around 9 years after and will be forever. Can you say the same about your Visa statements or paper receipts?

Blocks of transactions in a chain:[BLOCK 1] → [BLOCK 2] → [BLOCK 3]

So let’s say you want to hack a blockchain and steal a butt loads of money. The only way you can do this is by taking control of 51% of all the computers. You can do this by unleashing a meteor storm over North America taking down most of the computers and all the internet towers. Alternatively, you can try to hack into millions of computers one-by-one trying to control 51% or more. In short, you can’t (although quantum computers seem to be able to do this black magic). However one caveat… there has been hacks but not on a blockchain but in the exchanges (where people trade coins). Most of these hacks are due to human error, this is the same with anything. If you leave your bank account passwords on a piece of paper in a coffee shop, don’t be surprised if millions of dollars are gone the next day.

Where is this money coming from?

People who mined Bitcoin or bought it when it was just a few cents are now converting their coins into different tokens. In short, they are investing their new riches in other cryptocurrencies (ETH, NEO, BAT, LTC, etc). More people are pooling in more money increasing the market cap to $170 billion (that’s 21% of Apple). Everyday there are new platforms being built to help you convert your hard earned dollars into sweet sweet cryptocurrencies.

How much is Ether (ETH)?

Right now it’s $309.35 if you had bought it March of this year it would’ve cost $15.76. Now one thing to note is that this market is extremely volatile, a lot of these tokens are scams and are worth nothing. There’s a ton of speculation and people hopping on the train telling people that cryptocurrencies are a gold standard. This is a lie. What makes a token valuable is the ability to develop a community and a platform for others to build on top of it (at least in the perspective of Ethereum and the likes).

Is this is a bubble?

It is unfortunately. There are a ton of uneducated people who are throwing money at fake ICOs. This is great because it’s increasing the market cap but like the dot com bust a lot of these promises will not be fulfilled. What happens when people give these scammers millions of dollars expecting a huge return on their investment? Well… I feel sorry for you. There is a high chance that you might lose it all. So why is this a good thing at all? Because from the dot com bust came companies like Amazon, Ebay, Paypal, Google, and every big tech company that you know of. History will likely repeat itself and from the ashes of dogecoin or jesuscoin there will be a handful of next generation companies using a technology that can make the world a better place. I’ll be writing more articles talking about the viable promises of Blockchain and how they actually work.

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