The diversity of blockchain applications in one evening
A tale of Bitcoin’s history and Blockchain governance
By Oana Dumitru
On a cold February evening, the BlockchainTalks community gathered around the cozy and inspiring space of Impact Hub Amsterdam to listen to real life stories about how blockchain impacts our world.
As usual, the BlockchainTalks team put together an impressive lineup of speakers that don’t only advocate for not only the technological implications of blockchain, but also for the societal change that comes with it. Moreover, a panel of all speakers discussed the latest developments in blockchain technology making the evening even more interactive.
“You have to know where you are coming from, in order to know where you are going to go” Bas Wisselink
Bitcoin is not just the product of Satoshi Nakamoto’s famous 8-page whitepaper, but the result of tens of years of cryptographic development. Bas Wisselink, co-founder and co-owner of Blockchain Workspace took us through how it all unfolded and I must say it is quite impressive how so early on, cryptographers were thinking about issues such as digital anonymity and privacy, topics that have barely reached the main stream discussion nowadays.
Some of us were surprised to find out that the origins of Bitcoin were based in Amsterdam, starting with David Chaum in 1991 who was the first to implement a proto-version of cryptocurrency – called DigiCash. This first building block of “Bitcoin” allowed for digital currency to be sent by making anonymous transactions through encryption in order to protect people’s privacy, spending habits and thus their private lives. DigiCash was a centralized system as his digital cash solution was pegged by a bank, similar to how Tether operates today. Unfortunately his digital cash solution was not successful, not because of a lack of robustness, but for a much simpler reason – in early nineties, there was not too much interest for online commerce.
Just one year later, inspired by Chaum’s work, a group of 200-300 people started to connect and identify themselves calling themselves the Cypherpunks. In 1993 they published a paper called “A Cypherpunk’s Manifesto” they focused on privacy, rather than secrecy or hiding identities, meaning the ability to disclose information about yourself at will.
Four years later, Adam Back created Hashcash, a payment solution for sending emails in order to avoid email spam. In order to make people “pay” for the email they send you, you asked them first to solve a cryptographical puzzle and thus became the basis for Proof of Work and the Bitcoin mining solutions.
The next source of inspiration for Bitcoin, was Wei Dai’s B-money in 1998. He was building on Digicash’s public key pseudonym and on Hashcash as a proof of work, to be allowed to create a certain amount of money and avoid the issue of double-spending. His solution was to create money using a hash – something that is currently still used in Bitcoin. Furthermore, he introduced two ways to control this system which are still very popular nowadays: Proof of Work - all participants check by solving a puzzle; or Proof of Stake when all participants put in money to get into a lottery and check these transactions. However Wei Dai didn’t know how to control the amount of work people would put in, as if you put in an unlimited amount of work, you would be able to create an unlimited amount of money in the system.
Just a few months after B-Money, Nick Szabo introduced Bitgold and time-stamping allowing for a coin to be tracked in each transaction by knowing the time when it was sent from node to node. This was already a distributed system. He couldn’t yet solve the issue of fungibility, making sure that the coins were interchangeable. This means that if a node uses a lot of hashpower to solve a problem, then the coin issued would be more valuable than others. So it means that these coins cannot be interchangeable. This system was talked about by Nick Szabo until 2005.
And lastly, after a long silence in the discussion around digital cash, in 2008 Satoshi Nakamoto’s whitepaper came out of nowhere and proposed Bitcoin. As a result, in 2009, he had the first Bitcion transaction between him and Hal Finney. Bitcoin uses a public key pseudonym (building on David Chaum’s work), hashing (building on Wei Dai’s work), Proof of Work (building on Adam Back’s work) and time-stamping (based on Nick Szabo’s work). But it also introduces something new – roles for nodes, specifically the miners – and also batching transactions into one lock making it possible to identify transactions by means of cryptography. It also solved that issue of over-inflated coin supply through the hashing difficulty. At every 2160 blocks mined, the difficulty level adjusts.
It is important to know and understand the origins of Bitcoin and the problems these people were trying to solve. Bitcoin is ultimately the technological answer to a social and political problem: protecting transactions and keeping people accountable and committed to a ledger that cannot be tampered with.
Preventing counterfeit drugs through Blockchain
Our next speaker, Raja Sharif the CEO and Founder of Farma Trust spoke about how blockchain can be implemented in the supply chain of drugs, by tracking packets of drugs from point of manufacturing to point of consumption.
It is estimated that up to 1 million people die every year due to counterfeited drugs. Current solutions are lacking, as there is no possibility to track the drugs globally and also across various systems used by different companies. This lack of transparency could be solved by blockchain, as the blockchain would allow to track each packet of drugs. As such, users/patients would be able in the long run to check the authenticity of the drugs they are using with an app. This would be a simple scanning process allowing them to access the complete history of that packaged drug.
Solving Blockchain’s governance conflict – cheap for users’ benefit? Or expensive for miners to enjoy?
Decred is another initiative that focuses on building on the advantages of Bitcoin while escaping it’s disadvantages. Noah Pierau, Community Coordinator at Decred, explained how they manage to reach consensus via an on-chain decision making process and thus avoiding the creation of forks.
Launched in 2016 without an ICO or VCs, Decred is an innovative cryptocurrency that allows to keep all ideas within the project and to filter in the best ones without forking and losing them to a new chain. It does that by introducing a hybrid mechanism of Proof of Work and Proof of Stake blockchain. The Proof of Stake has a two-fold effect, first it allows for the stakeholders to verify the miners and secondly it allows to vote on proposed changes to the consensus rules.
Further innovation comes from the incentive mechanism, with the block reward being split between all actors: 60% to PoW miners, 30% to PoS voters and 10% to the development entity.
Despite achieving a lot, Decred still continues to build on their system by improving their fully decentralized autonomous network, implementing the lightning network and atomic swaps.
Blockchain4good and the future of education
As the final speaker of the evening, Emilie Raffo, the founder of Blockchain4good meetups in Geneva and the Communication Strategist for Odem.io took us through a series of blockchain initiatives meant to have a large positive impact on society. Among the problems Emilie raised such as access to the financial system, identity management, property registries or corruption, she connected them all to struggling developing countries and how blockchain could help them out.
One of these issues is access to education which is extremely expensive in developing countries. Odem.io tackles these issues by removing the intermediaries who charge a lot of money to allow people to reach educational institutions. Sadly, people accumulate a lot of debts to obtain a higher education. However, even though they manage to enter the workforce they encounter difficulties to pay back those debts.
What Odem.io provides is a physical platform where teachers and students can meet and agree through smart contracts on the terms of the eduction to be provided, as such reducing costs for the students by eliminating the middle man while ensuring trust.
And in the end…
Just in case this article was too long (or too boring) and you’d rather prefer to listen to the actual speakers, you may want to check the recording of our livestream.
In case you are curious to know more about Blockchain, meet other inspiring project leads or listen to great speakers, come to the next edition of BlockchainTalks. Our next event will be organized almost simultaneously in 3 different cities: Eindhoven, Amsterdam and Rotterdam. Now there is no excuse why you cannot join us as you can choose a city that is closest to you!
Bas Wisselink thinks blockchain technology is thrilling, but he believes it can only grow by constant questioning. He gets excited by questions and problems, and actively seeks them out. He has been active in the blockchain space since 2013, when he spend two sleepless weeks during his Christmas holidays after discovering both the technology and its community. Today, he's an active speaker and blogger about blockchain technology. His aim is to always leave the audience with food for thought. Do not expect him to hype a product, but expect him to make you love discovery.
Blockchain technology is usually only discussed out of time. We look at it and discuss it as if it exists in a vacuum. What a lot of people do not know is that it has a rich history and a lot of the groundwork was actually laid right here in Amsterdam. Bas Wisselink will dive into the history and underpinnings of this movement and hopes to shed some light on how the blockchain came to be what it now is. To understand the problem is to understand the solution.
Emilie Raffo is the organizer of the Swiss "Blockchain 4 Good" meetup. After writing her thesis on the utility of cryptocurrencies and writing the whitepaper of a Swiss blockchain startup, Emillie joined https://ODEM.io to make high-quality education affordable to all. Her dedication to this topic is not causal: her family has had an NGO for 20 years to finance the education of Rwandan orphans.
Emilie is truly passionate in finding ways to organize business and finance in an impactful and decentralized manner: she believes technology has the power to make the world a better place.
Noah is a lifelong advocate of innovation and continuous improvement. In 2015 he obtained his BSc degree from the University of Amsterdam, with a major in Political Science. While finishing hisacademic studies, Noah started actively researching blockchains. Early 2016 he was one of the participants in the Decred airdrop. In his presentation, he will explain how the Decred project has solved the challenge of decentralized governance by implementing an innovative hybrid PoW/PoS blockchain.
As Founder and CEO of Farma Trust, Raja is driving FarmaTrust's vision and mission of protecting the vulnerable by eliminating deadly counterfeit medications on a global scale. Raja is a UK qualified barrister with over 20 years business experience in the global media and technology industries and holds Masters of Law from University of Nottingham. Before establishing Farma Trust, his most recent groundbreaking global digital media achievements include the strategic planning, launch and operational management of Al Jazeera Media Network's digital current affairs media products aimed at millennials: AJ+ (USA), AJ+ (Spanish) and AJ+ (Arabi), engaging millions of young people across the world.