Last updated February 15, 2021
In AI Mysteries

Bitcoin, Blockchain and the Crypto Corporation

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Published on February 29, 2016

by Prithwis Mukerjee

If 2013 was the year of Bitcoin, the enigmatic crypto-currency created by the anonymous Satoshi Nakamoto, then 2016 is going to be year of the BlockChain — the shared public ledger technology that provides the platform on which Bitcoin works. In fact, Bitcoin is just ONE of the many applications that can be built on the blockchain and this fact is gradually dawning on the world of technology as different groups are racing to create new products.

While many strange and wonderful products like an automatic Uber-like car service have been proposed, the most powerful applications seem to be coming out of Wall Street. This is because of two reasons

The fundamental premise behind the blockchain is control and transfer of assets and this is what Wall Street does for a living
Wall Street has realised that rather than resisting the arrival of a disruptive technology it is better adopt it first. Resistance is futile. Just as retailers who ignored the eCommerce revolution got wiped out by the arrival of Amazon and eBay, dealers in financial securities could face the same problem. Hence the urgency to board the blockchain bandwagon

In fact so urgent is the desire to join the blockchain that DTCC, the body that controls the transfer of trillions of dollars of financial assets in the US market has teamed up with The Linux Foundation to plan for that “once-in-a-generation change of technology infrastructure” to create the HyperLedger and the Securities and Exchange Commission has authorised the release of equity shares on this alternate trading platform. The adoption of blockchain technology for the management of financial assets is as fundamental, if not truly tectonic, as the move from physical shares to de-materialised shares that we saw in the US in the 1970s and then in India in the 1990s.

But what on earth is this blockchain? That is difficult to explain in a few words without trivializing the concept. Please be patient and work your way through these three slide decks and hopefully you will understand what this marvelous technology is all about.

The first slide deck explains the basics of cryptography that are essential to understand how the bitcoins and other crypto-currency work. If you are already familiar with public and private keys you may skip this, but the idea of smart contracts is introduced here.

The second slide deck is where the bulk of the bitcoin protocol is explained. We also explain how bitcoin or any other equivalent crypto-asset can be managed with the shared ledger also known as the blockchain.

Finally, in the third slide deck we leave bitcoin behind and step into the mind-bending concept of an autonomous corporation. Where we look at futuristic concepts like programmable money and also some of the projects that are happening now and today.

The blockchain creates new way to hold and transfer assets that represent real life “value”. It is going to transform the finance industry in the same way that the internet has transformed the way information is transferred and consumed. But could it also go a long way to create a new kind of robotic entity and would that entity follow Asimov’s famous Three Laws of Robotics?

In fact this technology is so significant that I would not be surprised if someone proposes that Satoshi Nakamoto be awarded the Nobel Prize for Economics even in absentia!

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