As I’m pretty sure by now, most of you have heard in some form or fashion the word “cryptocurrency” being tossed around in the media & social media due to the most popular form of cryptocurrency by the name of Bitcoin (BTC) reaching a value level of as high as $7,380.56 per coin. To some people, the mere fact that this form of currency is so valuable is enough to get most people excited as they sit around pondering the possibilities of transforming this currency into a fiat currency to where they can essentially ball out of control. To other people, most honestly have no clue what cryptocurrency is, why it’s so valuable, why people are so excited about it, & why people are rushing to get involved in the cryptocurrency market. Well, I’m about to give you the most elementary explanation that I can think of in order to help you understand what cryptocurrency is, why cryptocurrency WILL dominate the future & more importantly why you SHOULD get involved in this market, especially if you are black.
Everything from money to social media activities are centralized (controlled by some organization). The stuff you post to Facebook is stored on Facebook servers all across the world that are owned & controlled by Facebook. Every time you withdraw money from an ATM machine, send money via PayPal, pay for something using a debit/credit card, all of those transactions must go through a bank (centralized) to where the bank controls the actual process of sending/receiving, recording & verifying transactions before the disbursement of funds…for a fee of course. These transactions themselves are stored on servers owned & controlled by these institutions as well.
These servers are very important for a reason. These servers process & store the information they collect from you (in addition to data mining this information to be sold to third party companies who then send you a bunch of junk via email or snail mail to convince you to buy). Another reason these servers are so important is because these servers are also extremely valuable to hackers roaming the internet looking to compromise a server to gain access to the information residing on the server to be later sold on the black market (think identity theft). The problem with these servers is that in the grand scheme of things, they represent single point of failures that are constantly being attacked & exploited for nefarious purposes. All of the information that you’ve posted to Facebook ONLY resides on Facebook’s servers spread out across the world. This information does not reside on any of Google’s servers which means if someone managed to wreck havoc on Facebook’s system causing the site to crash or something catastrophic to where your information was compromised (as in recent issues involving Yahoo!), then you couldn’t turn to Google’s servers in an attempt to retrieve the information you had stored on Facebook’s servers, because they are not connected in that manner to allow for the free flow of data to be exchanged & stored. I have a decade+ background in IT & I have a master degree in Information Assurance. My master degree alone is basically a degree that focuses on protecting information floating around being stored on servers. So the problem is a very real problem that most people are unaware of.
Cryptocurrencies function off of a technology called blockchain. Blockchain essentially eliminates the single point of failure aspect by removing the storage of data on centralized servers owned by private/public entities. The data on the blockchain whether it is financial transactions, social media activities etc are stored across a gigantic network of computers called nodes to where the information stored cannot be controlled by one entity or hacked causing severe problems due to single point of failure issues I described above. The reason the data on the blockchain cannot be hacked is because the data resides on a distributed network is highly encrypted to where a hacker can’t just hack one single point on the blockchain, they would have to hack the entire blockchain essentially. Also, the data residing in the blocks on the blockchain are constantly updated across the network to wherever you access the data on the network, the data will be the same.
Here’s an example of what I mean by the data being centralized & decentralized in addition to the data being “mirrored” across the network no matter where you are to access the data.
Back in the day on Microsoft Word a person would type a paper, save the paper, & then email the paper to somebody to make corrections. The person whom the email was sent to would get the email, open MS Word, make corrections, email you the paper back, then you would make necessary changes to the paper. This entire process was centralized to where only one party had control of the paper at a time and the other party couldn’t get access to the paper until the owning party relinquished control.
Now, we have Google Docs (basically cloud computing) to where multiple parties at the same time can access, view and/or edit the paper in real time without waiting for one party to relinquish control of the paper (decentralized).
How this ties into the data floating around on the blockchain is…you’re not inputting your data into just one entity and entrusting that one entity to do the right thing as far as processing and safeguarding your data (for a fee in most instances). You are now putting your data across a distributed network to where copies of that data will exist in multiple places at once. So, if I upload some data from my home computer on the blockchain, my data will be added to the blockchain which will then be replicated across the network and not just sitting on one server that I would need to gain access to (think…logging into Facebook, you’re essentially logging into a site that stores your updates on their servers). In a decentralized scenario, in theory, I would be able to log into my gmail account and still be able to access my data on Facebook.
Now some of you are probably wondering how this data is protected if this data is “free floating” on the blockchain versus the data (supposedly) being protected on some entity’s servers.
Simple, the data is encrypted (it’s encrypted on these entity’s servers too by the way…or at least should be). But the encryption on the blockchain isn’t CENTRALIZED, meaning you are not relying solely on that one entity to encrypt & protect your data.
So how the encryption works is fairly simple for the most part. Blockchain works off of an encryption practice called asymmetric encryption. Asymmetric encryption involves the use of a public & private key to gain access to data. Any data you put on the blockchain is encrypted to where the data looks like a bunch of meaningless letters, numbers & symbols that would literally take decades (if not longer) to decipher.
A private & public key can be thought of this way…
You maintain a mailbox at a UPS store. UPS gives you 2 keys: one to access the UPS store and the other key to access your personal mailbox within the store. The UPS store key that you possess is the same key that some random person with a mailbox at the UPS store would possess as well, but that random person does not have your private key (or shouldn’t) to access your personal mailbox.
So on the blockchain, what tends to happen is, people constantly give out their public key to pretty much anybody who wants it for the purpose of exchanging data (and/or “money”…cryptocurrency). But to unlock or gain access to the item in the transaction, a person would need your private key to do so. So basically what takes place is, Person A wants to send an item to Person B. Person A sends an item to Person B using Person B’s PUBLIC KEY. This item is encrypted within Person B’s PUBLIC KEY. Person B receives the item from Person A. Person B now uses his PRIVATE KEY to decrypt his PUBLIC KEY to get access to the item Person A sent him. If anybody were to intercept Person B’s PUBLIC KEY, they would NOT be able to access the data encrypted on that public key without having access to Person B’s PRIVATE KEY. Person A can’t even get access to the data he sent Person B because Person A used Person B’s PUBLIC KEY to encrypt the data and ONLY Person B’s PRIVATE KEY can decrypt Person B’s PUBLIC KEY. Got it? Good.
Now, all of these transactions are continually updated across the blockchain network in a matter of minutes to where each transaction is essentially “etched in stone” to where a new “block” is created in the overall network which is then duplicated everywhere on the network (think of my Google Docs analogy). This is important because in order to hack the system, every other block that was created prior to the new block would have to be hacked as well which would require computing power that probably doesn’t exist to even make it worth somebody’s time & effort to attempt. You can’t just hack one block, all the blocks are connected which mean you would have to hack ALL OF THE BLOCKS. Also, you can’t delete data on the block once the data is recorded. Now for the sake of this blog article, I’m choosing not get too technical beyond this point to prevent really confusing the hell out of people who have no idea how this works, but just want a basic general understanding of the technology behind it.
What I really want people to understand is why one Bitcoin is currently worth over $7K and why black people need to seriously get caught up on this technology to where you could benefit big from it in the coming years. Crytocurrency (Bitcoin and other coins) is an intangible asset that rewards people for participating in the creation, maintenance & growth of the blockchain. These people are called miners. These people allow for their computers to be used as nodes for creating the actual blockchain which allows for you to engage in peer-to-peer transactions which also allows for you to remove the middleman & their fees out of the process. They also allow for your data to be distributed without the need for a centralized distribution point that is owned by one entity.
People who are not miners invest in the cryptocurrencies that are being “mined” by these miners. A miner is a person who basically uses their computer to solve complicated mathematical problems. Each time they successfully solve a problem a coin is created. These miners are paid in partials of coins that is based on a variety of factors. The remaining partials are then placed on the market for non-miners to invest in or use as actual forms of currency to purchase items. Matter of fact, Japan just recently recognized Bitcoin as a legit form of currency to purchase items. There are even ATM machines in various countries (too include the US) that allow you to “withdraw” Bitcoin instead of dollars.
But here is what I really want black people to grasp & understand as this whole discussion relates to cryptocurrency and the blockchain technology…Black people need to think of this technology like it is the Internet 3.0.
When the internet first came out for general public use 20 something years ago, the internet was basically a place to visit websites and read stuff. That was it. The only people who were really making money off of the internet during that time were ISP’s (internet service providers) & people who registered domain names for the sole purpose of holding them and selling them to people later on (think if you bought Walmart_dot_com back then how much Walmart would have paid you to get that domain name). You had a few other ways of making money here & there (the Dotcom Boom) but that was pretty much it. Internet 2.0 ushered in the era of e-commerce & social media (where we presently are now). As crazy as this may sound, a lot of people honestly didn’t think e-commerce or social media would take off. A lot of people couldn’t fathom the idea of people buying products online or spending more time on a social media platform communicating to people than they did in real life. But in the year 2017, look at how we communicate & engage in commerce now. So now think of blockchain & cryptocurrency as internet 3.0 to where the internet will begin moving away from big companies like Google, Facebook, & banks controlling or having some influence on every aspect of everything that takes place on the internet. The blockchain will not put these people out of business, but the blockchain will give people more power over how our data is being utilized on the internet. This is all about ownership & control on the individual level versus relying on the big entities to do it for us. Cryptocurrencies such as Bitcoin have proven that there is a real demand & shift taking place to where as this technology continues to grow & mature, a lot of potential money stands to be made.
A private & public key can be thought of this way…
Article by Gee Lowery