Quick History of Bitcoin & Blockchain
This introduction is skippable but mandatory: what are Bitcoin and Blockchain?
The story began 10 years before, during 2008 subprime crisis. The world economy was impacted by the collapse of large US banks. This episode demonstrated that the deregulation of the financial system has shown its limits, and millions of people lost their investments.
The aftermath was huge and provoked by a bad money management of financial intermediaries such as banks or capital ventures. It is in this particular context that emerged the anonymous character of Satoshi Nakamoto who created Bitcoin in 2009. At the very beginning, Bitcoin was created to avoid a new economic crisis and reduce the power of financial institutions by giving more power to people and provide them a way to exchange money easily without using an intermediary. And so, Satoshi Nakamoto created Bitcoin, a cryptocurrency based on the new technology of blockchain to allow transactions between people. The official definition of Bitcoin is:
“a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.”
The price of Bitcoin progressed little by little before bursting in December 2017 by reaching 20 000$ (versus 1000$ in January 2017). Those charts below show very well this enormous tendency that creates a real ferment around Bitcoin
The public interest grows as fast as Bitcoin price on Goole searches. Moreover, according to Gartner, Bitcoin and Blockchain are at their top on Hype Cycle For Emerging Technologies
This crazy gold rush 2.0 that happened in December could be considered as a Ponzi scheme due to speculation. Nonetheless, it sharply rose the interest in the technology. All companies started thinking about blockchain implementation to solve business issues. Consulting firms like IBM or Capgemini are currently designing blockchain ledger solutions to serve their clients’ needs.
Different types of blockchains
According to the official definition, a blockchain is “a digital ledger in which transactions made in Bitcoin or another cryptocurrency are recorded chronologically and publicly.”
The blockchain is a ledger composed of members who can exchange crypto-currencies or more globally data. Everything is recorded in a global register which is transparent and accessible to all the peers.
On Bitcoin blockchain, for instance, all users have the same status and are “anonymous” but it is important to notice that there are different kinds of blockchain:
- Private / Nonprivate blockchain
It exists private blockchain that below to companies. For instance, Hyperledger Fabric, hosted by Linux Foundation, is a permissioned and private blockchain, designed for company usage. Whereas, cryptocurrencies like Bitcoin, Litecoin, Ethereum are related to a public blockchain.
- Centralised / distributed
Centralised: for instance, Hyperledger is a centralized and private blockchain: the company using it has all rights on the ledger, its nodes, and its users.
Decentralised: companies like Ripple, which permits nearly instantaneous transactions between banks and users are developed on a hybrid blockchain, decentralized but not distributed :” Ripples can be safely stored and kept and uses cryptography to protect participants, but the nodes it’s protecting aren’t individuals but “trusted” operators registered in the Ripple network. This allows the currency to use the advantages of the blockchain ledger, but in a closed ecosystem that makes it more efficient.” So Ripple has a power over the blockchain users, can deny or allow access to the ledger.
Distributed:“traditional” cryptocurrencies like Bitcoin, Litecoin, Ethereum have distributed ledger.
- Smart contract / No smart contract:
Smart contract definition: “A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties.” These transactions are trackable and irreversible.
Blockchains without smart contracts such as Bitcoin blockchain or Litecoin blockchain, allow people to send money to someone across the ledger without any “condition”. On the contrary, the huge value of crypto based on smart-contract, such as Ethereum, Neo or Icon, is that it allows creating some program inside the blockchain to set conditions for transactions or others values transferred to the ledger. This video explains very well the fundamentals of the smart contract and gives the use case of ICO (Initial Coin Offering) a fundraising through cryptocurrencies.
Many industries, such as banks for automatic loans or insurance for automatic indemnisation, are interested in smart contract blockchain. It is also the case for content management.
Blockchain in content management
The successful business model of content distributors is now threatened by blockchain possibilities which question their intermediaries’ role as their value. Decent is a blockchain based project which should be a game changer in this industry. they explained the current issues in content distribution systems :
Firstly, one issue is the fair remuneration of the content producer. On a centralized platform which broadcast content, such as Spotify, Netflix, Press media, TV…, people have to pay to access the content, and the artist loses some money due to intermediaries (generally 20%) “[big media: Youtube…] have continued operating in ways that fundamentally undermine the artistic control and profits of their contributors.” Decent CEO
YouTube, for example, recently announced that they will not allow users to earn any money until they reach 10 thousand views. With micro-transaction enabled by blockchain, even small creators could receive money for their content.
Secondly, the dominant position of content distributors could be a problem. For example “YouTube and Medium both have the right to remove comments, content or entire channels or profiles without leaving a trace.” Decent CEO
Thirdly, there is a question about security and protection of the content. People copy paste article, images, texts without caring about rights: content is shared illegally on the web. The Decent company wants to disrupt this market and change the business model:
.Blockchain could also have an impact on music streaming platforms.
The Voise company strategy consists in fairly paid the artists, musicians thanks to secure content and microtransaction permitted by blockchain and smart contract (because as you understood there is a microprogram that allows someone to access the content only if he had paid for it): this video explains the concept easily.
Others business models were born like Voise but applied on other domains like Spankchain for instance which uses the same principle but for the adult industry.
Content banks like Getty could also be interested in blockchain for securing their content and avoiding copy paste and stealings of their property. Cappacity, a very recent project, is a peer to peer 3D image bank based on blockchain: “All content and its exchange details are immutably stored in the blockchain, which resembles a BitTorrent-like system.” Cappacity
“Each content file is assigned with an ID or a hash to prevent any copyright infringement. All hashes of all the files are listed in the blockchain and cannot be changed. Once a content transaction is done, all its details will be processed according to a smart contract protocol and cannot be reversed retrospectively.” Cappacity
“Overall, the blockchain helps us create a secure and convenient environment for 3D content production and mass distribution. Since high-quality and accessible content is the driving force behind the development of AR/VR technologies, we believe that the blockchain-based AR/VR Ecosystem will bring the AR/VR industry to a new level of its development.” Cappacity
Press & media industries are also impacted. For instance, a newspaper in Winnipeg has already begun to use a micropayment system based on blockchain to protect and monetize its articles.
Finally, you must have heard about the KodakCoin buzz. Who could have guessed that this abandoned company will propose a new service, surfing on the blockchain trend!
The aim of KodakCoin is to protect picture rights: “The KODAKCone image rights management platform will create an encrypted, digital ledger of rights ownership for photographers to register both new and archive work that they will then be able to license within the platform. KODAKCoin will allow participating photographers to take part in a new economy for photography, receive payment for licensing their work immediately upon sale, and sell their work confidently on a secure blockchain platform”. Just after the announcement of KodakCoin the share prices nearly triple in 2 days!
Blockchain: buzzword or reality?
It is quite easy to measure all the possible field where blockchain could play a role.
In content management, we saw all the possibilities and the impacts that blockchain could have on content distributors like streaming platform, media or even contents banks.
As I write this article, the speculation around the cryptocurrency has reduced but we have to be careful to fake project and companies that are just taking advantage of this tendency. 2018 should be a crucial year for blockchain: democratization and adoption are coming.