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Monday, September 4, 2017

BLOCKCHAIN – THE SOLUTION OF MISTRUST

 


As a child, my father narrated to me a story about two brothers, who used to work in different cities and sent money to their old-age parents living in a village. However, one day the younger brother among the two - under the impression that he would be sending more money than his other brother - started reducing the money being sent to his parents and eventually stopped sending money.

Unaware about his younger brother’s plan, the elder one, due to the same reason as his younger sibling, also started reducing his monthly payout to parents and brought it down to nil. As money flow reduced, the health of aged parents, who did not have any other source of income and sustained mainly on money sent by their sons, started deteriorating. As days passed, parents’ health deteriorated further leading to their death.

The moral of this story, according to my father, was to not think about others while performing one’s duty and focus solely on the delivery. However, this did not convince me because merely thinking about other’s work should not impact the delivery by a man, who is God’s best creation.

As I grew older and attained knowledge through various means available, it donned on me that the problem was not related to the duty, rather, related to information sharing channel between the two brothers that lead to both brothers deciding to reduce the money being sent. Not just the brothers, but parents also did not have any means to inform their children about the repercussion their act of reducing money not being sent to parents has caused.

In real life too, we come across many such instances, where lack of information leads to mistrust. However, in 2009, Satoshi Nakamoto (a person not known to many) designed a system for anonymous fund transfer, popularly known as Bitcoin. This technology guaranteed that the information shared among the users is correct and not tampered with.

The system guaranteed correctness of the information by adhering to below principles:


1. All information must have a similar pattern
2. Information is shared among multiple trusted user
3. All the trusted users act as witness and custodian of the information
4. The group of trusted users is always going to greater than the untrusted user.
5. A collective consciousness mechanism among user for building trust factor

The underlying concept of bitcoin evolved and become Blockchain. Over a period of time Blockchain evolved and many more algorithms were introduced to make consciousness among the users like Proof of Work, Proof of Stake, Delegated Proof of stake et cetera. Based on a conscious mechanism, a different system was design Bitcoin (Proof of work), Ethereum (Proof of stake), Lisk, SHIFT (Delegated Proof of stake).

The brothers would not have started reducing their monthly payout to their parents if they had kept transactions between each one of them transparent – the philosophy of bitcoin. Alas! That was not the case with them and they lost their parents. 

In this article, I have thrown some insights on blockchain with hope, it will clear all your doubts.

Keep watching this space for insights on conscious mechanism.

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