For a guy who has on two occasions written in favor of the robot apocalypse, I can be pretty twitchy about security in tech. I surf behind a VPN (because the NSA is super interested in my herbal tea blends) encrypt important files for storage, all that good paranoid stuff.<\/p>\n
But of course, the real nightmare when it comes to tech security isn\u2019t on the consumer end. We\u2019re not worried about robots swiping unused RAM or reading our browser history (well, I\u2019m not; I don\u2019t know what you\u2019ve being doing lately, you deviant) nearly so much as the new reality that everything from money to mortgage papers is digital, and 1s and 0s don\u2019t much care who\u2019s futzing with them.<\/p>\n
A fine state of play on the issue can be found here, but the TL;DR is that to date a money-based economy has required an intermediary between buyer and seller, someone whose only job is to manage the money itself. That middleman\u2019s big job is verifying the value of what\u2019s being exchanged, resolving the \u201cdouble spending problem\u201d of spending the same unit of value more than once.<\/p>\n
Fun fact: that\u2019s literally why there are coins.<\/p>\n
Originally the heads on the \u201cheads\u201d side weren\u2019t just rulers showing off, they were stamps from the royal treasury that confirmed the proper amount of precious metal was in that particular lump. The authenticity problem is literally as old as money, and now we\u2019ve gone and thrown away the stamp.<\/p>\n
Thanks to the authenticity problem, historically it\u2019s been impossible to perform a straight peer-to-peer exchange of value with money: note that yours has deceased politicians on it. In theory, digital exchange makes that unnecessary. Cryptographic technology can guarantee authenticity better than a green picture of a dead guy, and exchange can occur between people directly.<\/p>\n
That\u2019s bitcoin, for example. But bitcoin is just the application of the idea. The idea behind bitcoin and a bunch of other clever digital things is blockchain.<\/p>\n
Blockchains are \u201cdistributed ledgers.\u201d All transactions made by members in a set time period are put in an encrypted \u201cblock,\u201d then the blocks are distributed to the network and the first member to validate the encrypted transaction gets a bonus. <\/p>\n
As soon as that\u2019s done, the block is timestamped, locked, and added to the chain. Every member\u2019s ledger is identical because the records are generated automatically, and instead of going through a bank or credit card company, users have direct access to all their information at any time.<\/p>\n
Best of all, with current technology, blockchain is effectively hack-proof.<\/p><\/blockquote>\n
Once a block is stamped it never changes again, permanently linked to every other block, every block is safe behind the kind of crypto that \u2013 no hyperbole \u2013 a hacking tool can\u2019t finish the necessary math because the Sun will blow up first, and you have to hack every block to get to any of them. It\u2019s a big deal.<\/p>\n