Blockchain breakthroughs: A tech revolution told in whitepapers
Blockchain is one of the great blindsides in the history of technology. Major trends around cloud technology, virtualization, and mobile you could see coming, but a novel distributed computing model based on public key cryptography? That came almost completely out of the blue.
When the Nakamoto whitepaper dropped in 2008 it unceremoniously set off a ferment of innovation that continues growing to this day. It wasn’t entirely unexpected if you were watching the digital currency scene — at the time an even nerdier backwater of the already highly nerdy cryptography frontier. The paper itself gives a tip of the hat to several prior artists like Adam Back’s HashCash whitepaper.
In that view, Bitcoin looks like a sensible progression. However, even as a natural outcome of compounding creativity the Bitcoin paper is extraordinary.
The proof of work (PoW) solution to the double-spend problem is non-obvious even knowing the prior art. And that idea led to an unpredictable result: the possibility of decentralized, permissionless virtual machines.
The first shoots in this spreading revolution were issued by Vitalin Biturik in the Ethereum whitepaper. The basic idea of leveraging blockchain to build Turing machines was introduced there. Once you have established the viability of a permissionless, compute-enabled network, you get what you might expect: a horde of smart computer scientists and engineers leaping into the space to find new ways of taking advantage of and improving upon the possibilities.
In short, we have seen an outpouring of genius. Obviously there have been some blind alleys and questionable characters at work. None of that discredited the real groundbreaking work that has been and is being done in the space. After the Ethereum virtual machine’s introduction, several promising avenues of progress have been proposed and implemented. Here’s a look at some of the most prominent.
If Bitcoin is the root from which the web3 tree has grown, Ethereum is the trunk from which the branches have spread. Ethereum took the conceptual step of saying with a system in hand for verifying transactions are valid, maybe we can build a virtual machine. There are devils in the detail here — implementing such a system is a substantial challenge — but not only is it possible, it also opens up applications with unique characteristics.
In general, these applications are known as dApps, or distributed applications. dApps are comprised of smart contracts that run on-chain and the traditional web apps that interface with them.
The concept of a smart contract is perhaps the best concept to use as a lens in understanding Ethereum’s basic innovation. Smart contracts are so called because they represent a contract on the network — they specify what are valid and binding contracts for the participants. (Participants are cryptographically bound to these contracts via their private keys). In a sense, the blockchain structure enables code to describe a variety of verifiable agreements between people and systems.
Smart contracts are “smart” because they are autonomous. This is the characteristic that really distinguishes them from conventional applications: no intervention by outside entities is necessary for their action.
With a generally available network that can enforce contracts, in which participants can join in a permissionless way, many traditional business models are potentially vulnerable to disruption. As this article describes in detail, finance is potentially just the tip of the iceberg. Also inherent in Ethereum basic design is the possibility of decentralized governance, or DAO (distributed autonomous organizations).
Many practical realities must be overcome in realizing the promise of blockchain, and many of the innovations in subsequent projects are targeted at doing just that.