What is Blockchain Technology? Massively Simplified by Richie Etwaru

The Wikipedia definition of a blockchain is as follows;

“A blockchain – originally block chain – is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block contains typically a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data. Functionally, a blockchain can serve as “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.” For use as a distributed ledger a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks and a collusion of the network majority.

That sounds very confusing doesn’t it?

Let Richie Etwaru simplify it for you. Watch this TEDx video to understand the basic concept behind blockchains.

Blockchain: Massively Simplified | Richie Etwaru

About Richie Etwaru:

Richie Etwaru, discusses the opportunity and implications of blockchain as a paradigm to slow/chose the expanding trust gap in commerce. He unpacks blockchain to a level of simplicity to be consumed by those that are just starting to understand and explore the paradigm. He lays out a current state of commerce, suggesting that every company is currently at risk of being disrupted or incurring severe strain from a blockchain version of itself.

Professionally, Richie Etwaru is a c-level at a Fortune 500 Company, an author, the owner of international patents, the founder of multiple ventures, an experienced keynote speaker, an angel investor, a member of advisory boards, and a recognized thought leader in the area of digital, technology, and design.

Transcripts of the Video:

0:12
let me take you to the ground floor of
0:14
the Internet this is what the internet
0:18
looked like exactly 40 years ago in 1977
0:24
the internet was just a couple of
0:27
computers a dozen of dots if I may
0:30
loosely connected by some lines that can
0:33
barely carry a couple of bits and bytes
0:35
between them not that much today you’re
0:41
watching this video on YouTube using the
0:46
Internet in the most sacred part of your
0:50
house without a wire connected to the
0:53
device that you’re watching this video
0:55
on on the seat that most people should
0:59
watch TED talks on in your toilet now in
1:05
order for us to go from where we are
1:07
which should ease couple dots to where
1:11
we are today a lot had to happen people
1:14
like Bill Gates and Tim berners-lee had
1:17
to dream about what could the world be
1:20
like how could we change the world and
1:24
here we are 40 years after now the thing
1:29
about great inventions and great
1:32
paradigms like the internet is you
1:33
actually don’t know what it is the day
1:36
was made you kind of have hindsight
1:39
forty years after and you look at and
1:41
you go oh I see what that did it did the
1:44
following thing and the question or the
1:48
discussion we’re gonna have today is if
1:51
there was a paradigm sitting in front of
1:53
us today what can we do today to figure
1:57
out what that paradigm is going to do 40
1:59
years from now so now we could take
2:00
advantage of it so that we can be a part
2:02
of what Bill Gates and others did to the
2:06
Internet in order to do that in order to
2:09
get ahead you have to ask what I like to
2:11
call the big question
2:13
and the big question about any paradigm
2:17
is what is the one thing what is the one
2:22
gap that that paradigm fills for
2:26
everyone
2:26
now I said hindsight is easy hindsight’s
2:30
20/20 but foresight that’s where it gets
2:33
difficult let’s take a look at hindsight
2:37
if we think about some of the large
2:39
inventions in our life the printing
2:41
press for example in the 1400s the
2:45
printing press filled an interesting gap
2:48
it filled what I like to call the
2:50
knowledge gap at the time knowledge only
2:53
came to the anointed someone special
2:55
would get a clay with the name of kings
2:58
on it and that’s how knowledge came from
3:00
the gods the printing press was invented
3:02
and completely closed the knowledge gap
3:05
if we take a look at something like the
3:08
engine that invention what gap did it
3:11
fill well it filled a power gap at the
3:16
time we wanted to manufacture and all we
3:19
had was manpower slavery colonialism the
3:24
engine helped get rid of all of that and
3:26
then our favorite invention the internet
3:30
starting 40 years ago you looked at it
3:32
you’d go I’m not sure what it does today
3:35
I like to think of it as filling the
3:38
distance gap the world is a lot smaller
3:41
than it was 40 years ago today you can
3:43
transact with just about anyone from
3:46
just about any distance away we’re here
3:49
to talk today about the next gap that
3:52
exists there’s a gap that is building in
3:55
our society and there’s an invention as
3:57
you would imagine that fills that gap
3:59
that invention is called blockchain now
4:04
this is an oversimplified version of a
4:07
blockchain conversation for all those
4:09
blockchain experts the sixteen of us
4:11
that exist in the world save all the
4:13
details for the Comets we’re gonna have
4:15
an oversimplified conversation we’re at
4:17
the ground floor of blockchain and what
4:19
I want to talk about is what is the gap
4:21
that it feels so that we can look
4:22
forward and see what the world could
4:24
look like and take advantage of it blood
4:27
change is something that is very
4:28
fundamental to us it’s at the core of
4:30
who we are and each of us do it hundreds
4:33
of times a day
4:34
what blockchain is going to change it’s
4:37
just going to change the way we trust
4:42
not just how we trust each other but
4:45
more specifically how we trust in
4:47
business now you might go WOW trust in
4:50
business I trust all the businesses I
4:53
operated with today of course I do
4:55
I trust my government I trust my news I
4:57
trust everyone I’m being funny here guys
5:01
Trust is actually very very core to
5:04
business trust in business started very
5:09
early on from cavemen all the way
5:14
through the mercantile economy to the
5:17
Industrial Age and today in the
5:18
Information Age we have come to a
5:22
conclusion as a species that I have to
5:26
trust you in order to transact with you
5:30
yes ladies and gentlemen Trust is the
5:33
fundamental currency of Commerce think
5:39
about if we just stopped trusting all
5:41
companies or governments Commerce would
5:44
come to a bit of a halt
5:45
now trust itself it’s very delicate
5:51
it’s appointment it’s close to us easily
5:57
breakable and yet somehow we’re able to
6:02
trust each other
6:04
and transact a hundred trillion dollars
6:08
a year between the 7 billion of us on
6:11
this planet this little delicate thing
6:15
called trust somehow or the other we’re
6:19
able to do it this many times per year
6:21
the fact is we manufacture that trust in
6:27
order to transact somehow or the other
6:30
we manufacture trust when I exchange my
6:32
hard-earned dollars with you for a good
6:35
or a service I have to trust you and we
6:38
manufacture that trust let’s
6:40
talk a little bit about the
6:41
manufacturing of that trust I’m going to
6:44
use my slim shadey voice anybody here
6:47
knows mm you know
6:49
well the real Slim Shady please stand up
6:52
let the oversimplification begin let’s
6:57
talk about how we manufacture trust
6:59
today in order to talk about trust so
7:01
that you can really get a sense as to
7:02
what I mean by blockchain is going to
7:05
change the way we trust let’s imagine
7:07
that we’re about to buy a house now we
7:12
have invented this thing in society
7:15
called the ledger no not heat ledger the
7:19
ledger like bookkeeping entries debits
7:22
and credits and the ledger is the
7:24
fundamental way that we go about storing
7:27
information about transactions today for
7:29
this house for example if we needed to
7:31
get a record of who owns this house and
7:34
what happens to it we would store that
7:36
information in a ledger that looks like
7:38
this first a house is built then it’s
7:41
constructed and there are some changes
7:43
that go with it it had some violations
7:46
here and there but eventually would be
7:48
able to get a record of this house
7:50
before we buy it anyone here ever bought
7:51
a house or sold a house how long does it
7:54
take to get this information you have to
7:57
go to a title company 30% of the titles
8:00
in the United States have errors in them
8:02
the problem with the Ledger’s that we
8:05
use today which we depend on the trust
8:07
many things not just houses is that
8:10
someone as easily as they can write a
8:13
record on the write on the ledger they
8:16
can delete a record from the ledger
8:18
can you imagine buying a house and you
8:20
go to the homeowner and they go yes of
8:21
course here’s the title I’ve kept all
8:23
the records of the title please have it
8:24
would you trust him no because the
8:28
information can be tampered with the
8:30
ledgers that we use today to transact
8:33
with whether it’s a house a car the
8:37
rights to some piece of art someone who
8:40
owns a piece of intellectual property or
8:42
a patent our temporal you can tamper
8:45
with them and what makes it worst is not
8:49
only are they tamper herbalism you can
8:51
remove a record you could also add a
8:53
or edit record as you can see here that
8:56
chimney violation that happens to this
8:58
house somehow magically is now a new
9:01
chimney I bet you’d be paying a price
9:04
you don’t want to pay for that house so
9:07
we have this capability called a ledger
9:10
we use it it’s tap herbal and we could
9:12
trust a little bit but we’re sort of in
9:14
this state of Commerce where we have to
9:16
trust but verify
9:18
anybody knows who said trust but verify
9:22
all right good we’ll add it to the
9:24
comment section as well okay the truth
9:26
is today as a civilization when we start
9:30
companies or we start transactions we
9:33
start with an automatic assumption that
9:36
the counterparty cannot be trusted when
9:42
we start companies or we start
9:44
transactions today we start with the
9:47
automatic assumption that the
9:49
counterparty cannot be trusted it almost
9:51
feels normal to us kind of feels like oh
9:53
yeah I mean why would we not do that
9:55
what does it have to be that way it’s
9:57
just something that we’ve become
9:58
accustomed to and the way we’ve gone
9:59
about it is we establish these things
10:01
called
10:02
intermediaries – fancy word for
10:06
middlemen and middle women
10:08
intermediaries these are entities that
10:11
are responsible for keeping a
10:14
centralized copy of the ledgers in all
10:16
of Commerce and they facilitate the
10:19
brokering of the relationship between
10:20
those who are looking to trust and those
10:23
who are looking to be trusted examples
10:27
of intermediaries are things like banks
10:29
a Department of Motor Vehicle it’s a
10:32
great intermediary for identity mortgage
10:37
title companies credit reporting
10:43
agencies these are all intermediaries
10:46
this is just a small example of the
10:48
intermediaries that we deal with today
10:49
and the reason why we deal with them is
10:52
because we simply can’t trust the
10:53
ledgers that we have now the
10:55
intermediaries don’t actually get us all
10:57
the way there if you think about
11:00
operating in Xero trust which commerce
11:02
would come to a stalling halt and
11:04
abundant trust the intermediaries
11:07
kind of get us to a point where we can
11:11
manufacture some and the rest of it
11:13
comes from the gut
11:14
the fact is Commerce and the state that
11:18
it is in today we sort of exist in this
11:21
trust gap now I should remind you that
11:24
the oversimplification is still
11:27
happening let’s talk a little bit about
11:31
blockchain to get a sense as to what
11:34
blockchain is and what it does as you
11:37
would imagine blockchain has a ledger as
11:40
well
11:41
now the blockchain ledger is an epic
11:44
upgrade on the ledger that we have today
11:46
there’s a couple of things that are very
11:47
very interesting about it the first
11:49
thing that’s interesting about the
11:51
blockchain ledger is every record that’s
11:53
written on a blockchain ledger has a
11:55
unique key that goes with it now you
11:58
don’t need to get into the details of
11:59
cryptography or hash keys etc just trust
12:02
me when I tell you that there’s a really
12:04
really awesome unhackable key that’s in
12:07
every record on a blockchain letter the
12:09
other thing that happens to blockchain
12:12
is that every record is written and
12:16
stamped by the trusted party that wrote
12:19
that record uh-huh you can see how this
12:22
is a little bit different from the
12:24
crappy ledger we use today isn’t it
12:29
here’s the major invention when the next
12:32
record is written when the next record
12:35
is written everything from the first
12:37
record including the key and the
12:40
contents of the second record is put
12:42
into that formula and out comes a key
12:45
for the second record you can see
12:47
there’s some dependency now when the
12:50
third record is written the third record
12:54
same thing happens all of the contents
12:58
of record number one including the key
12:59
and the contents of rep you remember to
13:01
including the key goes into the formula
13:03
and out comes a key for the third record
13:07
you can see how the dependency from one
13:10
record to another is different from what
13:12
we do today now again we’re in the
13:14
oversimplification zone there’s give me
13:16
a lot of comments about cryptography and
13:18
hash keys yes all that is important
13:20
but this is the fundamental difference
13:22
and this happens on and on and on and on
13:28
essentially technology making sure that
13:32
every single record we can see who wrote
13:34
the record we can add a key to that
13:36
record and we can build dependencies
13:38
between Rome records or another
13:40
essentially chaining all of the records
13:43
together aha
13:44
now you see where the word chain comes
13:46
from in blockchain and here’s what
13:48
happens if someone that doesn’t like
13:50
that failed chimney inspection decides
13:53
to remove that very quickly with an
13:59
algorithm you can apply it and look at
14:02
the information and recognize that it
14:05
was tampered with that is the difference
14:07
between how we exist today as Commerce
14:10
and how we will exist tomorrow in the
14:13
future essentially we’re in a world
14:16
where we can start to take advantage of
14:19
a ledger that is immutable meaning yes
14:22
you can mess with it but it’s really
14:25
easy to tell the ones that were tampered
14:27
with as opposed to the ones that are not
14:29
tampered with
14:30
now block chains usually exist in what
14:33
is called communities what you find is
14:36
that participants that operate in an
14:38
industry will all operate on the same
14:41
chain so that each participant in that
14:43
industry has a copy of the information
14:45
so they can write to the ledger with
14:47
each other now this helps to sharing
14:51
this helps the transaction throughput
14:53
etc you could call this the real estate
14:55
chain if I may we’re still talking about
14:56
that house that we’re buying obviously
14:58
there’s going to be healthcare chain is
15:00
going to be financial services change
15:01
they’ll be all industry chains and
15:03
eventually we’ll see a chain of chains
15:07
now if some what happens to interfere
15:10
with one of those Ledger’s let’s say
15:12
something happens a consensus algorithm
15:15
runs looks at all the rest of Ledger’s
15:17
and says hey you’re the one that’s out
15:19
and it gets replaced by a copy of those
15:25
that still has the good information new
15:27
blocks of transactions appear they get
15:30
written on top of the collection of
15:31
ledger new blocks of transaction
15:34
appear they get written on top of it and
15:36
eventually we get into a situation where
15:38
what you’re looking at is what is called
15:40
a distributed immutable ledger I want to
15:47
pause and make sure we take inventory we
15:49
talked about inventions large paradigms
15:52
trust a trust gap how we bridge that
15:55
trust gap today with Ledger’s that we
15:57
can tamper with and now we’re looking at
15:59
a completely different ledger one that
16:01
is immutable shared across organizations
16:04
that operate on a specific chain and now
16:07
distributed if you look on the left side
16:09
of this chart you see a state of
16:10
Commerce that uses Ledger’s that are
16:12
temporal requiring intermediaries that
16:16
own a centralized copy of it that broker
16:19
the relationship between those who are
16:21
looking for trust and those who are
16:22
looking to be trusted and as a result we
16:25
live in this trust gap on the right hand
16:27
side of this is a different view of
16:29
Commerce a view of Commerce where
16:31
information can be trusted and available
16:34
in real-time but I want you to think
16:36
about this house that we were buying can
16:40
you imagine if the information about the
16:43
ownership rights of this house was
16:45
written on a blockchain how much time
16:47
would that take out of the process to
16:49
get the title information right
16:51
how much friction would it take out and
16:53
how much fraud would it take out much
16:55
less the cost this is the power of
16:58
blockchain now we saw that in the large
17:04
paradigms that we looked at we saw
17:05
things like the printing press destroy
17:09
those organizations that were only
17:11
anointed with knowledge we saw the
17:13
combustion engine destroy things like
17:16
colonialism and slavery we saw the
17:19
internet come in and destroy brick and
17:21
mortar companies what we’re looking at
17:23
today is a new invention called
17:24
blockchain that changes the way we trust
17:27
and I believe trust companies are going
17:29
to destroy at a minimum these
17:32
intermediaries we will simply trust in a
17:36
different way the human experience is
17:38
going to change us fundamentally as it
17:40
changed from the printing press from the
17:43
combustion engine and from the creation
17:45
of the Internet
17:47
I’ll use my slim shadey voice again this
17:51
is the official end of the
17:52
simplification so where do we go from
17:57
here the reason why blockchain is so
18:01
interesting to me and why is it that I
18:03
continue to study it and participate in
18:05
it is that that trust gap that we talked
18:07
about is actually increasing we are
18:12
transacting with more things in more
18:16
ways than we ever have if you look at
18:19
this concept of sort of zero trust and
18:22
abundant trust you can see that that
18:25
need to trust is actually stretching out
18:27
to the right today you not only transact
18:29
with human beings you transact with
18:31
machines you transact with smart devices
18:34
and all of these things we need to start
18:37
to figure out how to trust them properly
18:39
now blockchain changes to other things
18:42
that are particularly interested in what
18:44
is in the area of identity what I think
18:47
about identity I’m not just thinking
18:48
about McLovin from Superbad I’m not just
18:50
thinking about this 24 year old organ
18:52
donor from Hawaii I’m talking about the
18:54
12 million cases in the United States
18:56
where there’s identity fraud that is the
18:59
first area where the trust gap is
19:01
expanding the other area that I’m
19:03
talking about is all the new devices
19:05
that are coming online that we also have
19:07
to trust not just human beings I think
19:10
the last protection that I saw was that
19:11
by 2020 we will have 7 times more smart
19:15
devices than we have human beings in the
19:17
world that’s about 50 billion smart
19:19
devices in 2020 that we will transact
19:21
with that we will have to trust and this
19:24
is what I mean by the trust gap is
19:26
expanding the other area where the trust
19:28
gap is expanding is in reputation we
19:32
talk about reputation I’m not just
19:33
talking about that phantom Yelp reviewer
19:36
that you see that writes a restaurant
19:37
about how they was five shrimp in the
19:39
meal as opposed to six that was supposed
19:41
to be there I’m not just talking about
19:43
those people I’m talking about the
19:45
quarter million rides a day that’s
19:47
happening between uber and lyft I’m
19:49
talking about the hundred thousand
19:51
transactions on Etsy I’m talking about
19:53
the hundred fifty thousand rooms that
19:55
are rented per night on Airbnb these are
19:57
all rep
19:58
occasional opportunities that we
20:00
continue to manufacture trust with our
20:03
gut putting ourselves at risk this is
20:05
what I mean by the trust gap is
20:07
expanding to the extent that when I
20:09
think about blockchain I don’t only
20:11
think about blockchain replacing
20:13
intermediaries I think about blockchain
20:15
creating trust companies that will
20:18
replace just about every company in the
20:20
world if there’s one thing that you
20:22
remember from this talk just remember
20:25
that I love tangerines now I love
20:30
tangerines but I happen to have an
20:32
allergic reaction to the chemicals that
20:34
are put in non-organic tangerines so
20:36
every time I go buy tangerines from the
20:38
store or my wife buys them for me we
20:40
have to look for this little logo that
20:41
says organic USDA certified I don’t know
20:45
whether that tangerine company just got
20:47
the logo off the internet by using
20:48
Google search and printed it on on the
20:51
package or not I have no idea whether
20:54
the tangerines are organic or not I just
20:56
have to trust that they are there’s
20:58
about 50 agencies in the United States
21:00
that are certified to to give you the
21:02
permission to put the stamp on the
21:04
package that you have that you have
21:05
organic tangerines now I want you to
21:08
just imagine the day when a tangerine
21:12
company comes out and puts a QR code on
21:15
the package and I can scan that with my
21:17
phone and it opens up an app on my phone
21:20
that shows me all of the transactions
21:22
that happen in that tangerine farm
21:24
including all the chemicals that were
21:26
applied to it and it’s running on a
21:28
blockchain so that I know that I can
21:30
trust it aha which tangerine would you
21:35
buy I can see it already 20 years from
21:40
now be remembered as the guy that said
21:42
aha which tangerine will you buy
21:44
obviously a tangerine company running on
21:49
blockchain would cannibalize any other
21:52
tangerine company that’s just claiming
21:55
to be organic that is the power of the
21:58
distributed ledger that is the power of
22:00
having information that you know that
22:02
someone did not tamper with that you can
22:04
actually trust without having to have an
22:07
intermediary the way I look at
22:10
blockchain is that every
22:12
in the world today not just the
22:15
intermediaries are at risk of having
22:20
competition from a blockchain version of
22:24
themselves
22:26
ladies and gentlemen were at the ground
22:28
floor of a new paradigm in humanity that
22:31
will change the human experience called
22:33
blockchain the thing that is going to
22:35
change is trust it has been my absolute
22:38
pleasure thank you very much

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