What is Blockchain Exactly

Internet DNA Podcast

Could blockchain really be used to revolutionise organic soil certification, hopefully you will have less of a blonde moment of understanding it all than Abi did and what does it all have to do with Dutch tulips anyway. 



Hello, I'm talking to Internet. Happy


We're going to be discussing blockchain. I think most people consider block chain to be bitcoins, but they're not actually mutually exclusive, are they?

No. So bitcoin or crypto currencies are built on block chain technology.

I tried to say, let's just dive straight in and say, what is blockchain technology?

Okay, so the idea behind blockchain is that you don't have a centralized computer that knows everything that you ask a question to. Everybody agrees what the truth is and once they've agreed what the truth is, they then write that recording and it cannot be corrupted because if you change anything before it fat part of the chain will no longer be valid because you're encrypting it with itself.

How do you all agree what the truth is?

All the computers know the history. They can see from the one piece of blockchain they're looking at. They know that that's the truth. So if then somebody says, now I want to add another record onto it, and they add another record on Twitter, all the others can say, Yep, that's true. That's the correct record. That would follow that record.

How do they add another record on?

Uh, well they encrypt it with itself. It's going to sound really odd. But let's say my very first one, it comes with the number one and then I'm going to times that by another number. Let's say three. So I timed it the first time and I get three and then at times it the second time and I get nine and I timed it the third time and I get 27 well I can't do now is go back and change nine to 10 because 27 would then be invalid because I can't say divide by three and get 10 cause it's 27. Do you see what I mean? Yeah.

Is this suppose limit to stop fiddling? That goes on in banks? What doesn't go on, but sometimes uh, if something goes wrong with the human siphoning off money or something, is it because they can change, change the records because they are the,

they all have a central repository of the truth. So therefore you can now alter the truth and everyone else has to accept it because that is the central repository. Now with blockchain, because everybody has that version of the truth. If anybody changes it, everybody else will go, that's no longer the truth. Does she want, I mean all that's no longer correct and this is really important in things, let's say like banking where we want to know that someone didn't slip something in at some point that wasn't agreed by everybody.

Yeah. So it should make banking much safer.

Yeah. I know obviously on crypto currency who owns this coin is very important that everybody agrees that you, that bitcoin or that part of that bit coin.

And at the moment on none blockchain currency, the bank says I own it. And that's yes, it's the bank can say I do or I don't know.

And then you might be, there is actually, they are the law and then the government sits on top of that and then says, given that that's the law, I'm taking x, Y, and zed. So the, the, the great hippie dream of blockchain is it gets rid of the ability of the corporate financial system to own you within its rules. You can make up your own rules. In reality, I don't think it's going to turn out like that cause it sounds very much like the big hippie dream of the Internet, which was it was going to make us all tree, which it very much didn't.

And I say instead we're chained to monthly payment a we talked about before. Yeah, exactly.

I got you. I'm going to guess that blockchain is gonna go the same way cause it sounds like the same dream to me. And it happens a lot with all new technologies and I actually think at the moment outside crypto currency and some very interesting parts of logistics, like what arrived where and when were, you don't want people to go back and go actually it didn't arrive here. No, it did.

Other things apart from money that blockchain can be used for is logistics, moving cargo around the world, middle flights around the world.

Yeah. And it's taking way. You're going to get a series of things that you want to verify they actually happened when, so if you want to look at something, let's say like you want to certify a type of food as organic so you can now use block chain in all the to make sure that every single part of the journey from a seed all the way to your getting that on your plate with blockchain, you can make sure every single part of that was done in the organic process and there's no way of people sort of half fiddling it out the side because you've got an absolute verifiable block chain of what happened to that product.

That sounds really interesting. It's almost like an https or secure certificate for the website. You're actually securing and validating something that hasn't been secured and validated before. So aside from the crypto currency, the way that blockchain can filter down to that type of thing sounds really interesting. And like it would stay, I mean the middle, you might have to pay for it, but it does sound like it. It is a Kitemark or a validation.

It's very good for that kind of traceability. So anything where you think we have a problem with traceability, especially when you've got lots of different companies interacting where each one of them has to have the traceability, then it's got each got a purpose. The thing about blockchain is it is actually quite expensive in terms of energy. Blockchain is consuming the same amount of energy or bit coin. Is it consuming the same amount of energy as Brazil?

Because she wants to get into, cause I, cause we talk about mining, Crutcher perhaps learning pit coins and there's these enormous warehouses in and toxic or somewhere, Colleen or Canada, very cheap as well. It's very cold because the amount of energy and the heat required is enormous. Mining is this energy sapping thing that happens. But what is that thing that's happening that's taking up?

So we talked about three earlier. We're going to use the key of three. So like the stupidest key on earth. But let's say, so now if I want to mine a coin, I have to find everything that is divisible by three. Yeah. Obviously very simple. But when you think about the complexity of the algorithms that they're using to actually encrypt these things, what mining is, is basically going through every possible combination. And two, you get one that goes, that matches because yeah, cause you don't know it's three, that number is hidden from you. So what you do is you go blah blah blah blah blah. This one. And it goes, no, I remember this one. No, this one. No. And it would just keeps doing that because it's like passwords. It's Hash. So you can't know what the key is. All you can do is say does this match the key? And then it'll go either yes or no.

That's what kind of patients through all the things that possibly are.

Exactly. And so it's massively power heavy because it is basically cycles per second.

The key is separate from the validation file,

the block chain. So if you say to the blockchain, is this okay? The blockchain will tell you yes or no.

That is the key. My files saying this is the next reference or is the key holding my file type.

Okay. So when you're mining, let's talk about bitcoin. So there are only x amount of Bitcoins, 22 million, but that number might be wrong. So once you've mined all 22 million, there are no more. Yup. That's not seen the value of a bitcoin at that point. Obviously the ones that are still left, if there are any that are still left of really difficult ones, they're not the 20 sevens they're the 3,000,003. You just see what I mean. They're the really obscure ones that are left and it's just a huge amount of basically you're doing code breaking constantly, constantly, constantly accounts these massively complex hash encryption keys and the same reason that encryption keys are by their very nature, very, very, very, very, very difficult to break by brute force. It's a similar mechanism that you're doing. You're not breaking it by brute force, but you're basically doing calculations and then I'm trying to verify them and when you verify one, you've got a bit coin,

which when they were mining these bitcoins, yeah. Looks like exactly. That's what it's called, mining. And when they will run out, what happens then?

Well, let me stop mining for Bitcoins,

not mining for something else

per se area or whatever. We need to, you know, and this is the same, which will be the cryptocurrency off.

That's right. So, so you could go and mind for ripple or another type of cryptocurrency. Yeah,

exactly. But the problem is, is that they take a certain amount of energy, which we can call electricity. So you need the most amount of profit you can make from mining or places with very, very low electricity costs because obviously it's not costing you as much to mine it as it would for me, who's paying high electricity cost.

And so how do I, how am I the person that goes, right, here's a new crypto currency, I'm going to make 10 of them and they're going to be very valuable. Right? Start Mining. How does that work?

Essentially, it's not a massively difficult piece of code. The real problem with bitcoins and I can't remember the one that kept getting hacked, is that you have to be very, very, very careful about how you allow new ones to be created because the very nature that it's not centralized means that there are opportunities to play with things like timestamps and to overwhelm the system to agreeing with you when you're definitely not. Right. Do you see what I mean?

A bit like learning my CSS animation that I'm going to go online and have a look at a few things and have a go. Can I just go alone and go, how do I create a bit coin? How, how do I create probably church and I follow this step, this one to 10 and then be like a banker.

Yeah, and actually I think a lot of bit coins. I'll literally copy pasted.

Why isn't everyone else doing

well? Because the biggest problem with digital currency is not the making of the currency. It's the getting the trust in the currency. So you can have, you can have it, that'd be Abby coin. But since I can't spend an Abbey corn in anywhere, it's not worth anything and it's going to cost me 250 quid in order to, to mine it, and I'm going to be left with an Abbey coin, which is have a value zero. It's no point to just see what I mean. But it's about, you have to give it a certain amount of value. So what you can say is I've got 2 million pounds and a bitcoin is worth 2 million pounds divided by the number of bitcoins available. That would be one way of doing it. So if I'd mind 2 million bitcoins, there were worth a pound effectively. Another way of doing it, which is, and in fact how bitcoins crashed was basically people started allowing futures on them and that means that you are now can bet on what you think they're going to be worth in the future. And so banks just shorted them.

Yeah. Bitcoin himself. Yeah, just that bit. Bitcoin's before anyone even knew it existed. Did blockchains exist or did he invent that as well? Um, I think you

could contend that he was apart of the people that invented it. Yeah. I mean, I don't like, I think like anything, like, you know, Charles Darwin didn't invent or come up with the Siri of evolution just on his own. I think he read other people and started to think, well wait a minute. So this guy, and I think he's called Satori, had to she and he's a very unknown person who's like a mystery man. No one knows who he really is.

The dark web as well. So that there was a mark here place where he's been,

oh, I don't see did. No, I don't think he did. I don't think that's what I don't, I mean, I may be wrong, but I don't think that was his thing.

Thanks. I just thought this is brilliant for [inaudible].

Yeah. So the Internet was movie are where we are and what we do. And I would like an Internet where that's not always true. And that's I think where the idea of the dark net came out of, I don't think it was the same guy. Yeah. Bitcoin was a way of saying every transaction on the Internet, well also every Internet on the transaction is tied to a person where is the equivalent of digital cash, where I can make a cash payment where there's no record of who bought obviously lends itself to the more criminal element. But that's just that, you know, that's not the technology. That's just, you know, that's just the usage of the technology

without wanting to sound really stupid. I still don't understand about the difference between my little file and the key is the key. The file. Okay.

Where's the keys in the file is encrypted into the fire,

but what else does it say in the file?

Whichever rich is that you're storing. So, uh, it might be storing the fact that you received a payment of one millions of a bitcoin

and the mining is that only when there are still coins out there that haven't been cleaned by otherness is actually if I'm transferring bitcoins or cryptocurrency, you don't have to mind how does that transfer happen? Then what if I need to add another?

So can you buy a bitcoin into the bitcoin blockchain of that bitcoin will go into an entry saying that you own x amount of that bit coin or that whole bit coin if you're that rich.

So if someone, like a friend of ours bought a whole heap of bitcoin sometime ago, he didn't mind them did he bought that? Somebody that mind them, but the people mining them or the people that use an enormous power on their computers

say, are hundreds of processes away from when he got his, you know, they were pre mind probably mind a long time ago.

So let's take this down a level. Obviously no one's going to buy into the Abbey Bank, which is a shame. But let's say I had some organic bananas. Yeah, I wanted to certify once and for all that they really were organics and so I thought that I would set up a blockchain for this to prove. Yeah, well I've been saying all along without having to pay a lot of it

block chain to all the members of the supply chain. Right. Was all the along every single

person that's theoretically touched these bananas.

Yeah, and so when the seed people say, I provided a these organic seeds and then the seed distributor said, I distributed the seeds and then the pharmacist, I bought these seeds, I grew these seeds in these fields

all the way. One of those people lied.

Okay. But you can verify that they lied though at that point. And you can verify that they actually lied. How? Because you can go back down the block chain and say, well, wait a minute. You said you grew them in these fields, but you didn't grow them in these fields and he can't go back and say, well, actually I, I, I, I said I agree with them in those fields because you can't change the blockchain from that point onwards because it would invalidate everything afterwards. You change it from nine to 10

go into one file and that basically a ledger that secured by a single block chain. Yeah, so the key is the blockchain. Yeah. The blockchain is that it's really interesting because it costs an awful lot to become verified by the organic earth society or whoever it is, and it's really difficult and crippling for small businesses, but this could be a cheaper way to prove that your organic without having to pay a very large institution to prove it.

Yeah. I mean it's not doing the actual on the ground. This is a organic field, but what it's making sure is that you didn't slip in some inorganic stuff in the middle of it because it handles the verification and the authentication at the same time. Then it's very difficult for people to go back and back manipulate things so they can't make something look like we did this and then actually change it. So it looked like you did something else because it's immutable. Once you've moved past the next day, you can't change anything previous to it. So now what you have is a ledger that everybody agreed on. Yep. So now when you want to do your traceability, you find actually the banana you've got wasn't all organic. You can now go back down that blockchain knowing that nothing can be falsified in it and find out

where the mistake happened or who. Interesting. So I've got my ledger, how do I send it into a block chain?

Oh No, it is a blog. What you can do is now traverse back down the steps of it cause it's obviously got a transaction history. So including is a little tab on each one that says this was agreed that this was verified as organic by x. This is agreed that this was all right. Your verified is organic by y. So you can now go back down it and say, well, we, at which point did this verification, was it not true?

Yeah, but how do I do the key? How do I make it secure? And do you want, do you want to get into cryptography? I mean, I don't want to teach you cryptography in a podcast. So that's what it is. It's a security key. It's cryptocurrency is cryptocurrency. Blockchain is, and where do these blockchains live? Wherever you want,

wherever you build them. So in a logistics system, it would be built into the logistics system that it uses block to verify the ledger. Okay, dear listener, I hope that you are more aware and you, it's actually very complicated. We can talk about it in a really top level like me have done, but basically all you need to know is that every time you add something new to a blockchain, everything before it cannot change. How do I set up a blockchain? Well are now we're getting back into cryptography and you basically you'll get blockchain software. I would have assumed that there are a whole bunch of vendors out there. If you're in logistics that do blockchain ledgers for your logistics software. It's not like you go and how do I buy a bitcoin? Uh, you go and buy a bitcoin. How do you buy a pound from any, anyone who's selling bitcoins,

they don't have to have a special browser or anything like that. No,

just scraped by bitcoins. Wherever you want. Clean Bank, you could buy one from bill [inaudible]. I don't think he's got any less, you know what I mean? Okay. So I can just go online. I don't have to go, I mean, I'm not going to see, it's like paypal. You say I would like some bitcoins and I will pay you 50 quid for some part of the bit coin and someone goes here, I'll say you were part of a bitcoin for 50 quid and then written into that part of the bitcoin is that you own that part of the bitcoin now and that transaction is now stuck there because you cannot take it out. Otherwise you do validate the whole bit. So do you see what I mean? Now it's safe. Once you bought that part of it, it's safe because you have now the record in your bitcoin wallet that says you own that part of the bitcoin.

So I have a friend who says, you've got to invest in bitcoins. If you've got a spare 2000 pounds, you've just got to do it. I'm making so much money. I'm kidding.

I don't recall. Yeah, you cannot lose. Yeah. Um, no. I think it was like in the beginning of last year, everyone was like, bitcoin, just get in on. I just kept saying, you know, this is just Dutch to lips, which is anytime I hear this other line you cannot lose. That is like you're really close to the bubble. Yeah.

What is it done too? I mean, I know what that's too. What does it, what do you mean by that?

Okay, so, um, like the first financial, well maybe not the first, but they're like a massive financial collapse happened in, in Holland where chewed it bulbs. We're getting some sort of fungus, I believe, or may have been a virus. And it was creating really weird patterns on the petals and these beautiful, really truly beautiful patterns. And people started buying these bulbs for more and more and more and more and more money. You know, shoot ball went from let's say being one pound to being traded in like 1500 pounds for a tulip bulb. Yeah. And then suddenly someone went, wait a minute, isn't this just the Tulip Bulb? Yup. Oh per pound it please. So all those guys that bought them for 1500 pounds, suddenly they were worthless. Because I mean we've had this discussion before. The value of anything is only what someone is willing to pay for it. And so the moment someone goes, wait a minute, you're sick, it's really worth to see what I mean. And then the market fumbles. People were ruined.

Absolutely. Very stressful. He says you have to the beginning of the month and then take it out at the end of that, put it back in again and his wife was going, it's really stressful. And there's a famous one in, yeah,

Glen called the South Sea bubble, which was to do with the South Sea company. Basically two stops. The British government from growing bankrupts, they created a sort of not real company where it was real. Oh, back at like Walpole. We're talking about Walpole and these days. So Robert Walpole look it up. It's really fascinating. We want to see like the early financial bubbles because they're interesting because they're very simple.

All done.


No, it's more the um, the GA's or getting close to the, a bit later. Seven, 17th 18th right. Okay. Fat Check. Yeah. My history is awful. But why it's interesting

to look at those ones is because they're very simple to understand. Like Tulip Bulbs, obviously modern economic collapses are far more integrated, but the same thing happens, which is, you know, you look at the 2008 by houses, you cannot lose. Well, eventually someone goes, I'm not buying a house for that one. You know, once the confidence grows, the market just drops away because everyone just realizes what, as soon as you realize you can lose suddenly all of those people that are investing because you cannot lose bail.

Hence a bubble being a very visual word to describe. Yeah, exactly. I think I'd like to talk about the dark web next week. Wow. Okay, so I don't know about the dark web and should we have a guest on our podcast? Yeah, we should because I'm quite fascinated with the dark web, but I don't go there because, no, I don't go there either. Exactly. Well, maybe not next week, but we will get a very experienced dark web user to come and talk to us about his experiences. Perhaps we might have to beep a few things out. No, I'm thinking here would be fairly and needing. Yeah. Cool. Well that's all we've got time for this week.

Brilliant. Well I'm glad I was confused.

Yeah, I was going to say thanks. I feel really, I'm all clear now.

The thing about cryptography is, unless you really understand cryptography, it's always going to be quite complicated because you don't really understand the mechanisms.

I do like the vision of the miners with their pickaxes in this neighbors walking into a big room of computers that sits with me. Okay. But what I do understand that was a different stream mining and the currency itself is that I wasn't clear about, and that is clear. You had gold coins. Some people mine the gold coin. Yeah. And then other people trade to gold coins. Well, you mind the goal, not all means you is that kind of gets minted into a coin and then the mind, the bet. Yeah. And that's that. It's a calling. Once it's properly mine, it's minted into recording. Then you can trade them. Oh, well, have a lovely week. And of course

Dan & Abi work, talk & dream in tech. If you would like to discuss any speaking opportunity contact us.