How Blockchain Works: Why Blockchain?

My name's Tegan Kline. I'm the co-founder of Edge & Node, the initial team behind The Graph. And with The Graph what Google does for the web, The Graph does for blockchains and organizing data. My name is Cynthia Haas, and I'm the director of the World of Women Foundation. World of Women is a collection of 10,000 women all across different backgrounds, variety of skins, traits. And we are a community that champions inclusion and diversity in the web3 space. My name is Charlie Lee. I'm the creator of Litecoin. One of the alternative currencies to Bitcoin. I was playing around with the Bitcoin code base and decided to create my own cryptocurrency and it was a fun side project and it took off. When you buy something with a credit card, when your groceries are labeled organic, when you see a verified identity on social media or when you vote, all of these things, they depend on trust. How do you know that the money was transferred, that the food is actually organic, that the person is real, or that your vote is counted? Ultimately, you trust records managed by banks, companies and governments. But these days, many people wonder if they can trust companies, governments or any form of centralized power. With the rise of misinformation what if we could build a system of trust that didn't depend on a central entity? What if we could keep track of things like money or property in a way that anyone could audit the data without putting a company or government in charge? That's possible today, using the technology called blockchain. Blockchain is a new way of storing information across the internet where everyone can participate. With blockchain, data can be decentralized and distributed. Nobody owns a blockchain, but everybody can use it and verify their information on it. This technology is the innovation behind cryptocurrencies, like Bitcoin. It has other potential use cases which we'll get to in a later video. But first, let's look at how the problems of trust have been solved in the past. Since the earliest of human societies, we have invented different ways of building trust by keeping track of information and transactions like who owns this farm? How much do I owe you for the milk? What are the laws of the land? Humans started using shells or precious rocks to keep track of transactions, and these became the earliest forms of currency. As we moved from tribes to villages to cities, we needed to keep track of property and laws. This led to the early invention of numbers and writing. Isn't that incredible? We didn't invent numbers for math class. We didn't invent the alphabet to write books. We invented them to keep track of land, livestock, debts and taxes. And of course, we've come a long way since then. Currency has evolved from shells to coins to bank notes to digital data. Writing has evolved from clay tablets to paper to digital formats. Along with inventing writing and numbers. We've also invented a new way to establish trust, because all of these ways of preserving records, they still depend on trust. That's why the laws of the land were set in stone to make sure nobody would change them. But how do you trust something, even if it's set in stone? For example, you might have a clay tablet that says you own 100 cows, but how do I know that you didn't make that number up? That's why we invented trusted seals, stamps and signatures. And with all of these inventions, we authorize and put our trust in a limited group of people, organizations, or governments with the special power to verify our records. And that's the one thing that has never changed over thousands of years and new technologies. These systems only work if we trust the organizations and authorities that verify the records. And this brings us back to the blockchain. Blockchain is the first technology that allows us to record information without needing to trust a central authority. It's a digital way to store and verify information that is set in stone without needing a stone or a seal or a bank or government. The information on a blockchain is saved on a distributed network of computers. So long as these computers are independently managed. In theory, no individual or organization can take down the network or corrupt it. This is like a form of writing that can't be counterfeit or destroyed. It enables a new form of trust. The first use is Bitcoin. Bitcoin is a digital currency that safely tracks transactions and ownership without needing to put trust in any bank or government. But that's only one example. A blockchain could potentially be used to track ownership of real estate, to establish contracts, to authenticate documents and to verify a document was created on a certain date. It's now theoretically possible to do all of these things and so much more without depending on traditional systems of trust. Blockchain technology still has a long way to reach its full potential, and its future is a topic of regular debate. Some believe that this is the future with a potential to democratize who has power and authority in human societies. Others think it is a giant scam with no other purpose. In the rest of this video series will look at how this technology works. And then we'll explore different points of view.