Blockchains Act to Evenly Distribute Network Power
The advent of bitcoin and their rapid adaption into technology challenges the functioning of society. Bitcoin is focused on economics but the technology behind bitcoin, the Blockchain, is not limited to this function. While future prospects for Blockchains are numerous, that is a discussion for a different time. Rather I would like to examine what a Blockchain is and how it relates to networks. Brendan Marr is his discussion of the industry states, “Blockchain technology offers the intriguing possibility of eliminating this “middle man”. It does this by filling three important roles – recording transactions, establishing identity and establishing contracts – traditionally carried out by the financial services sector” [1]. The current state of the financial sector relies on banks and other systems to facilitate the transfer of funds. When someone writes a check or wires money it can take days purely because of logistics; yet when someone sends an email it arrives instantly. There should be way to safely allow the transfer of money while also making the process nearly instant. Blockchain is that answer. By publishing all transactions and increasing traceability the process is made more effective and efficient.
Blockchain as an entity relies entirely on networks. Interestingly, the removal of the “middle man” seems to simplify the network—funds are transferred directly from one person to another. Yet that middle man is replaced with an extremely complex network that acts like a “middle man” of its own, a ledger. The ledger records every previous transaction and includes accounts of all parties related in the deal. There is an interconnectedness introduced by the Blockchain that removes the power from social network. As seen in chapter 12 of Networks, Crowds, and Markets: Reasoning about a Highly Connected World, a web can favor a certain node if they are the link to everyone [2]. In finance, the banks are this power player about which all interaction and money revolves. The Blockchain introduces accountability, distributes the power, and ensures a safe transaction of funds. Each transaction relies on all the transactions to be validated. Further in order to hack the system to steal money, one would have to change the details of the ledger, a feat which is nearly impossible. The network of users is more secure than any bank or institution because if one link fails, the whole network is maintained through a distribution of power.
| [1] | B. Marr, “How Blockchain Technology Could Change the World,” Forbes, 27 May 2016. [Online]. Available: http://www.forbes.com/sites/bernardmarr/2016/05/27/how-blockchain-technology-could-change-the-world/#2485440b49e0. [Accessed 16 October 2016]. |
| [2] | D. Easley and J. Kleinberg, Networks, Crowds, and Markets: Reasoning about a Highly Connected World, Ithaca: Cornell University Press, 2010. |