🤔 Why does Blockchain Matter?
Imagine a technology that could verify if food is expired or not, secure contracts between private companies, and create hack-proof democratic voting systems. All are different abilities that Blockchain has the power to accomplish…and more. We are living in an uber-connected society that is only going to grow more connected. But with great influence comes great responsibility. Already, we have witnessed the destruction that hacking can do upon supposedly fair elections. We have seen millions of user identities stolen and given to unknown entities. We have felt the sting of being cheated by retailers to pay a higher price than they deserve.
And that’s exactly the problem that Blockchain solves, a problem of fairness. In a world where theft is the norm, people have suffered. People have suffered and lost what is rightfully theirs. In the music industry, $12.5 billion is lost annually in the United States alone due to music theft, while sound recording piracy leads to 71,060 jobs lost every year. You might be gasping at the sheer scale of the problem, but in the end, they’re just numbers on a page compared to the emotional pain that individuals go through after a piece that they pour their soul into is taken from them. Say you have a singer named Adele (that got your attention, right?). Adele is a 19 year old aspiring R&B artist who loves to write and perform songs when she’s not playing her guitar chords. Singing is her lifeblood and man, does she love to sing! Unfortunately, when Adele signed onto her first deal with a record label, she didn’t quite know what she was getting into. After publishing a couple of hit ballads that received millions of views, almost no money reached her pocket.
Hm, that’s sus. She called up the record label and asked them why she was receiving almost no payment for her hard work, and all they said was that it was in the contract. So many middlemen were involved in the record label’s services that they were sucking the money straight from the person who merited it the most — Adele. Not only that, but Adele saw her songs being passed around online by people who weren’t even giving her credit and were making more money off of pirating her music than she actually was from her record label. She felt irrepressibly frustrated, rightfully so. Adele didn’t know what to do.
₿ How does Blockchain Work?
What can we learn from Adele’s pain? We learned that the two biggest issues in the music industry today are transparency and intermediaries. Blockchain puts a decentralized system based on secure consensus straight in the hands of the user. Since the very nature of blockchain cannot be controlled by third parties, it eliminates the need for middlemen and therefore puts money back into the pockets of hardworking musicians like Adele.
So how does blockchain even work? Good question. I’m glad you asked! Blockchain is often used interchangeably with the term “cryptocurrency,” but the truth is that blockchain is the very framework that makes crypto exchange possible. It gives you a way of finding consensus through mutual agreement. In blockchain, there are multiple nodes, or any computer connected to the overall network and storing part of the data from that network. Consensus is achieved when all of the nodes can confirm that the same action happened. It’s an efficient way to prevent fraud by verifying that a record is real.
Smart contracts are the main mechanism that check for security. They program your payments and deposits without the use of a middleman. Once a request is sent out by an individual block, it is verified by a consensus mechanism before it is officially added to the network. Each verified block is added to the ledger, or the decentralized database that records the entire history of transactions in the order that they happen. All of this is done through cryptography. Cryptography utilizes tokenization which replaces the original data with a simplified data that makes it more secure of the same value and length. Chunks of info called keys are used to make mathematical guarantees about messages. The user signs the transaction with a private key and sends it out for checking with a public key. A cryptographic hash function takes in the transaction input and puts out an encrypted output, thereby putting the possibility of identity fraud out of the question. Towards the end, a timestamp verifies the transaction. Because the transaction cannot be replicated, issues such as double spending will soon be worries of a time long gone.
🎤 Saving Adele
Since all of the information on the blockchain is public, Adele will also be able to view the exact balance of her royalties. Her data will be organized by smart contracts, and furthermore, she’ll have direct access to all of the metadata affiliated with it. There’s no question that she will be ecstatic with joy after viewing her loyalty rights, which won’t be able to be changed by a third party. She’ll have full control over her songs since the ledger behind the blockchain is public, meaning that copyright infringement won’t be a threat when she’s able to communicate with her fans over the decentralized network. Adele will be able to experience the rewards that she deserves as a music artist.
🦄 Unicorn Startups
Right now, blockchain companies are disrupting the music industry. Choon eliminates middlemen, thus putting the revenue back into the artists’ hands. Based on digital agreements, smart contracts are drawn up to automatically distribute payments. While Choon focuses on the monetary side of music, another startup called Resonate offers a streaming service to fans that’s built directly on the blockchain. It charges an annual membership fee of $5 in exchange for voting rights on important issues. Resonate’s mission is to give fans the power to use decentralized streaming while simultaneously tearing down the monopoly that centralized companies such as Spotify and iTunes have. Lastly, Voise is a platform that enables artists to set their music’s price and receive 100% of the revenue. Smart contracts secure agreement terms that prevent music theft.
It’s clear that blockchain will be able to get rid of the key issues that are plaguing songwriters today, mainly middlemen, cost inefficiency, and piracy. However, it’s still far from being mainstream. Blockchain is an emerging technology that will be able to give the power back to the players, but it’s not perfect yet.
🤯 Blockchain Hurts…the Environment?
Environmental damage might not be the first term you think about when it comes to blockchain, but nevertheless it is a consequence of maintainence. An enormous amount of electricity is needed to mine transaction data, electricity that is usually generated by harmful practices of coal mining and burning fossil fuels that offset poisonous gases into the atmosphere. Mining Bitcoin alone requires the same amount of energy as the entire island of Ireland in one year.
Data servers are the next big problem about blockchain. They take up a significant amount of space and also waste large amounts of energy. Did you know that a single data center can use more electricity than an entire town? Shocking, right? Well, take into account the number of fossil fuels that must be burned in order to supply that electricity. To make matters even more complicated, Facebook increased the size of its Irish data center from 86,000 to 150,000 square meters in 2019. Can you think of how many more pounds of carbon dioxide will be emitted since that happened?
🌱 But Don’t Worry, All is Not Lost
Although mining and data servers use a lot of energy, DApps, or decentralized applications built on blockchain, actually have a lot of potential to help the environment. Want proof? Nori is one startup that’s using blockchain as a tool to give carbon-removal suppliers the ability to eliminate excess carbon from the atmosphere. It allows governments, corporations, and individuals to fund its mission. In 2020, Nori raised a whopping $1.2 million during a seed round to further eliminate carbon. Another company, The Poseidon Foundation, analyzes a product and matches it to a carbon footprint proportional to how much negative impact that product has on the environment, showing the true cost in its entire duration. Fun fact: they even have a partnership with Ben and Jerry’s!
Blockchain is also used to reduce inefficiencies in global supply chains. Due to the complexity of operations carried out, supply chains contribute to 90% of environmental damage caused by consumer packaged goods, according to a study by McKinsey. Blockchain offers a steady alternative that once again eliminates middlemen and the waste that comes with coordinating between them. On one platform with one framework for one mission, sustainable supply chain operations are able to be carried out efficiently. Businesses and their partners are also able to view all past records on the blockchain in an astounding level of transparency that has never been reached before. It’s clear that despite blockchain’s environmental drawbacks, it still possesses immense potential to combat climate change that we’ll have to mature into a renewable-powered network.
👉 So What’s the Consensus?
Blockchain is a technology that offers greater honesty, security, and independence on the Internet for everyone who chooses to take the leap. It’s still in its beginning stages of development and hasn’t quite reached the point yet where it’s become mainstream. But traces of it have slipped into pop culture via Dogecoin memes tweeted out by the likes of Elon Musk. Gen Z-ers like me are more comfortable with being online than ever. As we grow up into the future consumers of this age, we’ll be tasked with keeping the current distribution systems going — or transitioning to new ones — Blockchain included! That’s all for today folks.