Brace yourself for the hype cycle around blockchain.Instead of indulging in the hype, I suggest we focus on the technology's characteristics and how it might be applied to specific use cases.Meanwhile, broad-ranging discussion of governance issues and standards development must proceed apace.I make these statements as an avid participant in exploring this technology's capabilities and potential, through my involvement with the IEEE Special Interest Group on Blockchain.As a novel approach to traditional security challenges on the internet, blockchain likely will have many useful applications that benefit ordinary people.But the excitement it is generating needs to be tempered with a sober discussion of how its characteristics may be applied in the real world and the limits of its applications.That said, it's certainly safe to also say that blockchain possesses some fantastic characteristics, which have never been seen before.These characteristics, if properly understood, will indeed bring value to all users of the internet.

There are a multitude of discussions about blockchain's characteristics and potential use cases, and I urge readers to search for these sources themselves.The IEEE Special Interest Group on Blockchain involves a range of interested stakeholders, from technical experts to keen experimenters.We aim to help provide a technical audience with some idea of this technology's potential, sans the hype.bitcoin bible free downloadDescribing Blockchain Blockchain is a technology that originated in the financial services area, most famously as the underlying mechanism for the digital known as bitcoin.bitcoin gonna crashBlockchain allows identical information to be presented or stored at multiple locations without a single point of control.dogecoin chart priceIt therefore provides confidence that identical information sits in multiple places without oversight by a third party to ensure the integrity of that information.

An important point here is that this is a very simple component that is capable of producing enormously complex systems.Another is that when we talk about cooperation between untrusting parties, blockchain replaces trust with mathematically proven identical information.Trust is still required at a macro level (such as trust in initiatives), but not at the transaction level.The initial use of blockchain in support of Bitcoin is an effective way to distribute information that doesn't have to be secret but must not be changed, which is referred to in information security circles as "integrity."So if you don't know all the parties participating in an activity requiring trust, blockchain provides a methodology.Conversely, if you do know the participating parties, but they are independent of you and your ability to enforce rules and govern outcomes, blockchain can serve as well.Historically, the formation of the internet and the world wide web both excluded security in their fundamental designs.

The creation of blockchain became the first time that somebody's actually figured out a way to use the power of the decentralized internet to provide assurance around the security of data on the internet.IEEE's Role The IEEE Internet Initiative's fundamental approach is to help foster an internet that is safe, secure, broadly trusted and universally available.Relative to blockchain, that means providing security in a way that's integral to internet architecture.On a very high level, that's how IEEE fulfills its mission of advancing technology "for the benefit of humanity."At a more specific level, blockchain has the potential to enable anyone with a bright idea to develop an approach to globally-distributed information in a particular sector or along a particular supply chain, if they can get the key stakeholders on board, in a far simpler manner than globally negotiated contracts or treaties.So blockchain has the potential to enable people to build distributed databases for, say, the management and/or identification of records or assets, even the development of ideas.

I suggested earlier that readers explore blockchain discussions according to their particular interests.I'll close this blog post by suggesting that IEEE's specific interest - improving technology for the benefit of humanity - might add another angle to the global discussion of blockchain.We see blockchain as providing enormous opportunities to decentralized initiatives, among many other possibilities.For instance, the United Nation's sustainable development goals have sub-goals, which have sub-goals relevant to and ripe for local action.Using blockchain, an individual can kick off an initiative to address a sub-goal of sustainable development and see if interest arises around the world.On a more concrete level, formal, technical discussions around blockchain now focus on governance issues: How will we proceed if something goes wrong?Right now there's not much consensus on such issues and that has to be worked out prior to standards development for blockchain.The IEEE Special Interest Group on Blockchain is currently calling for volunteers to work in these and other related areas.

The IEEE is but one of many organizations around the world looking at blockchain standards; the level of global cooperation is very high because nobody really knows which approach is going to be successful.Everyone is talking to everyone else at this stage and exploring opportunities for cooperation.Greg Adamson serves as president of  IEEE's Society on Social Implications of Technology  (IEEE-SSIT) and is an Associate Professor at the Melbourne School of Engineering, University of Melbourne, Australia.He is also an IEEE Senior Member and chairs the IEEE Special Interest Group on Blockchain .ASKED TO NAME an event that has reshaped finance in recent years, bankers will point to the collapse of Lehman Brothers on September 15th 2008, the nadir of the financial crisis.Fintech types are more likely to mention something that happened six weeks later.On October 31st 2008 Satoshi Nakamoto, a pseudonymous cryptography buff whose real identity remains a mystery, unveiled a project he dubbed bitcoin, “a new electronic cash system that’s fully peer-to-peer, with no trusted third party”.

It described what appeared to be a robust framework for a currency that could run without the backing of any government.Enthusiasts proclaimed that finance was about to enter the era of crypto-currencies.Since the need for a trusted third party has traditionally been a large part of the banks’ raison d’être, this could mean that in future they will no longer be required—potentially a much more radical change than the other inroads fintech has made on their business.Six-and-a-half years on, the bankers may feel they can relax a little.Interest in bitcoin has waned.After spiking at $1,100 in November 2013, its value has dropped to $225 (see chart).A few online retailers and trendy coffee bars accept it, but its yo-yoing value is one reason why its use in the legitimate economy is barely measurable (though it remains a favourite with drug-dealers).The general public has not forsaken cash or credit cards.Interest in the underlying mechanics of the currency, however, has continued to grow.

The technological breakthroughs that made bitcoin possible, using cryptography to organise a complex network, fascinate leading figures in Silicon Valley.Many of them believe parts of Mr Nakamoto’s idea can be recycled for other uses.The “blockchain” technology that underpins bitcoin, a sort of peer-to-peer system of running a currency, is presented as a piece of innovation on a par with the introduction of limited liability for corporations, or private property rights, or the internet itself.In essence, the blockchain is a giant ledger that keeps track of who owns how much bitcoin.The coins themselves are not physical objects, nor even digital files, but entries in the blockchain ledger: owning bitcoin is merely having a claim on a piece of information sitting on the blockchain.The same could be said of how a bank keeps track of how much money is kept in each of its accounts.But there the similarities end.Unlike a bank’s ledger, which is centralised and private, the blockchain is public and distributed widely.

Anyone can download a copy of it.Identities are protected by clever cryptography; beyond that the system is entirely transparent.Should the Lions pick all 15 players from one team?A new front in the legal fight over Donald Trump’s travel banQatar Airways wants a 10% stake in American AirlinesIreland and Afghanistan become the first new Test nations in 17 yearsWhy calculating a British parliamentary majority is so trickyHumanist nuptials are popular in Scotland but only beginning in UlsterAs well as keeping track of who owns bitcoin today, the blockchain is a record of who has owned every bitcoin since its inception.Units of currency are transferred from one party to another as part of a new “block” of transactions added to the existing chain—hence the name.New blocks are tacked on to the blockchain every ten minutes or so, extending it by a few hundred lines (it is already over 8,000 times the length of the Bible).The proposed transactions contained in new blocks do not have to be approved by some central arbiter, as in conventional banking.

Rather, a large number of computers dedicate themselves to keeping the system running.Rewards are high enough for vast data centres across the world to want to participate.Known as “miners”, they authenticate transactions by reaching a consensus on what the latest version of the blockchain should look like.In exchange, they are given newly minted bitcoin.Chaining blocks together sequentially prevents anyone spending the same bitcoin twice, a bane of previous digital currencies.And the system is beyond tampering by any one party.Unlike a bank ledger, which can be altered by its owner (or a government), the blockchain cannot be changed without simultaneously overwriting all of the thousands of copies used by the miners at any one time.The definitive version of the blockchain is whatever a majority of the participating computers accepts.None of them is connected to any centralised organisation.There is no bitcoin central bank to sway them.To overwhelm the system, someone would need to control 51% of the computing capacity of the 10,000 or so “miners”—not impossible but unlikely.This system of consensus by distributed co-operation sounds complicated, but it allows something of value to be transferred from one person to another without a middleman to verify the transaction.

Fans think this is a way of changing the centralised, institution-dominated shape of modern finance.It is genuinely new.The question is whether it is useful.Proponents envisage an “internet of value” that can make money flow as freely as data are flowing already.Ridding the world of credit-card fees and foreign-exchange charges would be merely the first step of a much broader revolution.In the same way that e-mail did much more than replace letters sent in stamped envelopes, the internet of value would be a platform for myriad as-yet-unthought-of innovations.Just as nobody forecast social networks, blogging or Netflix in the 1990s, the absence for now of any tangible applications other than bitcoin for the blockchain merely points to humankind’s deficient imagination.All that is needed, blockchain boosters argue, is a “killer app” to find a use for the breakthrough, in the same way that web browsers made the internet useful.Some still think that a currency is the most promising application, but plenty of engineers are throwing other ideas against the wall to see what sticks.

CoinSpark, based in Tel Aviv, is among those who want to be able to add messages to the bitcoin blockchain.That would be a way of cheaply notarising information: once something is in the blockchain, it cannot be removed (crypto-geeks post their wedding vows there).Lighthouse, developed by Mike Hearn, a former Google engineer, runs a decentralised crowdfunding platform on bitcoin.Neither of these are killer apps, but they may lead to something bigger.Techies are (just about) united in their enthusiasm for decentralised ledgers, but divided on whether bitcoin’s blockchain can work in its current form or whether an improved version is needed.Rival blockchains are nothing new: alternative currencies inspired by bitcoin, dubbed “alt-coins”, have proliferated ever since it was launched.Some are quasi-Ponzi schemes where the currency’s founder (and so default owner of much of the blockchain) profits when he sells bits of it to newcomers.Others have re-engineered Mr Nakamoto’s blockchain to make it more suitable for non-currency uses.Critics point out that bitcoin in its present form can process just seven transactions per second, whereas a large credit-card company like Visa can comfortably take on tens of thousands.

Users may have to wait up to half an hour for a transaction to be processed, and mining guzzles a lot of power.But enthusiasts say the blockchain is so robust precisely because of the large number of miners involved, and point out that it has survived untold numbers of cyber-attacks.Alas, using hacker-proof bitcoin requires going through intermediaries such as exchanges to convert real-world currency into crypto-cash, and “wallets” to store it.These have proved anything but secure, which arguably defeats the purpose of bitcoin’s trust-free world.New blockchains far removed from currencies are being spawned.Ethereum, widely seen as the most ambitious crypto-ledger project, wants its blockchain to go beyond transferring value: it should also be able to execute simple tasks such as verifying if a party to a contract has fulfilled its side of the bargain.Its boosters think such a machine could support “smart contracts”, where a computer can verify or enforce an agreement.The next step is for robots to go into business for themselves, for example a computer server renting out processing capacity, and using the profits to upgrade itself.That, for now, is science-fiction.

In the short term, distributed-ledger technology is far more likely to be used by incumbents in financial services.The New York Stock Exchange in January bought a stake in Coinbase, a bitcoin wallet, in case stock exchanges decided to go for decentralisation.Banks think that some of the plumbing for settling financial contracts could be decentralised, too, perhaps with their own private blockchains.Payment networks are also keeping an eye on blockchains, attracted by their tiny transactions costs.If a network like Visa were to be built today, it would almost certainly be decentralised, says Jim McCarthy, its head of innovation.One well-funded new blockchain is Ripple Labs, which wants to enable “secure, instant and nearly free global financial transactions”.It is working with financial incumbents to draw up a payment protocol based on decentralised ledgers.Its aim is not to supplant the current financial system but to make it more efficient.“We are builders, not disrupters,” says its boss, Chris Larsen, a veteran of the fintech scene who founded Prosper, a lending platform.

The problem Ripple is trying to solve is not the omnipotence of the banks but the antiquated way that money is transferred among them.At present two banks in different countries have to use one of a handful of large “correspondent banks” to transfer money between them.With Ripple, they should be able to interact directly.Seasoned crypto-anarchists are not excited by the idea of reforming the global banks’ back offices.Some complain that Ripple is taking an idea with the potential for revolutionary innovation and using it for something far more humdrum.Yet if Ripple succeeds in bringing a critical mass of the banks onto its platform, it will have rendered a service similar to the people who turned a raft of disparate academic computer networks into a single internet in the 1990s.That is not to be scoffed at.All large banks already have teams poring over blockchain.Many of their back-office settlement platforms seem destined for a move to decentralised ledgers.One barrier is the difficulty of finding staff who can get them up to speed on the technology.