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Blockchain, hashing and smart contracts: MUIC has held the first “Cafе Scientifique” meeting

MUIC Innovation Center has launched “Cafе Scientifique” project.  The project is a series of popular science lectures, the main goal of which is to bring science closer to public comprehension.  Informal setting and the key rule “even a child shall understand the lecture” assist speakers in achieving it.   

 

Blockchains and cryptocurrencies are the topic of the first meeting that took place in “Fabula” coffee shop.  MUIC residents, journalists, and bloggers met over a cup of coffee; Blockchain expert Shahkruz Ashirov, who has experience of launching IT-startups in Uzbekistan, Russia, and USA, took stage at the microphone. He spoke of the technology, its prospects and answered the questions raised by guests.  All the details are in “first person” article. 

 

What is blockchain?

 

Blockchain is literally a chain of blocks, where data is stored.  This may be a top-secrete information, information important to certain country or organization or very large amounts of money.  Data in each block is connected to one in the previous block. It is impossible to modify or fake the data for this will disrupt the integrity of the entire chain. The entire base is distributed among computers, the more computers, the more reliable the blockchain is. To store data in distributed network is a new phase in the development of technologies, the very disruptive technology revolution everyone is talking about.

 

What will happen if someone will try to change data in a blockchain?

 

Digital signature protects blockchain from such actions.  Let’s imagine that someone wanted to add zero to the number in front of their name in Excel summary spreadsheet.  However, the table was compiled by several people. Each of them has a key (or a seal) using which they sign block and thus seal all information input.  The fact that information had changed will become known to everyone.  That is the principle of blockchain.   

 

There also is “hash” concept or, to put it simply, electronic print. The technology is simple. Each computer is provided with a simple algorithm, which enables to turn any file of any size (this can be a movie, text, etc.) into a certain line of letters and digits. This process is called “hashing” and the line - “hash” or electronic print.  You can at any moment check if the file matches the print. It happens instantly. If even a single bit of file is changed, the print changes drastically. Looking at a completely changed line of letters and digits, you will know for sure that another file is in front of you.  

 

Then, each block has a print confirming the block has not changed. Each following block has a number and a print of the previous one and so on.  Blocks connect in a chain creating blockchain: a block where transaction is recorded, and a chain as a chain of blocks. 

 

Is it possible to fake a block print?

 

Block print is a guarantee of its authenticity. If you try to fake one block in the middle, you will have to fake all the blocks that follow. An interesting mechanism appears here, it is called “Proof-of-Work”.  The mechanism is known as “mining”, it consumes electricity and significantly complicates the process of creating a print. Why? In order to make signing of a block expensive. Today, you will pay hundreds of millions of US dollars just to sign one block with transactions. Faking one, you will have to fake the following and further along the chain - no money will be enough! For that reason, no one could crack bitcoin blockchain for 10 years. Quite the opposite, the technology is now used to store money. Many believe that blockchain is an Internet of new generation, Internet of money.  Its main advantage is that it is very difficult to lose money.  In the event of failure of any transaction, sender will keep the money.

 

Blockchain can be used to store money. How else can we use it?

 

Social networks, messengers, live cameras, online exchanges emerged as the Internet and technology advanced. The very same is going to happen with blockchain. Yet today, many interesting applications are designed.  For instance, Steemit social network based on the blockchain is launched. This network is actually a blogging platform. Steemit is much simpler than the Facebook,  but the difference is that it pays authors of posts money.  Russian alternative is golos.io. The application operates for only two years, but has about a million of users.  Among them are those making their living writing content. 

 

The objectivity makes such platforms appealing. In typical newspaper, the fee of author depends on a number of subjective factors: work experience, amount of work, disposition of editor etc. In blockchain system, a person gets exactly as much as he or she earned. The payment is automatic, in digital currency of app (token rather than bitcoins) and is made using smart contract. 

 

What are the prospects of smart contract?

 

Smart contract is a protocol that runs on blockchain, it is impossible to stop it.  Smart contract is entrusted with tasks of utmost importance.  For example, annual distribution of billion-dollar dividends.  Having source code, you can be sure that it will be neither changed nor hacked.  This is the approximate prospect of using a smart contract as software. For instance, I personally would want to leave my children some money on a blockchain in smart contract.  Interest on this money will go to e-wallets of my loved ones as long as a blockchain and the Internet exist.

 

And what about power consumption?

 

Many are concerned with electricity consumption and environmental unsustainability. These are the problems of outdated ways of blockchain production.  I recommend looking at the situation in the longer term. Power engineering got a large customer interested in package of services. This is good from the perspective of business as demand and consumption volume is growing.  This means inflow of money and an opportunity to invest in electrogenerating capacities of a company. I believe this is not a problem but a source of motivation for development of the industry.  

 

What issues shall be solved using blockchain in Uzbekistan first of all?

 

Introduction of blockchain in Uzbekistan is an entirely new experience.  No one has attempted, there is no expert opinion yet. Therefore, delegations from Russia, Ukraine, Georgia, the United States come to Uzbekistan and, in particular, to MUIC  offering their services. Currently, IT field is at pilot implementations stage, when foreign companies interested in the market bring their specialists, expertise and gradually try to implement something.  Data of Cadasters, Civil Registry Offices, as well as any government data that contains important information about citizens shall be stored in a blockchain. As platform advances, data migration process will happen in stages depending on the significance. This transition is inevitable.

 

It is the time of open source as licensed and closed software are not present in blockchain. Everything related to the recording and storage of data shall be open.  This is one of security conditions.

 

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Meetings within “Cafе Scientifique” project will be held on a regular basis.

 

Open to the public. 

 

You can follow the announcements on the official website of MUIC and in social networks.