Depending on who you ask, blockchain technology is poised to revolutionize the world — from creating a universal currency to building a free and truly private internet. Or, the new technology, built with a combination of encryption and transparency, is a solution in search of a problem.
The reality likely falls somewhere in between. While a growing number of startups and researchers are devoting themselves to exploring blockchain’s full potential, experts caution that a healthy dose of skepticism is needed to fully evaluate the technology and its eventual place in society.
For many individuals, though — including some looking to invest — blockchain technologies and their limitations remain poorly understood, leaving people vulnerable to being exploited by bad actors. Researchers at Princeton University’s School of Engineering and Applied Science are striving to change that through education, outreach and research.
“Early on we realized this was a technology that was not well understood but that a lot of people were interested in,” said Ed Felten, the Robert E. Kahn Professor of Computer Science and Public Affairs at Princeton. “There wasn’t a coherent, high-quality way of teaching about this technology or explaining it, so we’ve tried to systematize the knowledge and unsolved problems underlying it.”
Simply put, a blockchain is a ledger. But unlike an old-time hotel register gathering dust on a counter, a blockchain ledger is held electronically in multiple locations across the internet. It is visible to any member of the community participating in that particular blockchain. Each copy of the ledger is held on a computer called a node; when someone makes a transaction using the blockchain — say using virtual currency to order a pizza — the operators of the nodes run through calculations to create a new entry, or block, in the ledger. Each new block is encrypted using a private, numeric key from the person who bought the pizza; the new blocks are also linked to the previous blocks using additional encryption.
The combination of encryption and visibility makes entries extremely difficult to fake. Because the calculations are carried out on multiple nodes and the results are visible to participants — varying results would be an immediate red flag. The distributed nature of the system means it is hard for a single entity to control. It also makes transactions extremely difficult to track back to a user.