Video - Bitcoin 101 - A Million Killer Apps - Part 2 - Blockchains, The WWL And A Global Shared History
History has always been written by the victors. But beginning in 2009, this limitation has been disrupted. Designed to be electronic cash, Bitcoin has proved to be so much more. In this video we focus on re-thinking the blockchain, and understanding why this technology can prove to be revolutionary for how humanity records, remembers and keeps track of itself. Indeed by providing an immutable and transparent database, open to anyone, blockchain technology is destined to disrupt deeds, journalism, scientific publications, patents, artistic rights, and history itself. This is much more than a public ledger or proof of publication, this is a global shared history.
To understand these concepts, James takes you on a tour of the blockchain and the World Wide Ledger (WWL). If you've had trouble grasping blocks or chains or the combination thereof, this video is for you.
Hello! This is James D'Angelo and welcome to the Bitcoin 101 blackboard series. Today we are doing part two of what I was hoping would be a two-part series on a million Killer Apps, but it's just grown so big or just so many different places where Bitcoin is going. That it's no longer two-part series and I'm going to have to do at least three, but today we've got such amazing stuff that we're covering. In fact, if you just take the stuff we're covering today you'll certainly find a million possible Killer Apps. And this video is partly based on original talk I did at Harvard Business School but then yesterday I was actually at the Harvard Kennedy School for policy and government. And man, it was amazing to see a whole different crowd of people very excited by this new technology and it wasn't about the currency, it was about all these things we're talking about. Smart contracts and the stuff we're going to be talking about today, really amazing stuff so let's get started. Okay.
A lot of people probably already know this, but on my laptop right now the one I'm actually using right now I have a full copy of the blockchain. And it's in a folder and thousands maybe hundreds of thousands of people keep the same folder on their computers. Okay. So, it's just important to realize that we're talking about something that's on my computer, something that's on a lot of people's computer and you hear a lot of people referring to the contents of this folder as a ledger. So indeed, they call it a public ledger because everyone's got a copy of it and it's important enough to define a ledger. Ledger is a book or collection of financial accounts. And indeed that's a fair analysis Bitcoins at cryptocurrency and we keep track of all transactions in Bitcoin. So here is an example of a ledger. Remember a ledger is written in pen if you make a mistake you add another entry very similar to Bitcoin. Everything that it writes it keeps forever.
But in order to give some idea of the novelty the sheer revolutionary power of Bitcoin I love directing people to this page, blockchain.info. And up here you see the latest blocks that have been mine but down here is what I find really revolutionary. And it's live. We just saw $13,000 transaction that happened just seconds of a dollar, a fifty-two-cent transaction. These are all transactions that are happening right now. All the transactions in Bitcoin so if you are using the currency of Bitcoin and you are transacting in it all the transactions appear live on this page and many other pages because you can just go access the data and this information is then stored into the Bitcoin folder on my computer. Every single transaction of all time. And this is absolutely wild. You cannot see this done in dollars, you can't see it done yen, you want euro. No other currency do see all the transactions, visa holds all of it privately, Bitcoin publishes everything, every single transaction.
So here is a transaction right here. If we can move quick enough and click on one and you can click on the individual transactions and learn more about it. Sometimes you'll even find out where the transaction was broadcast from. So, this was broadcast from the Netherlands. And this is a pretty standard transaction. We got one input person who's paying and two payees and usually one of these payee is a return, a change address back to the original sender in this obfuscates a little bit the amounts that are being sent. But this individual sent out $269 worth of Bitcoin and then either took back 167 or 101. We don't know. Okay. But it's a fairly standard transaction, great example transaction that takes place in Bitcoin. And that transaction and all that information is stored on my computer in my Bitcoin folder and every other computers, okay.
So here is my folder, Bitcoin folder so you can go up on, you can actually click on it just like any regular folder, right. And here I get all the blocks. We've got over 30 gigabytes of data currently in the Bitcoin blockchain. Here is a test net and here's just some other random files lying around. The main one is right here. Here is all the blocks and you click inside here and you will get all the information that makes up what Bitcoin calls Blocks and that's all in here. They're all in a data type format but it's completely un-encrypted so you can click in there and see the actual transactions. So, it's just really important to know what we're dealing with. The Bitcoin's public ledgers people like to call it. It's just a folder sitting on my computer that holds all of these transactions, okay.
So let's move on. As I've already mentioned, a lot of people like to refer to the blockchain as a public ledger. But a lot of other people refer to Bitcoin and blockchains are really two creations in one. They call it a payment system kind of similar to PayPal which doesn't have its own proprietary currency. It just allows for currencies to transfer on its system so it's a payment system and it's also a currency. So Bitcoin as they're suggesting is really two things in one and here is Erik Voorhees is talking about this concept really beautifully. And these are excellent metaphors to use. So the great ways to get people to begin to understand Bitcoin. And this all makes sense because the inventor of Bitcoin Satoshi Nakamoto, the guy who named Bitcoin Bitcoin who wrote Bitcoin, called Bitcoin a peer to peer electronic cash system.
So if it's electronic cash and we've got a list of all the transactions it's fair to call that a ledger for able to run payments on, it's fair to call it a payment network in a crypto currency combined as well. But what seems apparent now six years after the creation of Bitcoin is that in the process of creating Bitcoin by combining these powerful technologies in a noble way some interesting extra things happened in the process and so in order to understand some of these things it's really important to understand exactly what are these things called Blocks. So a lot of times when we see images or metaphors of blockchain we've looked at the blocks kind of as is mysterious black boxes. So, it's actually important that if we're going to talk about blockchains, to not only understand perhaps the chain but it's really important to understand what exactly are these blocks.
Well, if the blockchain is a public ledger then blocks must hold transactions or even money. And indeed these blocks hold all the transactions but these transactions are really just data and the way that the data is stored has allowed Bitcoin to become money. Okay. So, we've got this real blurring of ideas where data could be information. Information could be money, money can be transactions we really don't know what's up but suddenly because a Bitcoin it's very possible to email actual money or store your money in a USB. So everything's getting swirled up and combined, data, information, transactions and money all together this is bizarre stuff but it doesn't really change our answer, right. What is a block hold? Well, lots hold this financial stuff, this financial data, these transactions. So that doesn't take us afar away from our original definition, a book or other collection of financial accounts, indeed a ledger and in Bitcoin's case a public ledger.
But we have a very interesting problem here because transactions and money are not all that these blocks hold. And this is where things get a little bit weird. If you dig inside the blockchain, indeed if you dig inside individual blocks you can find actual photos. So there is this photo of Nelson Mandela. This exact photo was downloaded from the blockchain so it's on my computer, it's on everybody's computer who has downloaded the blockchain and it's the exact same copy in everyone's computer. In fact, this JPEG right here, the Bitcoin logo is on the blockchain. This cool little tribute to Len Sassaman, the cryptographer and there is even these photos and you have this cool little system that allows for messages, text and images to be stored on the blockchain. But that's not all. You can also find PDFs and text on the blockchain. In fact, Satoshi's original white paper as a PDF is on the blockchain, put up in 2013 and it's a perfect PDF. You can copy stuff in it, you can select it, looks exactly like any other PDF because it's a PDF and it was deposited on this date in 2013 with this exact transaction. And this transaction stream that something besides financial accounting was being stuffed inside the blockchain because here we have one input which is fairly standard. But we have 948 tiny, tiny amount outputs. Basically, the tiny transaction fee that Bitcoin charges for putting data onto the blockchain, okay.
So here is our input. Here's the person who is paying and here's all of our 948 outputs. And inside the outputs you can code it in such a way that you can store data for a JPEG, you can store data for an MP3, you could store any data that you want. And just for fun, let's hop on block explorer and take a quick peek at this actual transaction. So, here's our singular input and the amount they put in and here are 948. They needed 948 outputs to put the single PDF on the blockchain, not hard to do, you can write a simple program parses the data, sends out the transaction, all accomplished in just a few seconds, okay.
So we've put PDFs into the blockchain, we've put JPEGs in the blockchain. Maybe that someone's already put MP3s in the blockchain, put movies into the blockchain, you can put text in the blockchain, but there's something else that folks are putting in the blockchain, very interesting stuff. What they're putting into the blockchain is code. And we speak about this a little bit in the first video and we're going to speak about this a lot in the next video which focuses on DAOs and dives deeper into the concept of smart contracts. And all these things are made possible because you can put code onto a blockchain. You can't have a smart contract that anyone is going to want to use unless the code is on the blockchain. I would cover this in detail in the next video. But it's important to realize that you can not only put actual running code inside the blockchain but folks already have. This is all code that came from the blockchain.
Here is this little basic program for a creature simulator as far as I understand the code doesn't even work so we've got bad code in the blockchain, who cares. It's there in the blockchain. Someone wanted to put it in there, it's in there. So, you can put code in and if you can put code, well you can also put in the compiler itself. So if you're worried how your codes interpreted well you put your code in and you put in the compiler, crazy, crazy stuff. But this leads us back to our original question. What are the blocks inside a blockchain? Well, I could reach for a dozen wild metaphors or we could just call it exactly what they are. Blocks are just folders places to store data as you saw on my computer the entire blockchain is just a folder, you can pop it open and you could start to find the original blocks. It's just a storage of data. And, of course, Bitcoin doesn't individualize all the blocks exactly into each little folder but it's exactly what's going on. It's storing data just like you would store data into a folder.
So it's not a metaphor because it's true, but if it wasn't true it make a great metaphor. So here is your block and each block can hold everything that any folder on any computer can hold. Yes. So, we figured that out. We have a good idea of what a block is so a folder is a block, a block is a folder, just a way of storing data. So, it's important to realize that the blockchain is more than a ledger. As Vitalik Buterin said just a few weeks ago and I'm sure with some amazement even to himself. Blockchains are a friggin database technology, that's it. It's just database technology and then he kind of got everyone excited by saying that five years down the road I doubt any users will care what the end of the line network token is? What he's saying is I doubt any users will care if you hold or have Bitcoins. And that might be true because you can still use Bitcoins without knowing that you're holding them, you could think you have dollars in your wallet, you could think you have Euros and that could be accounted for and managed by Bitcoin the payment network and Bitcoin the currency.
But for what we're talking about today a blockchain is really just a bunch of blocks and those blocks are just a bunch of folders holding data and so it's a database technology. But we do have to acknowledge that it's kind of strange database technology. Okay, so it gets too technical to cover now but to solve the massive problems of creating the world's first decentralized digital currency and some of the problems were double-spending in the Byzantine generals problem, Bitcoin's blockchain needed to be immutable and transparent. So, the solutions that Satoshi Nakamoto came to develop is anonymous or pseudonymous cryptocurrency was to develop a database that's both immutable and transparent. That's worth repeating. This whole idea of developing something that is immutable and transparent is pretty noble all unto itself. And we'll just take a quick peek of what had to be done to make the data immutable and transparent.
The first thing you have to do is you have to be able to lock the data somehow. Very hard if you think about it trying to lock data. Data just sits there, how do you lock it, you can lock your hard drive, you lock the room to your computer or something like that but if you're going to make the data public how do you lock it. Will you actually use a thing called a cryptographic hash function and Bitcoin uses the SHA256 hash function and this image right here uses an MD5 but how it works is if you stuff text into the function it will generate a code so every time in any MD5 on anyone's computer you put in the eagle flies at midnight all lowercase all with the spaces you will get this exact code. If you change this text in any fashion at all so I change the E to an F. This code will change entirely not suddenly but it will change entirely, almost every number will be different and look different. Okay, so it's very easy to see when you made a tiny change in the original text, you look at the code and see a major change over there.
Well, for a small amount of taxes doesn't seem that handy but you can take an entire book or an entire library and put all the text in there and the nice thing about an MD5 or SHA256 is it'll still give you a tiny little code. And it will give you a tiny little code that's unique to that library or that specific books. So say you stick this whole book into a hash algorithm, will you come out with this code. So, you change one comma or one space or one letter in that book you will end up with a completely different but tiny code. Right? This is tiny, so what people do is they send you the book and they send you this tiny little code and they could even go over the phone is the code K-O-I-X, 7 blah, blah, blah? Oh yeah! You have a perfect version of the book that I wanted to send. It hasn't been changed at all. So instead of you trying to find some mistake in the book or find a comma or something misplaced you now have this ability to lock the data using this hashing code.
So it's not a traditional lock but that's actually cool because with this type a lock you can still read the original document and it's trivial to verify that you've got the right stuff. So, computers can check that hash and merely second for all this data know that you're sending around the right copy of that information unadulterated version of a book, file, a library, all known information in the universe can be done and stuff through a single hash and it will come up with one specific code that you can use to lock all that information. Okay. So that's one of the first steps of making data immutable and transparent.
Now, let's look at how you might make it transparent. Well, transparent really kind of means making it publicly available so if you're going to send that data around you want to be transparent. If it's been encrypted clearly it's not transparent people can't use it. But the other thing that you need to do if you're going to make it truly transparent and truly public is you're going to need to replicate it and distribute it. Okay, in the first true sort of data replication machine was the Gutenberg printing press, but now we have Cloud computing, we've got networks, you can send data all over the place. It's really helpful for me if I've got files I'm concerned about on my computer to be able send it to the Cloud distribute it so if something happens to my computer or something happens to my house I still have a copy of all that information. The more I distribute it the more publicly I make it available. The more I allow people to use it the more I've made it transparent.
And these is what Bitcoin does, right. Anyone can download it. You don't need to sign on to get a perfect pristine copy of the blockchain so anyone who wants or everyone who wants can get a lot an encrypted readable folder that everyone agrees on is the same folder, not changed by reading those hashes we can know immediately of all the data since 2009. The 33 gigabytes that I have on my hard drive is the same data that everyone else has, so yeah, you can kind of think of it as read-only memory, it's also agreed upon timestamped an order of memory that we all know to be the same. This is wild stuff. So, this whole concept of fully and provably transparent, well you've never heard of before not able to be changed or we've had immutable databases but there's real problems with centralized mutable databases is going to create many of them, slight changes all of them. Then you could just show the version that behooves you. But the combination of these two fully provably transparent not able to be changed. Well, that's something that the world's never seen before. And this is an important and bizarre result from just creating a peer to peer electronic caste system. Okay. This is a fundamental change with how we can start to think about world history.
Well, is it important? Does it matter? Is it cool that we did it? Is it indeed even more important than Bitcoin the currency itself? Well, let's think about human history and noticed that I put history in quotes because history's a funky thing. Humanity has always had an ephemeral past. Something that changes and no example is better than if you go to try and find out the original author to a quote, right, you type in history is written by the winners or any other famous quote. You see a number of different people were the ones who originally said that. So, history is already kind of vague and amorphous. Here history written by the winners, Napoleon Bonaparte, history is written by the victors Winston Churchill. Okay they're slightly different, they really mean the same thing. Who was the person who originally said it? Was that either of them. Most likely what happens is that history has forgotten the original author and we've now attributed it to other people. And this becomes especially problematic when we think about the textbook wars. So what's chosen and put inside the textbook is what the children are going to learn and what's not put in the textbooks what's not stocked in libraries gets left out of history.
And as George Orwell famously said and this really applies to this revolution of Bitcoin is who controls the past, who controls history, controls the future and who controls the present, controls the past and we see that clearly. When you're choosing what to put in textbooks. And Mark Twain summed it all up very beautifully. The very ink with which history is written is merely fluid prejudice. So true. There is a lot of folks who go, aah, computers made it all better, we can now store stuff, we can keep everything we want, we just have to get a little bit smarter because as we know when we turn our computer off or RAM forgets everything and sometimes our hard-drives crash and as we know our personal memories aren't so great but were storing stuff in the cloud and, you know, all that stuff were capturing more history than before.
But as we know, computers are also really good at altering information. So yeah, good at storing information but even better at changing information clearly. So here is a couple humorous alterations of our dear President Barack Obama. So, we come to this problem never in history, has there ever been an immutable public record clearly. Things burns but more likely things get destroyed, things get changed and things get left out of history. So can this be changed? Can we store information so everyone can read it, agree upon it, update it, share it, make it permanent and not let the data be controlled by countries or kings or anybody else who's looking to mess with data.
Well, Satoshi didn't try to do this. This wasn't his main goal but he did set up a system for locking publicly readable data which includes images, tax, code or anything and anyone can keep a copy of that on their hard-drive. It's distributed really well, it's locked really well, it's perfectly readable by anyone but it does have one problem. If it's locked. Well, how can we update, how can we change it, all this new information in the world needs to be flying into our folders and somehow it needs to be locked but we also have to agree especially if we're dealing with financial transactions which order these documents came in because if I own $10 and I pay someone $10 at the coffee shop I shouldn't be able to walk down to the hardware store and use those same $10. The inability to mess with the order of these transactions or mess with the order of history or deeds or titles or anything like that is pretty important. So we need to come up with some way to be able to agree which version of the new docs are valid and then be able to somehow tie it or chain it to the previous locked folder.
And again this gets pretty technical to cover. Now, we talk about another videos and here's some notes for you to dig inside this technology. So let's read. But updating the ledger involves some of the most revolutionary thought in history. It's certainly some of the novel ideas of Bitcoin. It involves proof of work in cryptographic hash functions which not only allows us to come to a consensus agreeing on the new stuff we want to add in the folder, but also binds all the new stuff to the old stuff in order. So, we're chaining the data together by including the hash of the previous block. And so, all of the stuff that we're talking about leads us to a new way to view the blockchain. I've say a simpler way to look at the blockchain. Here is all the incoming transactions. Even new photos and new text, the new code all flying in every ten minutes, boom! We slap a cryptographic hash function lock on it. That's very hard to develop this hash because it require the hash to have a lot of leading zeros at the beginning whereas a massive amount of computational power. And this locks it, but not only does it lock that particular set of new documents but it also locks it to the previous set of documents. Indeed, this lock protects these documents even more. So even though it's been locked it's now been locked twice and this lock protects this lock and these documents.
And these are what we call in Bitcoin confirmations. So, when you have one confirmation it means you've already got one lock already slapped on that data. If we've got two confirmations now it's got two locks on that data and each lock is approximately just as hard and expensive to unlock as the previous one. So, we end up with something absolutely amazing. The world's first permanent and public memory. Indeed, on my computer I had every transaction in Bitcoin. I have all the way back to the very first one in January 2009 which is probably in a folder all the way up here and here is the folder from ten minutes ago. These are the transactions, this is the data, this is all the information and pictures and text from ten minutes ago. It's already been locked. So we've got a new way of storing history that cannot be adulterated completely distributed completely locked. And it's possible as we start to understand the power of all this and we're going to talk about the power of all this and the application is coming up in this video. But it's possible that this date can be a watershed moment in time because after this date we now have a way of storing history permanently. Not able to be burned, not able to be thrown away. If it's in there it cannot be changed.
So we might end up with a situation where instead of BC. We're now before blockchain 2009 after blockchain or before Bitcoin and after Bitcoin because as we have said changing even one comma in any folder even all the way back to the first folder you change one comma, you change one part of the transaction, any piece of the data and you've invalidated this entire chain that's sitting on your computer. You're no longer part of the current blockchain. So if you want to be a part you have to leave the data perfectly intact. And here I've thrown a little picture these Russian dolls because of a nice little metaphor as well, right? Think of this is the first block of the first transactions and as each block gets layered on it protects the earlier transactions even more and it's keeps getting bigger and bigger and bigger it gets harder and harder and harder to break down to the original Russian doll.
So, it's relatively easy to change some data that's in this folder and that pretty hard to change some data in this folder and man it's getting really almost impossible to change data in this folder so you can imagine what it's like when you're back here or back here. You're talking massive, massive, massive expenditures for computing power to hack all the way back there. Really prohibitive to change the data. And just to underline this point if we change even one pixel on the photo of Nelson Mandela in this folder all the way back here we've invalidated the blockchain on our computer. Not anyone else's just ours. We're thrown off the network, we're no longer part of the network. So, if we wanted to see mining rewards or anything like that, if we want to participate in the system or incentivize to keep all of our data intact and keep a copy of it on our computer. Here is Satoshi's white paper change anything and validates everything from here on as well.
So here is a nice little graphic right? Who got the blockchain, who controls the Bitcoin network, anybody who wants to and as we put more and more of our history in there, as we put more and more important documents in there. We are going to start to see people leaning on this technology to prevent things from being changed. So maybe perhaps he's playing a game and he wants to make sure that his partner scores haven't been changed so all the friends get together and they put all their scores in these folders on the blockchain. And now he can rely on the fact that those scores haven't been changed now he knows he's tops on the leaderboard. But everybody who is using Bitcoin can have the full lock chain inside the computer, every single transaction, photo of Nelson Mandela, Satoshi's PDF, everything and they're all provably exactly the same.
And so the follow-up comment Vitalik talked about blockchains are just a friggin database technology. Jeff Garzic responds and says blockchain is just an audit log, a difficult-to-censor history and he's making the understatement a year or perhaps he is even making the understatement of the century. Because sure, if you can build this database technology that is ordered and timestamped in public and all that, sure you can have a currency but it's possible that you can have much, much more and what we're talking about is the possibility of having a complete shared history for all of humanity.
This is a revolution not just in history but of who we are and no one's talking about this. We don't see anything about this on the History Channel that we're totally rethinking history. And it is all come about from this little extra thing Satoshi was trying to develop a currency and he ended up with the ability to create a global shared history. And sure, as I just mentioned that's great for currencies but as we'll see it's great for so many other things, millions and millions of possible applications from this one little accident. Creating this technology because you wanted to build a currency is a little bit like creating eBay. When all you wanted to do was sell some golf clubs or earrings or something. This is so much bigger than an electronic peer to peer cash system.
And indeed, this can be viewed as an important public good and its public good in a way we've never understood public goods before because all public goods in history of either being controlled by governments are controlled by private individuals or private organizations. Bitcoins controlled by well, no one and everyone at the same time, as thousands and thousands of people all with a perfect copy, the official original copy on their computer. This is truly decentralized. In fact, that is the definition of truly decentralized. So, we end up with a brand-new form of public good, pretty incredible. So now I'm going to tear through the problems of not being able to control data in the past and then we are going to look at the Killer Apps. I'm going to tear through those because almost all of this becomes very obvious when we look at the idea that we can now store data permanently, publicly and locks that we can all agree upon it.
So almost everywhere I look I start to see the problems of not being able to store history in a transparent and locked manner. Okay, so here is an article from New York Times couple weeks ago talking about Hurricane Sandy which is a couple years ago. Lawyers and some of the lawsuits related to the storm say they have found at least 500 cases in which engineering reports were altered, history change to minimize payments. Change history in your favor save yourself lots of money, screw people over. Very recent case but we can go back 50 years or so and look at some real tragic cases from the past. Since from a book that I was just reading called Devil in the Grove and there is a story about Joe Maxwell who was living on his land in Georgia. Didn't cause anybody problems at all. He had bought his land, he had cultivated his land and food growing it, kids, wife everything all living there and then there was this little uprising in town. And what happened, well, a whole racist mob started shooting everybody and burning everything partly because they were upset about something that they believed to be true that was probably not true. But partly because they're also very excited to get their hands on Joe's land.
Joe was terrified and all his neighbors were terrified and they all have to move off their land. And his deputize Ku Klux Klansmen. Well, they were in cahoots with the sheriff. They just wrote up new deeds throughout the old deeds maybe they don't even have original deeds but they wrote up new deeds seize possession of that land. And we are like oh my god! This story is so long ago how could you possibly bring this up, when I was reading in the Amazon comments from this woman who wrote in 2013 you can't see the little three there anymore. But in 2013 she talked about knowing Joe Maxwell and his wife Ruby Maxwell she grew up with the kids who are all still alive right now. These are people who had land stolen from them because we had no way to record deeds and even if we did record them the counties where they were recording the deeds were corrupt and racist and all that and they were just tearing up and burn him up and now there are people living on their land. This land was bought, paid for and cultivated by Joe Maxwell. He made this land better and so tempting that people wanted that land. They used any excuse to get people off that land. This happened all over the place. Chicago, very recently a lot of this stuff has happened. These are real problem how deeds are created and the ability to agree on data.
And we see this everywhere. Hillary Clinton staffers destroy Benghazi documents, State Department official claims. Well, we don't know who is right or wrong here. If documents are missing anyone can claim the documents are missing but documents can also be erased or fudge or whatever. And Hillary has a recent problem with her emails et cetera. SEC files were destroyed lawyer says in 2011. These weren't just any standard SEC files the destroyed files comprised records of at least 9,000 preliminary inquiries into matters involving notorious individuals like Bernard Madoff as well as several Wall Street firms that were laid off the subject of scrutiny after the 2008 financial crisis. They're important documents, gone and the official term for this is spoliation of evidence but it's just destroying documents, very, very common. And leaves just to all the standard questions who handler or hold your data. Well, if it's a centralized group something can happen to that centralized group and indeed centralized groups hold everything.
County Recorder holds and controls deeds, big problem for Joe Maxwell. Google holds and controls my emails. Okay. doesn't seem like a big problem most of the time but ah! then there's the problems of the NSA and big companies actually giving emails up. The Federal Reserve controls my ACH transfers, Facebook controls my data holds my data, visa, PayPal, MasterCard hold and control my money and all the transactional information. This is data that can be corrupted, this is data that could be changed who knows what's going to happen in the future but we certainly know from history that all of this stuff gets changed all the time. So who will be owning and controlling our social identity, very crazy, very dangerous stuff. Do we have control over it? Is there a proven record of things that happened in the past? We don't know. And one of the companies that I love following on this topic and I love this character Paul Snow down at Texas runs Texas Bitcoin conference but he's also leading the charge to develop this company called factom which should be going public very soon. And it's exactly this. It's all about trying to put title records, legal apps, financial apps, deeds, titles et cetera onto the blockchain in a way so that it's not so bloated, right. They actually come up with a better system than we've seen already.
So putting the Nelson Mandela photo into the blockchain. Well, that's kind of burdensome to everybody, but there's a way to hash this information, store it somewhere else, make it public in your own way. Put it on YouTube or script or just send it to someone as an email and then put the hash inside the blockchain and put the hash inside with another collection of many, many hashes of lots of data then you get one tiny hash, you stick on the blockchain that is timestamped. It's proof of publication and that concept that Paul's using is called an Anchor. You're anchoring that data to this really wonderful immutable public database called the blockchain. So, you've made everyone much more accountable. The data that's been published is that there's really great quote about all of this, public ledgers, Bitcoin databases tend to be honest because it's very hard to know today what lie I will want to tell tomorrow. Most of the spoliation of data happens post facto because you go oh, my God! I should have done that. So you go back and try and fudge with the data. But if it's in a place that can't be changed, well, now you're stuck with that data so it prevents the ability to run lots of types of fraud.
So now we can really whip through stuff, right. We've got this immutable database so it's very easy to do timestamping a notary. Say this is an idea you want to patent this picture right here. Well, you can take that JPEG, you can hash it and then you could send some cast to that hash onto the blockchain, proving that you were aware and held control this document at a certain time. And that applies directly to how patents work. And clearly, if you're putting all your financial transactions if indeed you're using the Bitcoin blockchain is just your ledger where you're putting all your accounting information or auditing is a snap, you just press a button and you're completely audit. As we know auditors and big companies will come in and move in for at least a month, right? They will access all your computers in everybody's face and at the end of all that, all they can offer you is an opinion. We think that they did everything okay, that's how wild financial records are. If everything's on the blockchain some high school student could run the audit and tell you for sure if all the transactions are legit or not. If their financial statement is correct or not. Killer change the way things are done, should be trivial to audit all these government agencies because they should have all their records except for the voting records in a way where everyone can see them, agree upon them and they can't be changed.
And indeed if you're doing this you end up with this really novel, really freaky sort of sci fi concept which was suggested by one of the coders for Eris industry, his name's Buchman. He said that blockchains for the first time in history give us a situation where the absence of evidence is evidence of absence. I mean think about that for a second. Absence of evidence has always been, wow! there's a problem here which is blank spot on your resume. Where were you between 9:00 and 11:00, the night of the murder? There was an absence of evidence so everyone starts to assume that something terrible happened there, but if you have all your transactions on the blockchain and we know they can't be deleted, if there's no transaction then well, there was no transaction the absence of evidence is evidence of absence.
Phenomenal stuff, little bit futuristic because people aren't yet putting all their transactions on the blockchain. But it's going to happen, I mean, it is a fundamental change is a public good that's going to change the way things are working. And Chris Ellis over in London recently got a bunch of attention, wired magazine article for coming up with this devilishly simple, devilishly cheap way to replace passports such that there can be no fraud whatsoever, no loss problems of passports or stolen passports no problems of passports at all. Stick them on the blockchain and here's Janina who was the first person who has ever identified on the blockchain. She's such a brave soul and Chris and her got together to do this project to show the world how simple it is to do passports in simple identification verification on the blockchain.
Okay, and it just goes on and on. All these things that have typically been problems can now be replaced. A marriage licenses, licenses in general much better done on the blockchain. Artistic royalties whether you're a painter, a filmmaker, musician you can start to track and trace your royalties and ownerships of certain songs and sharing of certain songs easily simply on the blockchain. So there's endless possibilities you can just take this to any concert, you don't think of your own and there's no way I'm going to think of all this. Software versions, legal documents, contracts, government records, deeds, titles et cetera, et cetera, et cetera. Millions of Killer Apps are transparent and locked data that is completely public that everyone can agree on.
And what's amazing is that Satoshi Nakamoto built this so we could run his currency and this currency relies on exactly that. It relies on this Public Ledger but the fact that you can put other things inside the Public Ledger changes the game for a number of massive applications and smart contracts which we talked about the first video we're going to talk a lot more about in the next video and digital autonomous organizations are made possible by this as well. So sure, you get currencies but you get all the stuff we talked about in the first video, all the stuff we just talked about now and all the outrageous stuff that we're going to talk about in the third video. So stay tuned for that, but please remember to like, comment, subscribe. Do whatever it is you do and we'll catch you at the next video.