How Blockchain Works: Why Blockchain?

My name's Tegan Kline.

I'm the co-founder of Edge & Node,
the initial team behind The Graph.

And with The Graph
what Google does for the web,

The Graph does for blockchains
and organizing data.

My name is Cynthia Haas, and I'm the
director of the World of Women Foundation.

World of Women
is a collection of 10,000 women

all across different backgrounds,
variety of skins, traits.

And we are a community that champions
inclusion and diversity in the web3 space.

My name is Charlie Lee.

I'm the creator of Litecoin.

One of the alternative currencies to Bitcoin.

I was playing around
with the Bitcoin code base

and decided
to create my own cryptocurrency

and it was a fun side project
and it took off.

When you buy something with a credit card,
when your groceries are labeled organic,

when you see a verified identity
on social media or when you vote,

all of these things, they depend on trust.

How do you know that
the money was transferred,

that the food is actually organic,
that the person is real,

or that your vote is counted?

Ultimately, you trust records managed
by banks, companies and governments.

But these days, many people wonder
if they can trust companies, governments

or any form of centralized power.
With the rise of misinformation

what if we could build a system of trust
that didn't depend on a central entity?

What if we could keep track of things
like money or property in a way

that anyone could audit the data without
putting a company or government in charge?

That's possible today,
using the technology called blockchain.

Blockchain is a new way
of storing information across the internet

where everyone can participate.
With blockchain,

data can be decentralized and distributed.

Nobody owns a blockchain,

but everybody can use it
and verify their information on it.

This technology is the innovation
behind cryptocurrencies, like Bitcoin.

It has other potential use cases
which we'll get to in a later video.

But first, let's look at how the problems
of trust have been solved in the past.

Since the

earliest of human societies,
we have invented different ways

of building trust by keeping
track of information and transactions

like who owns this farm?

How much do I owe you for the milk?

What are the laws of the land?

Humans started using shells or precious
rocks to keep track of transactions,

and these became
the earliest forms of currency.

As we moved from tribes
to villages to cities,

we needed to keep track of property
and laws.

This led to the early invention of numbers
and writing.

Isn't that incredible?

We didn't invent numbers for math class.

We didn't invent the alphabet
to write books.

We invented them to keep track of land,
livestock,

debts and taxes.

And of course, we've come a long way
since then.

Currency has evolved from shells
to coins to bank notes to digital data.

Writing has evolved from clay tablets
to paper

to digital formats.
Along with inventing writing and numbers.

We've also invented
a new way to establish trust,

because all of these ways of preserving
records, they still depend on trust.

That's
why the laws of the land were set in stone

to make sure nobody would change them.

But how do you

trust something,
even if it's set in stone?

For example, you might have a clay tablet
that says you own 100 cows,

but how do I know
that you didn't make that number up?

That's why we invented
trusted seals, stamps

and signatures.

And with all of these inventions,
we authorize and put our trust

in a limited group of people,

organizations, or governments with
the special power to verify our records.

And that's the one thing that has never
changed over thousands of years

and new technologies.

These systems only work
if we trust the organizations

and authorities that verify the records.

And this brings us back to the blockchain.

Blockchain is the first technology
that allows us to record information

without needing
to trust a central authority.

It's a digital way
to store and verify information

that is set in stone
without needing a stone

or a seal or a bank or government.

The information on a blockchain is saved
on a distributed network of computers.

So long as these computers
are independently managed.

In theory, no individual or organization
can take down the network or corrupt it.

This is

like a form of writing
that can't be counterfeit or destroyed.

It enables a new form of trust.

The first use is Bitcoin.

Bitcoin is a digital currency
that safely tracks transactions

and ownership without needing to put trust
in any bank or government.

But that's only one example.

A blockchain could potentially be used
to track ownership

of real estate, to establish contracts,
to authenticate documents

and to verify
a document was created on a certain date.

It's now theoretically possible
to do all of these things and so much more

without depending on traditional systems
of trust.

Blockchain technology still has a long way
to reach its full potential,

and its future
is a topic of regular debate.

Some believe that this is the future
with a potential

to democratize who has power and authority
in human societies.

Others think it is a giant scam
with no other purpose.

In the rest of this video series
will look at how this technology works.

And then we'll explore
different points of view.