OneAction NZ

Democracy Co-operative

What is Blockchain Technology and Why is it Important?

Posted by Rhys Goodwin on June 30, 2021 · 6 mins read

Kia ora folks, This post is going to get a wee bit technical, after all, I’m not just a student of politics, I’m also a technologist – but I promise I will connect the two by the end.

Lately I’ve been delving into something called blockchain technology. Blockchain is a way of storing an electronic ledger of records or transactions in a way that prevents them ever being tampered with or changed. Each record is mathematically linked to the previous one, so if you try to change a record it impacts all the records after it, and everything breaks.

Imagine a paper notebook with lines of writing but it’s impossible to erase a line or rip out a page without it being obvious. If we take that analogy a step further – you might wonder – well even if we can’t erase a line or rip out a page, what if we just re-wrote the entire notebook but excluded the lines or pages we didn’t want? If there was only one notebook and you had possession of it then yes, that would work. But what if there were 10 identical notebooks each held by a different person, and everyone had to agree to add a new line, and each person checked the lines in everyone else’s notebook. In that case, if you wanted to erase a line, you’d have to get all 10 people to agree to re-writing out there notebooks again without that line.

It’s the same with blockchain technology, not only is each record linked to the previous one, multiple identical copies of these linked records (that is, multiple copies of the blockchain ledger) are held by thousands of people around the globe. This makes it virtually impossible to change a record on a blockchain ledger. Most technology we use today requires us to trust a central entity. Be it a bank or social media company like Facebook. This is where blockchain is different– it’s decentralised and doesn’t require you to trust anyone person.

Of course, nothing comes for free and for people to want to participate in maintaining this decentralised blockchain ledger there must be some kind of incentive because naturally people need to use their computers and internet connections for any of this to work. The thousands of people around the world who participate in maintaining the ledger are rewarded in virtual tokens. These tokens can be used to buy things online, in the real world, or exchanged for traditional money. Likewise, anyone who wants to store some information on the blockchain ledger must pay a small fee, using the same kind of virtual token. Again, all of this happens without a central company or entity controlling things. This situation naturally forms an economy, and this is what digital currencies are. Also known as crypto currencies. You might of heard of bitcoin?

I want to quickly clear up a couple of points. Firstly, you may have heard the controversy over Bitcoin’s huge power usage, making it very environmentally unfriendly. This applies to many crypto currencies. However, it is very important to understand that Bitcoin and its friends use a very early and inefficient system to validate their blockchain. There are now many new emerging technologies which use no more power than a home computer to do the same thing. Secondly, currently blockchain economy’s are very volatile, they are largely unregulated by governments and very likely subject to a great deal of manipulation and dodginess.

There is in a sense two parallel stories unfolding here. One is about a highly speculative (basically gambling) trading system that no doubt has a lot of dodgy-goings-on. The second story is one about something that may have a great deal of value, a potentially ground-breaking and powerful shift in the way the world ‘does money’. Think about being able to transfer money between people very securely as easily as sending an email or a text message, instantly, anywhere in the world without a middleman.

There is still a way to go and it’s hard to know how important this technology will be. Will it be as big of an innovation as the internet itself? Will it be as big as smartphones? We’ve never seen anything quite like it before but my feeling as a technologist, is that it may well completely transform the way money works at a global scale.

Now why am I talking about all of this? What’s it got to do with OneAction and democracy? It’s two-fold - firstly, the decentralised nature of these new economies means there is an opportunity for the community to take ownership of them in a bottom-up way. One of the most interesting aspects of these emerging economic systems is the way the rules are set - users and participants of these systems will be able to vote on how they work. This is known as on-chain governance. Secondly, blockchain technology opens a world of possibilities for secure online voting and deliberation so it’s highly likely that the OneAction participation platform will use blockchain technology.

I can’t think of a time when a game changing technology has been stopped, so whether you like the idea of these new economies or not, in my view it’s highly likely they are coming to us in a big way. The question is how will we respond? Will we make sure these technologies work for us? Or will be allow them to be used against us?

If this stuff interests you, why not join the OneAction Community forum and join the discussion?

Ngā mihi,