Dutch Bitcoin Journalist Aaron van Wirdum from Bitcoin Magazine has written an excellent piece on Blockchain technology entering the Zeitgeist. Most interesting van Wirdum makes a strong case on anchoring (Merkle Trees) with some solid interviews and research – noting that anchoring could very well be the future of Bitcoin as a 2.0 technology.
However he also points out that Bitcoin itself might never be the platform that’s used to record every single stock trade, or all the world’s data… But it could evolve to be a fundamental and secure base layer, on which more advanced solutions are constructed.
Bitcoin is being rediscovered as a building block, much like the IP layer of the internet itself.
This unique security proposition has opened the door to a new application of the original Bitcoin blockchain: anchoring. Rather than transmitting and processing all information, some of the newer blockchains and alternative data-layers do most of the work on their own chain or ledger, and simply tap into Bitcoin’s security without putting a big footprint into the system.
This is done using cryptographic tools called Merkle trees. Data – any type of data – can be scrambled and compressed into a hash: a seemingly random string of numbers. This hash can be much shorter than the original data, but is also impossible to unscramble, deeming it useless to anyone who doesn’t have the original data. But anyone who does have the original data can scramble that data in the exact same manner. If the hash turns out the same, it essentially verifies that the original hash was made using the same data.
A Merkle tree, then, consists of multiple hashes hashed together into a new hash, called a Merkle root. As such, hundreds of pieces of data can all be compressed into a Merkle root. And using the magic of cryptography, anyone who has any of the original data can use the Merkle root to check whether that original data is part of the Merkle tree.
Major companies such as Philips are experimenting with Bitcoin’s blockchain using Merkle trees. The electronics and health care giant recently established a partnership with Tierion, a blockchain startup that lets users create a verifiable record of any data, file, or business process on the Bitcoin blockchain.
Read article in full here.