The Invention of Blockchain is Similar to That of Dice

The invention of Bitcoin and Blockchain doesn’t just mean ‘the birth of a new technology’, ‘the birth of new money’ or even ‘the birth of a speculative stock’. When people encounter something totally new, they will try to understand it by using the knowledge they already have, and comparing the new comer to a thing familiar to them. However, Bitcoin seems to be a field a little different from any established ones people have already known. Something Bitcoin creates is very difficult to understand, but I believe that it is something entirely new.

The invention of Blockchain is similar to that of a dice in some ways.

When we play a game with a dice, the game can’t be valid, unless all the members involved understand that ‘they can never control a roll of the dice’. We can immediately figure out that the result was just accidental because all of the people have experience of throwing a dice. If a swindler made a dice controlled by him, the dice would not pay a role as a dice.

If one of the members playing the game ignores the result, the person breaches the contract of the game. This is because it is clear to the other members that before throwing the dice, the person understood nobody could control a roll of the dice, and that the result was accidental.

In the case of PoW, it can objectively show that a large number of numeric calculations have been repeated before an effective nonce for next block is found. By studying the system of hash calculation, we can understand its mathematical property where the result of a hash calculation to find an effective value for next block is irreversible, if not as intuitively as we do about the property of a roll of the dice. We can also understand an electronic signature system, though it is little complicated.

The promise all the participants of Blockchain agree to is called a ‘consensus’. Its comes from a Latin word, and means ‘sharing an opinion that everyone in a group agrees with or accepts.

The participants in Bitcoin ‘consent’ to its mathematical property where ‘a hash calculation needed to create a block’ is irreversible, and also its protocol ( the construction and consistency of its data are under restrictions) in Blockchain system.

Using Bitcoin or owing Bitcoin means tacitly agreeing on an assumed specification in Bitcoin system. Blockchain is a system that the participants all over the Internet consent with each other.

Dice and Bitcoin emerged in the world by giving new meanings to theirs role.

I felt the hidden ‘consensus’ in Blockchain system when Bitcoin Cash was born.

Bitcoin Cash was born in August, 2017 by a hard fork (to change the consensus without compatibility). Although a hard fork was announced on August 1, the first blocks related to Bitcoin Cash were not readily made. In the case of cryptocurrency based on Blockchain, if blocks are not made, that means cryptocurrency cannot work as a currency at all. Despite this situation, some cryptocurrency exchanges provide services for trading Bitcoin Cash. The currency which was not sure to survive was traded on the market.

6 hours after the noticed time, a few blocks were made. However, the number of the blocks was not enough for Bitcoin Cash to survive. Nobody was sure what was going to happen to Bitcoin Cash for several days. Increase with the block height, its price was up. It was like a confirmation of the consensus that the creation of blocks could made Bitcoin Cash work as currency.
The cryptocurrency exchange played a role to create motivation for miner. At the moment of Bitcoin Cash birth, I felt that this is the process to consent something important about Blockchain system. And I thins it is the tip of the iceberg.

In the case of Japanese yen, when we have Japanese currency, we consent to take risks of its currency fluctuation, and trusting the Bank of Japan might be a risk as well. However, we seem to have a common idea that ‘the central bank will keep commodity prices of Japanese yen’, though we are not aware of it in our daily life. Owning a currency means agree hidden consensus.

The Bank of Japan, which is the issuer of Japanese yen, takes responsibility for its price stability, and also has the authority to control the issue amount at its discretion, and to punish a counterfeiter. This contract made tacitly between a nation and its citizens. It is called a social contract. It’s an important term, which shows the legitimacy of a sovereign state.

On the other hand, Bitcoin doesn’t have this kind of social contract. It can only survive with consensus between the participants.

Most importantly, since the basis of the consensus in Bitcoin system lies in technology. Bitcoin system can improve by using technology. In the case of the management of Japanese yen, it can be controlled by the social contract between the Bank of Japan and the users of Japanese currency, while Bitcoin depends on technology. Such money had never existed historically before Bitcoin emerged in the world.

Lastly, let me introduce an article on Blockchain.
I excerpted some passages and summarized them.

Really new things will emerge and exist beyond our understanding. Bitcoin is one of them. It is called ‘new money’ just because this word might be the most familiar to us of all the vocabulary we have now. Actually Bitcoin might not be ‘money’. I would like to explain about Bitcoin and Blockchain in detail, and clear up what Bitcoin is really like.

I would be happy if you shared my opinion.

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