How Blockchain Works: Beyond Currencies

Hey, I'm Hill Harper, actor, author and founder of the Black Wall Street Digital Wallet and App. Hi, I'm Dieter Shirley and I'm the CTO of Dapper Labs. The Black Wall Street is a blockchain technology powered community that hopes to solve the racial wealth gap through providing opportunity for folks to help them build wealth, jobs and opportunity. Dapper Labs is a company that believes that digital collectibles are the future of fandom and that blockchain technology can give users a level of ownership and control over their digital lives that they've never really had before. Blockchains have potential far beyond cryptocurrencies alone. See, blockchain technology offers an open database where people can record information without the need for a central authority. But blockchains can do more than just store information. They can perform computations to enforce fair transaction rules without gatekeepers and expensive or sometimes corrupt human oversight. As an example, let's look at music royalties. Record labels receive money when you play music. Then they distribute that money to individual musicians and artists. Usually there are lots of music and who collaborate on a song, and each one receives a different percentage of the money. But keeping track of all that is complicated, which is why artists give up a large share of their earnings to record labels, publishers and other third parties to collect and distribute these payments. Blockchain technology could be used to perform these same calculations and issue payments directly to the appropriate artists. Without a third party and almost in real time. To do so, we use a program called a smart contract. Although if we're honest, a smart contract is neither especially smart, nor is it really a contract. It's an autonomous program that you can think of kind of like a vending machine. You put the right amount of money in and the product comes out automatically. It can ensure that the rules of a certain kind of transaction are followed without the need for legal contracts, and it runs correctly 24 seven without oversight. Executing the agreement whenever the right conditions are met. Want to give you an example. When a song you wrote becomes a top hit. A smart contract could deposit the money right into your account. Say you wrote the song with a friend and a third friend performed it. A smart contract could divide the money three ways deposit it into a digital wallet. And the smart contract not only keeps track of how you agreed to divide the money, but also divides it for you. And then the blockchain keeps a record of all these transactions, so you can go back and review it if you want. With smart contracts, blockchains can decentralize not only the storage of data information, but also the rules about how that data is used and the computing effort that enforces those rules. So what kinds of things are possible on blockchains using smart contracts? Well, the advocates of this technology believe it can change many aspects of society by removing the role of governments, corporations and third parties. For example, blockchain technology can enable transparent elections by automatically recording votes and publicly auditing them all while protecting voter identity. Or it could allow us to trade renewable energy with our neighbors without paying a third party for the transaction. Of course, none of this is happening right now, today, at least not on a large scale. So there is a lot of debate about whether blockchain technology will ever lead to these things being completely widely adopted. Nonfungible tokens or NFTs are a popular example of smart contracts that are already in use. An NFT is a unique asset individually tracked on the blockchain that can be associated with the ownership of digital collectibles, artwork or items in a game. If you want to buy or sell the item, the smart contract handles the transaction with pre-set rules such as giving some of the purchase price to the original creator as an ongoing royalty. Musicians like Grimes and Kings of Leon have already released their work as NFTs, and governments are considering recognizing smart contracts as legally enforceable agreements. The potential of NFTs and smart contracts is often debated. Detractors like to focus on examples of fraudsters using it as a tool to trick people while other people think that NFTs will one day represent all property ownership entirely, eliminating the need for middlemen and governments in all sorts of transactions. But as with most things, the truth will probably fall somewhere in the middle. Ultimately, the utility of this technology will depend on its adoption in the real world. Will future concert halls accept NFT tickets? Will game makers accept tokens bought and sold outside of their own games? Will major musicians be paid through smart contracts? Will everybody have just a digital wallet and real wall to be gone? Will governments recognize property ownership or even vote recorded on a blockchain? We'll all have to wait and see.