I've been around blockchain since 2016. It's hard to see the silly picture NFT hype without a care for why this technology is so important.
Blockchain solved a longstanding problem in technology. It's called the Byzantine Generals Problem. This is about how we can ensure trustworthy information across large groups of distributed parties.
Byzantine Generals Problem:
A group of generals from different clans have a city surrounded. If they all attack, they'll win. If they all retreat, they'll survive. If some attack while others retreat, they will be killed by city defenders.
Each general must send their vote to all other generals.
They can only communicate by messenger, but:
- Messages might get intercepted and altered by defending troops.
- The generals can't trust each other. One general may be sending different messages to different generals.
Centralisation
Before Bitcoin, this was solved in computer science by a central component responsible for retrieving, interpreting, and confirming the information.
In daily life this is a central person or company responsible for "counting the votes.". Your bank is responsible for your balance, and confirming when money is received or sent. Facebook, Instagram, Snapchat manage your photos, messages, and information.
This presents two big risks:
- The bank or FB can decide to block access to your account, your money, your information. They can change the content in your account, or impose costs to regain access.
- They can be compromised (hacked) by someone who can then block access, change or steal information.
The Bitcoin Solution
The bitcoin blockchain removed the need for central control. In fact, security increases as more members (aka. miners) join the network.
It's not perfect. There are costs to providing security, and rewards for doing so. If rewards aren’t sufficient, miners will leave and security decreases.
What's important though is that blockchain provides a sufficiently clear and reliable solution to centralised networks. Decentralised networks are possible and so far Bitcoin has proven secure.
You can now be your own bank and control your own content. Ethereum and many others were developed to provide even more decentralised functionality. NFTs as collectibles are just a fun tip of the iceberg, we can expect much more on the horizon.