After sending shockwaves throughout the financial industry now, Bitcoin is poised to revolutionize
 digital privacy as well.
 Whether it's between everyday citizens, investors, or corporations, every financial transaction
 we make is recorded.
 The institutions that regulate currency have created a system in which governments, banks,
 accountants, and notaries track these transactions, robbing the public of any privacy or currency.
 That's why Bitcoin was released in 2009, as a currency for anyone who wants to keep
 the government out of their wallets.
 The digital currency uses encryption to regulate the creation of coins and verify the transactions.
 It's totally decentralized, which means it's not controlled by a single authority
 like the Federal Reserve.
 And unlike greenbacks, the Fed can't just print more cryptocurrency to inflate our way
 out of trouble.
 Its value reflects peer supply and demand, not a value force into the system by regulation
 or through government monopolies.
 The key technology behind Bitcoin is the blockchain, and it's revolutionizing digital privacy
 while simultaneously keeping data of online transactions in the public's hand rather
 than a single entity's.
 Beyond Bitcoin, blockchain could be used in any industry, from finance to medicine, to
 secure transactions and data, and track how that data is used.
 Like an open ledger, each block represents one or more transactions.
 Though most of us think about Bitcoins in purely financial terms, a block in a blockchain
 can represent anything, like files, photos, or property deeds.
 Each block is encrypted so that only the people or companies participating in the transaction
 have a key, but the data is shared among hundreds of thousands of computers that participate
 in Bitcoin mining.
 Publicly sharing this ledger creates a new form of accountability and trust.
 And because of the thousands of copies, hackers or other malicious actors can't alter data
 once it's added.
 Combined with strong encryption, this means third parties are no longer needed to verify
 transactions.
 Jameson Lopp is a software developer at BitGo, a Bitcoin and blockchain security business,
 and an expert in computer security.
 He joined me on Behind the Headline to explain this more in plain English, and how blockchain
 is revolutionizing data privacy and how we can take back our privacy in this growing
 national security state.
 Check it out.
 Thank you so much, Jameson, for joining me today.
 Can you briefly explain the blockchain in plain English, and how this is revolutionizing
 data privacy in our civilian state?
 Sure.
 At a very high non-technical level, the fundamental question that blockchains answer is how do
 we keep track of ownership and property in a way that doesn't require trusted authorities?
 So if you think about how ownership of property is currently tracked, whether it's your house
 or your car, stocks, bonds, or money itself, these are currently all attested by trusted
 authorities such as government agencies or financial entities that are regulated by governments.
 And these entities are already using modern technology to track the ownership digitally,
 but they're doing so with their own private databases.
 And essentially what blockchains do is they flip this model on its head, and we instead
 make the database or the ledger, if you will, public so that everyone who is using the system
 is checking each other's work.
 This makes the system what we call trustless, because you're no longer relying upon anyone
 in the network to be honest to you.
 And it doesn't fundamentally protect us from government or corporate spying.
 There's still a lot of privacy issues, but what it really protects us against is corruption,
 like government and corporate corruption, because we're able to be sure that no one
 is trying to defraud us.
 So if it doesn't protect us against surveillance, how can this protect citizens from government
 and corporate corruption, as you say?
 There's a lot of different ways that you can consider there to be corruption in the system,
 especially in the financial system.
 Both government and the banking system have ways of essentially creating money out of
 thin air.
 And this can be through inflation, it can be through quantitative easing.
 There's also, as we've seen in 2008, through very complicated manipulation of financial
 markets through algorithmic derivatives and other things that are so complicated that
 almost nobody understands them.
 And so you can actually run stock markets and financial networks on blockchains, and
 then that enables everyone else to be sure that you're playing by the rules, essentially.
 So in a blockchain, the transactions themselves are encrypted but shared among dozens, if
 not hundreds of computers.
 I mean, can you explain how this actually makes users more secure and creates trust?
 Yeah, so we say that the transactions are cryptographically signed.
 The transaction data itself is not encrypted, which would make it private and make it unable
 for other people to see the transaction, though there are new systems that are being developed
 where the transaction data is encrypted.
 There are a lot of interesting privacy innovations that are currently being undertaken in this
 space.
 But essentially, if we want to build a system that allows us to track ownership without
 trusting third parties, we need to have this new type of ledger.
 It's easy to create a public ledger, but the hard problem is preventing people from cheating
 and altering the ledger for their own benefit.
 So the solution is we flip the model upside down, and instead of having the ledger on
 one or two computers that are owned by governments or companies, we instead have everyone who
 wants to participate keep a copy of the entire history of the ledger on their own computer.
 And this allows you to check the cryptography of all the transactions through history, which
 are actually dependent upon each other.
 And so this is where we get the concept of a chain from, is that we take these batches
 of transactions and approximately every 10 minutes, we put them together, it's cryptographically
 verified, and it also points back to the previous batch of transactions.
 So this makes it really difficult for people to try to rewrite history.
 If you try to go back into history, you actually have to recreate all of these blocks in order,
 which becomes exponentially more difficult from a computational standpoint.
 Okay, so let's talk about the blockchain in more practical terms that affect our daily
 lives.
 How can blockchain allow processes for data-heavy industries like the medical field or even
 tech companies to become even more simplified for the consumer and for those companies themselves?
 A great property of blockchains is that you're essentially creating a tamper-proof history
 of historical changes.
 Blockchains aren't a silver bullet for computer security because you still have to secure
 these cryptographic keys that allow you to make the modifications to the blockchain.
 But you can do things like what my company, BitGo, does is we actually support something
 called multi-signature algorithms.
 And so what that allows you to do is have trust that is then split up between a couple
 of different entities.
 And so that's another way of having sort of checks and balances against making changes
 to these ledgers.
 So we're seeing now a number of banks, the R3 Consortium for example, there's also the
 open source Hyperledger project, and they're getting into blockchains and distributed ledgers
 in general because they understand that there are a lot of applications where there are
 already these semi-trusted networks and if they could automate all of the validations
 that are currently being done manually by humans, then you can get a lot more efficiency.
 So one way of thinking of blockchains or distributed ledgers is that it's essentially a way to
 automate bureaucracy.
 So whenever we're checking each other's work in any type of system, because we're just
 creating new rules here, then we're doing it in such a way that you can automate it
 out and have a bunch of computers doing it rather than having, say, accountants tally
 up all the numbers every night.
 Right, and how can the blockchain then protect companies from hackers?
 I mean, first thing that comes to my mind is the Target hack that compromised their
 customers' data and information.
 How would blockchain protect consumers from that?
 The difference between credit cards and cryptocurrency is that with a credit card transaction, you're
 actually handing over all of your private financial data to the merchant, and they're
 taking those keys and pulling money from your account.
 And the result of that is that you have to trust every merchant you interact with to
 have good security practices and not leak out your private data.
 Otherwise then, you've got identity theft, you have to get new credit cards, all that.
 With a blockchain, you're instead using the cryptography to push a transaction out onto
 the network that modifies the ledger and sends the money somewhere.
 So it's more like a digital cash.
 So the result being that the merchants that you're interacting with are just getting your
 money directly, and they don't have the private data to take any more from you.
 So even if a hacker gets in the Target system, they won't be able to take any more Bitcoin
 from you.
 On the other hand, from a non-currency perspective, like I said, the blockchain essentially creates
 this immutable history of everything that's ever happened within the system.
 And so if a hacker tries to go in and change entries from the past to their benefit, then
 it's quite simple to have your computer automatically perform an audit that will show you exactly
 where the tamper will occur.
 Very interesting.
 So Jameson, we just have one minute left.
 Can you briefly explain the pushback that blockchain has received in comparison to say
 Bitcoin?
 When Bitcoin was first made headlines, it received a lot of pushback from the financial
 industry and even the government.
 What kind of pushback has blockchain received?
 The industry, like the financial industry and a number of other industries seem to be
 really interested in blockchain, but not Bitcoin.
 Now I've been to a number of meetups and talked to a number of people that are in this space
 and their primary concerns with Bitcoin-like systems are that Bitcoin is permissionless,
 so anyone who wants to can join the system and use it as long as they're following the
 rules.
 But what banks and other financial networks want is they want a system that they can somewhat
 control more and only give validation authority to trusted entities and they want to be able
 to have even better privacy and they want to be able to have even more transaction volume.
 And it's very hard for them to be able to squeeze all of their use cases into Bitcoin
 because Bitcoin is trying to be this generic trust ledger.
 So when they're looking at more specific use cases, they want to be more efficient and
 sort of replicate the systems that they already have.
 Well thank you so much Jameson Lopp for joining me today and explaining that in plain English.
 Jameson Lopp, developer of blockchain for BitGo.
 Thank you.
 Thank you.