Main content
Course: Financial Literacy > Unit 12
Lesson 10: How blockchain works- How Blockchain Works: Introduction
- How Blockchain Works: Why Blockchain?
- How Blockchain Works: Under the Hood
- How Blockchain Works: Beyond Currencies
- How Blockchain Works: Marketplace & Price
- Blockchain: Trustworthy or a Scam?
- Blockchain: Societal Impact
© 2024 Khan AcademyTerms of usePrivacy PolicyCookie Notice
How Blockchain Works: Beyond Currencies
Explore the use cases of blockchain beyond finance and its diverse applications. From tracking music royalties to NFTs, we'll demonstrate the innovative ways in which blockchain can potentially have an impact on industries outside of finance. Created by Code.org.
Want to join the conversation?
- Unless governments and Supreme Courts stamp smart contracts as legally enforceable, how can we really trust them? Because if there is a fraud, who to turn to then?(3 votes)
Video transcript
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.