The Blockchain: What It Is and How It Can Benefit Libraries

Encryption, Libraries and Data, Privacy, Technology

By: guest blogger Shawn Demerjian

You can’t trip over a magazine rack these days without hearing about Bitcoin or crypto-currencies or blockchain. My goal here is to clarify some of these terms, provide a little background history, and explain how this new technology works. This will be a two-part series, with Part Two going into detail on the potential applications and use-cases for library and information professionals as a whole.

A graphical representation of the blockchain showing data links between locked blocks of data.Although a cursory scan of these terms tends to focus overwhelmingly on Bitcoin and crypto-currency, it’s the blockchain that serves as the underlying foundation for this technology. Crypto-currency — including Bitcoin and the thousands of additional “coins” or “tokens” presently available — is the most well-known application of the blockchain, but far from the only one. With a reach extending far beyond anonymous transactions and speculative bubbles, academia is beginning to get involved. Last year, in fact, San José State University’s iSchool was awarded a $100,000 grant by the IMLS in order to “gain a better understanding of blockchain technology for small and large, urban and rural libraries and their communities.”

Outside of academia, private sector firms and public agencies are also taking a closer look. Some of the world’s largest software companies — including heavyweights IBM and SAP — and financial institutions — Goldman Sachs and JPMorgan, among others — are devoting time and resources into examining the blockchain’s impact, while in the civic arena, we find pilot projects sprouting up around the globe, everywhere from Chicago to the Netherlands to Dubai.

So then what is a blockchain?

First, a bit of history. Although its genesis can be traced back to the early 1990s, it wasn’t until 2008 when a paper published under the pseudonym Satoshi Nakamoto discussed the first real application of the technology: Bitcoin. Interestingly enough, the term “blockchain” was never actually used in Satoshi’s paper, only references to a “chain of blocks” or “block in the chain.” That came later from colleague Hal Finney (his real name).

A blockchain can be thought of as a distributed ledger consisting of records of transactions, with each participant holding a copy of the ledger. Of crucial importance here is that a “transaction” does not have to be of a financial nature — it is simply data. Every transaction is recorded, time-stamped, and then added to a “block” which serves as a log of the transactions, analogous to a page in a ledger. Once full, the block itself is then time-stamped and “sealed” via encryption. The next block to be created is subject to the same process, after which it gets “chained” to the previous block.

“A blockchain is never finished, as participants in a blockchain can always attach new links to the chain. However once added, links can never be removed again.”
– Dutch Blockchain Consortium

A cartoon image of a cat preparing to unlock a block of data in a chain, while another cat in the background seals a new block to the chain.In terms of security, there are several aspects to note. If someone tries to tamper with any of the recorded transactions, a new record is then created, with every participant notified of the change. Also, as mentioned above, completed blocks are “sealed” via encryption. Wonder how that works? Many of us who grew up in the U.S. performed our own (albeit much simpler) versions of decryption as children. Remember cereal box decoder rings? Or elementary school worksheets instructing us to spell out a secret message where 1 = A, 2 = B, and so on? Blockchain cryptography is somewhat more complex, however the end result is quite clear. An input of any length is taken and converted into an output of a fixed length. That fixed encryption length is measured in bits, with most blockchain transactions subject to 256-bit encryption, translating into a 32-character string of random letters and numbers (8 bits = 1 byte = 1 character). That string is what gets recorded onto the ledger, and while theoretically possible, the odds of decoding such a string are quite low.

Participants are also provided with both a public and a private encryption/decryption key. Blockchain theorist William Mougayar describes this in his 2016 book as the “yin-yang of the blockchain: public visibility, but private inspection. It’s a bit like your home address. You can publish your home address publicly, but that does not give any information about what your home looks like on the inside. You’ll need your private key to enter your private home, and since you claimed that address as yours, no one else can claim a similar address as being theirs.”

Now that we have a better sense of what the blockchain is and how it works on a basic level, we can start to consider some useful applications in the library and information services arena, including:

  • Easier sharing of digital assets between libraries and/or consortia
  • Improved Digital Rights Management
  • OCLC enhancements
  • Digital “chains of custody” to safeguard against data censorship
  • Greater civic engagement

In Part Two we’ll discuss these (and other) use cases in detail and examine their impact on library and information services. Stay tuned.


Shawn DemerjianShawn Demerjian is an aspiring futurist, full-time student, and New England transplant now living in the Midwest. He spent the last decade-plus working in sales and client management roles in the market data, syndicated research, finance and technology sectors. Shawn has always been fascinated about the future, exploring the implications of technology in our society and what that potential may hold for us. You can follow him on Twitter @Future_Shawn as well as his blog, Ponder Tomorrow.


Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.