Even Forbes Get It Wrong. Blockchain: Demystified – Adam Bennet
The word “blockchain” is regularly used out of context. Blockchain technology in its truest form can be a boring topic unless you are a computer scientist. Fundamentally, blockchain technology is a digital tool that computer scientists or IT guys can use to synchronise digital information stored on servers (i.e. databases) residing in different parts of the world. For this reason, blockchain is a specific type of distributed computing, called distributed databasing.
For completeness, the “block” part of blockchain technology refers to the way data is stored on the database, namely, as a data block with a specific size and structure. The “chain” part refers to the fact that any new data block added to the database must reference the old data blocks.
A common misconception is that “a blockchain is a distributed ledger”. They are not the same thing. The term distributed ledger describes a specific use case of blockchain technology. A digital ledger refers to a scenario where financial information is stored on a digital accounting record in a database.
In this use case, blockchain technology can be used as a digital tool to replicate and synchronise copies of a single accounting record, shared amongst different servers, in different parts of the world, in a fault-tolerant way. This specific use case is an application of blockchain technology, which results in a distributed ledger, and is colloquially referred to as cryptocurrency.
Even Forbes get this subtle difference between blockchain technology and distributed ledgers wrong, erroneously claiming that “at its core, blockchain is accounting software [1].” This claim only adds fuel to the misconception machine. To be more precise, Forbes should say that “blockchain technology is used to synchronise a distributed ledger. A distributed ledger is accounting software.” Forbes have fallen into a common trap and confused the network architecture itself with an application of the network architecture. It is like confusing the internet itself with social media.
At heart, blockchain technology on its own has nothing to do with cryptocurrency or accounting. In fact, blockchain technology has far more in common with cryptography than it does with currency. Cryptography is a mathematical tool that EVERY blockchain uses to help synchronise digital data stored on databases across multiple servers . Only some blockchain use cases support digital currencies, but all of them require cryptography.
Another common misconception is that blockchain wastes a lot of energy. Blockchain at heart is not energy intensive. It’s just that the cryptocurrency Bitcoin, which popularised blockchain technology, uses cryptographic tools which require some computation in order to synchronise the Bitcoin ledger across different parts of the world. Because of Bitcoin’s choice of cryptographic tools, the synchronisation protocol becomes energy intensive when there are lots of fast computers connected to the network. Fundamentally the Bitcoin blockchain is fine for small scale use, but the tools behind the scenes don’t scale well to large networks.
There are other cryptographic tools which can synchronise databases without requiring energy expenditure from computation (e.g. protocols based upon Byzantine fault tolerance and its variations). However, these alternative tools don’t scale well either, but for a different reason. Namely, they require a lot of communication data to be sent, or they result in centralisation of trust. One of the challenges for blockchain researchers is to refine the cryptographic tools used for synchronising databases so that the demands upon computational and network resources remain small, whilst still retaining the desirable properties of openness and decentralisation.
The applications for blockchain technology appear to be numerous, and includes digital asset ownership, digital content distribution (e.g. email, photos, artwork, journalism), data blocking (e.g preventing machine reading of content), privacy networks, intellectual property assignment and permissions, data auditing, conditional (“smart”) contracts, and zero-trust decentralised architectures. Each of these applications will draw upon different sets of digital tools, and it is the role of R&D departments, legislators, and innovators in industry and academia to develop and refine the correct tools and architectures applicable to each use case.
With careful planning and foresight, proper blockchain design can mitigate and address problems associated with energy waste, scalability, and security. Of these three, the area of blockchain research which appears to receive the least attention at present is security [2]. Unfortunately, security breaches against almost every modern blockchain will become increasingly likely in a world where capable quantum computers exist. The reason for the vulnerability is because the majority of cryptography used to secure blockchain technology (and the internet in general) is easily circumvented with a capable quantum computer. The challenges and solutions for blockchain security is an interesting topic, which I will cover in another post.
[1] “What is Blockchain? | Forbes” YouTube. Accessed 20th Dec 2019. https://www.youtube.com/watch?v=nZPfu21yWhQ
[2] Fedorov, A. K., Kiktenko, E. O., and Lvovsky, A. I. “Quantum Computers Put Blockchain Security at Risk”. Nature, 563 (2018). https://doi.org/10.1038/d41586-018-07449-z
Published at Sun, 22 Dec 2019 18:50:51 +0000
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