Bitcoin, Ethereum and other cryptocurrencies have entered the main discourse, but they have also been joined by a widespread but little-known concept: "the blockchain" or simply "blockchain". The idea of a blockchain, cryptographically the improved digital ledger that supports Bitcoin and most cryptocurrencies, is now used to describe everything from a system for inter-bank transactions to a new supply chain database for Walmart. The term has become so widespread that it is rapidly losing meaning.
"What is a blockchain?" The word is a buzzword that is increasingly ill-defined, "David Gerard, author of Attack on the 50-foot block chain, said in an email: Bitcoin, Blockchain, Ethereum and Smart Contracts.
There are innumerable blockchain explanations in text, audio and video on the web. Almost everyone is wrong because they start from a false premise. There is no universal definition of blockchain, and there is a wide disagreement about what qualities are essential to call something a chain of blocks.
There is no universal definition of a chain of blocks
The Bitcoin system is considered the first chain of blocks: the epiphany that launched the blockchain industry that, according to supporters, will revolutionize money, government and more.
Bitcoin was designed to be public and allow everyone to join, and its blockchain was born out of the need to keep people honest in the absence of a central authority. The design sacrificed efficiency to ensure that the theft was not profitable because rewriting the ledger would require so much computational power that it would be more expensive than any upside potential. To achieve this effect, the Bitcoin blockchain consists of a digital ledger that records all transactions from the beginning to the present. The ledger copies are not stored in a central location; instead, they are maintained by superusers called "nodes". Some of these nodes, called "miners", carry out transactions in batches and add them to the general ledger in "blocks", linking each block cryptographically to all the previous blocks. Miraculously, this system, combined with the core management of the Bitcoin development team, has worked for almost 10 years.
Bitcoin, which debuted in nature in 2009, "is the first implementation of blockchain technology," according to IBM. And yet, many of the technology designs labeled "blockchain" today have little or no resemblance to the Bitcoin blockchain.
Google's definition of "blockchain" is "a digital ledger in which transactions made in bitcoin or other cryptocurrency are recorded chronologically and publicly". Although most people would agree that a blockchain is a digital ledger, many blockchains do not have an associated cryptocurrency and are not publicly registered. Some would even argue that a chain of blocks does not need to be digital.
Investopedia says: "A chain of blocks is a digitized and decentralized public book of all cryptocurrency transactions." Again, many block chains are not public, and many others are not decentralized.
The IBM definition says: "Blockchain technology is used in a network of point-to-point parties, which all participate in a particular transaction." Except that at least for a well-publicized blockchain, the one created by the World Food Program, there is only one participating party: itself. IBM continues: "Because the ledger is distributed, everyone involved can see the & # 39; world state & # 39; at any time and can control the progress of the transaction." The MasterCard block chain, however, is not visible to anyone (and seems to have no function outside of marketing since Mastercard admits that the payments are still running through their existing system).
Some would even argue that a chain of blocks does not need to be digital
The highly commercialized efforts in Estonia provide a good example of how the term "blockchain" has been stretched and diluted. "Since 2007, Estonia has been operating a universal national digital identity scheme using blockchain," the Harvard Business Review wrote last year. The New Yorker wrote in December 2017 that "the backbone of Estonian digital security is a blockchain technology".
The Estonian system actually predates the Bitcoin blockchain, and there is some disagreement about whether it should be called a blockchain technology.
David Birch, a consultant at Fintech and author of Before Babylon, Beyond Bitcoin, was at a blockchain event with the CIO of Estonia, Siim Sikkut, who seemed to confirm that the Estonian system is not a chain of blocks.
"I asked him where this myth of the 'Estonian chain identification' came from, because I find it absolutely disconcerting that this urban legend has obtained such traction," Birch wrote. "He said it could have something to do with people misinterpreting the use of hashes to protect the integrity of the data in the Estonian system."
Estonia's technology provider, Guardtime, renamed its "time-bound hash" offer to a "blockchain technology". That is not necessarily false since "blockchain" does not have an agreed definition, and for now, it is a good marketing tactic.
"I asked him where this myth of the 'Identification of the Estonian chain' came from, as I find it absolutely disconcerting that this urban legend has obtained such traction."
"We have been working on the issue for a long time, long before we thought about Bitcoin," said Mike Gault, CEO of Guardtime, in an email. "There is no new cryptography in Bitcoin: the genius behind it was taking different cryptographic building blocks and building a cryptocurrency protocol that encourages people to use it."
Blockchain is "an annexation-only data structure that contains data records that are cryptographically linked," he said. "Data records are added to the data structure when multiple distributed parties reach a consensus based on previously agreed rules."
An important part of the new blockchain proposals, such as those proposed for the financial industry, are the so-called "private" blockchains. Critics say that these projects are old technology disguised as something new.
"Private blockchain" is just a confusing name for a shared database, "wrote Arvind Narayanan, assistant professor of computer science at Princeton, who teaches a popular blockchain class in Coursera.
Narayanan argues that the key innovation behind the Bitcoin blockchain was the so-called work test consensus mechanism, which was intended to replace the need for a central authority with rules and incentives that would keep network members honest. . The work test is inefficient and is the reason why the Bitcoin network consumes so much energy, so it is not necessarily bad to leave it. But without a proof of work, is there really something new about the blockchains?
"Private blockchain" is just a confusing name for a shared database. "
Some would cite other cryptographic techniques such as the distinction between a chain of blocks and "a shared vanilla database," Narayanan wrote, but those techniques are nothing new. "Cryptography makes the system more difficult to manipulate and easier to audit," he wrote. "But these aspects of the blockchain were not Bitcoin's innovation!" In fact, Satoshi narrowed them slightly from the previous research cited in his white paper: Haber and Stornetta's research dates back to 1991!
Definitions in the law
This uncertainty has contributed to the general boiling of the industry by inflating the number of blockchain projects and exaggerating the capabilities of technology. It can also cause unpredictable problems in the future as states pass legislation related to block chains.
Angela Walch, an associate professor at the School of Law at St. Mary's University and a researcher at the Blockchain Technologies Center at University College London, wrote an article about terminology related to blockchain and law.
"A group of states is really in a hurry to pass some kind of legislation to show how apt they are for cryptography or technology," he said. "Many of them are putting blockchain technology definitions in these statutes, and from my perspective, they are very problematic definitions."
The definition that most concerns Walch is that developed by the state of Arizona. The Arizona Electronic Transactions Act was amended in 2017 to clarify that it covers transactions made in a chain of blocks. In doing so, the legislature wrote a definition: "Technology blockchain" means distributed ledger technology that uses a distributed, decentralized, shared and replicated ledger, which can be public or private, authorized or not, or managed by cryptoeconomics tokenized or tokenless.The data in the general ledger are protected with cryptography, are immutable and auditable and provide a truth without censorship. "
The fact that the data is in a chain of blocks does not mean that the data is accurate
In particular, Walch is concerned about the phrases "immutable" and "truth without censorship," which attribute absolutes to a technology that can best be described as "difficult to change" and "uncensored as long as people maintain the network, which can include miners, developers or dictators, they want it to be that way. " Gideon Greenspan, founder of Coin Sciences, wrote that the cost of rewriting the Bitcoin blockchain is within the reach of a motivated nation-state. There are many highly publicized instances of blockchains that were altered: Bitcoin bifurcated several times, even in 2010 when an error of "overflow of integers" in the software led to the creation of 92 billion bitcoins and the entire network had to roll back the ledger. Ethereum branched off after a massive hack in 2016. In addition, due to Europe's General Data Protection Regulation, which goes into effect in May and says that users should have control over their data, developers are now exploring ways to eliminate blockchains data.
The phrase "truth without censorship" also ignores the fact that the fact that the data is in a chain of blocks does not mean that the data is accurate. Inaccurate data, such as an error in a medical record, can still be validated in a chain of blocks.
"What is a court supposed to do later when the definition there does not look like technology, and what are the implications for that from a legal perspective?" Walch said. "Things can be very complicated."
To make matters worse, the Arizona definition is now used for proposed legislation in other states, including California. Blockchain designs have also been proposed by more than 200 governments for use in various applications, including voting, property registries and digital identity.
Towards a standard
Victoria Lemieux, associate professor of archive sciences and director of the blockchain research group at the University of British Columbia, leads the effort to develop a blockchain terminology standard for the International Standards Organization.
"In general, if the transactions come together in blocks, and they are blocks that are secured in the chain by cryptography, and are designed to be inviolable and produce immutable records, the system qualifies as a chain of blocks," he said. in an email "Having said that, in general terms, blockchain is often a term that covers a wide range of distributed ledgers, even if the transactions are not organized in blocks."
"Different epistemic communities have formed their own ideas about what the blockchain is."
His team has encountered some challenges, including the fact that "different epistemic communities have formed their own ideas about what Blockchain is, some with very strong political and social views around open source, exchange and autonomy" . These communities are not well integrated into the ISO process, he said, and many members feel that they are being overshadowed by large technology companies and other commercial interests.
Another challenge is the proliferation of legal definitions that "may mean that these jurisdictions are outdated and complicate legal processes or the application of technology," he said.
Lemieux is also familiar with misconceptions about the capabilities of blockchains. "The concept of reliability, at least from the perspective of archival science, goes far beyond what the blockchain can do, or even promises to do, in most cases," he said. This idea implies that the records are accurate, "which is not something typically in the scope of a number of blockchain solutions" and exaggerates its reliability, which is a "problem if it has poorly written intelligent contracts or new and untested consensus algorithms. " It also exaggerates claims of authenticity, which is based on the strength of any identity system paired with the blockchain. "Finally, immutability implies permanence, and there is no guarantee that ledger records created and maintained in a chain will last, even with many copies, due to technological obsolescence and the fact that incentives to keep the system going can disappear after a while, "she said.
Establishing a clear definition will help clarify some of these misunderstandings. "Developing a more accurate understanding of what blockchain technology is will help us address its shortcomings and improve it so that it can be better utilized in the transformative ways that its advocates imagine," he said. "It's hard to have a conversation about the progress of a technology or its use when we all say different things when we talk about it." Unfortunately, she estimates that the standard will take approximately 18 months to complete.