The blockchain story (Part 2)

In response to the broad and active discussion on The blockchain story is bullshit, I clarify and expand on my thoughts here:

My focus is from a Computer Systems and Engineering perspective on the blockchain as a distributed database with trustless write access and its potential as a major component for new applications. Bitcoin, the application it was designed for, isn’t the focus here.

From a technical standpoint, the blockchain doesn’t open up any new ‘technical’ attributes. The blockchain does not enable any new sensors, nor does it enable an order of magnitude increase in bandwidth, storage, affordability, that doesn’t also apply to any other types of distributed stores of data. In fact, performance will be most likely be worse and at best cannot be better than existing trustful distributed datastores. In other words, any system built on a blockchain can be built on any other distributed datastore.

It does open up new ‘social’ attributes where trust is distributed away from existing central authorities, and there’s a line of argument that existing central authorities slow down innovation in regulated areas. We already see activity around finance and a new form of DNS. My point here is that trust is not magically removed from the story. Trust (in an economic sense) is simply transferred from an existing central authority to a new oligarchy of coredevs and early adopters.

Authority is a different sense, and in the cleanest arguments for blockchain’s potential, authority is transferred from humans to mathematics (any blockchain-based system transferring power to another set of humans is just not that interesting). My line here is that more important transactions tend to be ones that are disputed and thus regulated. Enforcing these decisions (especially in cases of real property and physical assets) therefore tend to be a function of the government. In one scenario if we follow this line to completion, I imagine a computer authority with drones and robots enforcing all contracts. This is perhaps a more trusted government because the blockchain-based datastores will be ground truth and there will be no need for human intervention (and corruption). I don’t have any qualms against such a future. In this case, authority and trust is transferred from existing governments to properly carry out the will of the people (which a lot of people at any given time don’t think is happening), to authority and trust that every component of this humanless contract enforcement apparatus being properly implemented (which is problematic as bugs tend to increase exponentially with complexity of the system — Heartbleed is fresh on my mind). But in the immediate and foreseeable timeframe, it’s unclear how this new authority will play with existing authority, and that’s really out of scope for this particular commentary.

The blockchain is indeed an elegant piece of software with some cool properties! But there’s a lot of story and spin around it, and here’s my reality check.

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The blockchain story is bullshit

There are a lot of smart people who assert that blockchain technology will be a protocol revolutionary on the scale of the initial Internet technologies. While the blockchain is indeed a clever solution to the Byzantine Generals Problem... Continue →