‘You keep using that word. I do not think it means what you think it means’
Bitcoin, Ethereum, and other cryptocurrencies have entered the mainstream discourse, but they’ve also bot joined by a concept that is widely circulated, but poorly understood: “the blockchain” or just “blockchain.” The idea of a blockchain, the cryptographically enhanced digital ledger that underpins Bitcoin and most cryptocurrencies, is now being used to describe everything from a system for inter-bank transactions to a fresh supply chain database for Walmart. The term has become so widespread that it’s quickly losing meaning.
“What is a ‘blockchain’? The word is a buzzword that is increasingly ill-defined,” David Gerard, author of Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum &, Clever Contracts, said te an email.
There are uncountable blockchain explainers te text, audio, and movie around the web. Almost all of them are wrong because they begin from a false premise. There is no universal definition of a blockchain, and there is widespread disagreement overheen which qualities are essential te order to call something a blockchain.
The Bitcoin system is considered the very first blockchain — the epiphany that launched the blockchain industry that proponents say will revolutionize money, government, and beyond.
Bitcoin wasgoed designed to be public and permit anyone to join, and its blockchain wasgoed born out of the need to keep people fair te the absence of a central authority. The vormgeving sacrificed efficiency te order to ensure that theft wouldn’t pay because rewriting the ledger would require so much computational power that it would be more costly than any potential upside. Te order to achieve this effect, the Bitcoin blockchain consists of a digital ledger that records all transactions from the beginning of time to the present. Copies of the ledger are not stored ter a central place, instead, they are kept by superusers called “nodes.” Some of thesis knots, called “miners,” batch transactions and add them to the ledger te “blocks,” cryptographically linking each block to all the previous blocks. Miraculously, this system, combined with stewardship from the core Bitcoin development team, has functioned for almost Ten years.
Bitcoin, which debuted te the wild te 2009, “is the very first implementation of blockchain technology,” according to IBM. And yet, many of the technology designs that are labeled “blockchain” today bear little to no resemblance to Bitcoin’s blockchain.
Google’s definition of “blockchain” is “a digital ledger te which transactions made ter bitcoin or another cryptocurrency are recorded chronologically and publicly.” While most people would agree that a blockchain is a digital ledger, many blockchains do not have an associated cryptocurrency and are not recorded publicly. Some would even argue that a blockchain needn’t be digital.
Investopedia says, “A blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions.” Again, many blockchains are not public, and many others are not decentralized.
IBM’s definition says, “Blockchain technology is used ter a peer-to-peer network of parties, who all participate te a given transaction.” Except that at least for one well-publicized blockchain, the one built by World Food Programme, there is only one participating party: itself. IBM goes on: “Because the ledger is distributed, everyone involved can see the ‘world state’ at any point te time and can monitor the progress of the transaction.” Mastercard’s blockchain, however, is not viewable by anybody (and seems to have no function outside of marketing since Mastercard admits that payments are still running through its existing system).
Very marketed efforts te Estonia provide a good example of how the term “blockchain” has bot opened up and diluted. “Since 2007 Estonia has bot operating a universal national digital identity scheme using blockchain,” the Harvard Business Review wrote last year. The Fresh Yorker wrote te December 2018 that “the backbone of Estonia’s digital security is a blockchain technology.”
Estonia’s system actually predates the Bitcoin blockchain, and there is some disagreement overheen whether it should be called a blockchain technology.
David Birch, a fintech consultant and author of Before Babylon, Beyond Bitcoin, found himself at a blockchain event with Estonia’s CIO, Siim Sikkut, who seemed to confirm that Estonia’s system is not a blockchain.
“I asked him where this ‘Estonian blockchain ID’ myth came from since I find it absolutely baffling that this urban legend has obtained such traction,” Birch wrote. “He said that it might be something to do with people misunderstanding the use of hashes to protect the integrity of gegevens ter the Estonian system.”
Estonia’s technology vendor, Guardtime, rebranded its suggesting from “hash-linked time-stamping” to a “blockchain technology.” That’s not necessarily untrue since “blockchain” has no agreed-upon definition — and for now, it’s a good marketing tactic.
“We have bot working on the topic long, long before Bitcoin wasgoed thought of,” Mike Gault, the CEO of Guardtime, said ter an email. “There is no fresh cryptography te Bitcoin — the genius behind it wasgoed taking different cryptographic building blocks and building a cryptocurrency protocol that incentivizes people to use it.”
Blockchain is “an append-only gegevens structure that contains gegevens records that are cryptographically linked together,” he said. “Data records are added to the gegevens structure when numerous distributed parties come to overeenstemming based on pre-agreed rules.”
A significant chunk of fresh blockchain proposals, like those proposed for the financial industry, are so-called “private” blockchains. Critics say thesis projects are old technology masquerading spil something fresh.
“‘Private blockchain’ is just a confusing name for a collective database,” wrote Arvind Narayanan, an assistant pc science professor at Princeton who co-teaches a popular blockchain class on Coursera.
Narayanan argues that the key innovation behind Bitcoin’s blockchain wasgoed the so-called proof-of-work overeenstemming mechanism, which wasgoed intended to substitute the need for a central authority with rules and incentives that would keep members of the network fair. Proof of work is inefficient and is the reason Bitcoin’s network consumes so much energy, so it’s not necessarily a bad thing to ditch it. But without proof of work, is there anything truly fresh about blockchains?
Some would cite other cryptographic technics spil being the distinction inbetween a blockchain and “a vanilla collective database,” Narayanan wrote, but those technologies are nothing fresh. “The crypto makes the system firmer to tamper with and lighter to audit,” he wrote. “But thesis aspects of the blockchain weren’t Bitcoin’s innovation! Te fact, Satoshi tweaked them only slightly from the earlier research that he cites te his white paper — research by Haber and Stornetta going all the way back to 1991!”
Definitions te the law
This uncertainty has contributed to the general bubbliness of the industry by inflating the number of “blockchain” projects and exaggerating the capabilities of the technology. It may also cause unpredictable problems te the future spil states pass blockchain-related legislation.
Angela Walch, an associate professor at St. Mary’s University Schoolgebouw of Law and research fellow at the Centre for Blockchain Technologies at University Collegium London, wrote a paper about blockchain-related terminology and the law.
“A bunch of states are truly ter a rush to pass some sort of legislation to demonstrate how crypto-friendly or tech-savvy they are,” she said. “Many of them are putting definitions of blockchain technology te thesis statutes, and from my perspective, they are very problematic definitions.”
The definition that concerns Walch the most is the one developed by the state of Arizona. Arizona’s Electronic Transactions Act wasgoed amended te 2018 to clarify that it covers transactions done on a blockchain. Ter doing so, the legislature wrote a definition: “‘Blockchain technology’ means distributed ledger technology that uses a distributed, decentralized, collective and replicated ledger, which may be public or private, permissioned or permissionless, or driven by tokenized crypto economics or tokenless. The gegevens on the ledger is protected with cryptography, is immutable and auditable and provides an uncensored truth.”
Ter particular, Walch is worried about the phrases “immutable” and “uncensored truth,” which ascribe absolutes to a technology that may be better described spil “hard to change” and “uncensored spil long spil the people maintaining the network, who may include miners, developers, or dictators, want it to be.” Gideon Greenspan, founder of Coin Sciences, wrote that the cost of rewriting the Bitcoin blockchain is well within reach for a motivated nation-state. There are many very publicized instances of blockchains being altered: Bitcoin wasgoed forked numerous times, including ter 2010 when an “integer overflow” error te the software led to the creation of 92 billion bitcoins and the entire network had to roll back the ledger. Ethereum wasgoed forked after a massive hack ter 2016. Furthermore, due to Europe’s General Gegevens Protection Regulation, which comes into effect te May and says users voorwaarde have control overheen their gegevens, developers are now exploring ways to delete gegevens from blockchains.
The phrase “uncensored truth” also disregards the fact that just because the gegevens is ter a blockchain doesn’t mean the gegevens is accurate. Inaccurate gegevens, such spil a mistake on a medical record, can still be validated te a blockchain.
“What is a court supposed to do zometeen when the definition there has no resemblance to the technology? And what are the implications for that from a legal perspective?” Walch said. “Things can get very messy.”
To make things worse, Arizona’s definition is now being used for proposed legislation te other states including California. Blockchain designs have also bot proposed by overheen 200 governments for use ter various applications including voting, property records, and digital identity.
Toward a standard
Victoria Lemieux, an associate professor of archival science and head of the blockchain research cluster at the University of British Columbia, is leading the effort to develop a blockchain terminology standard for the International Standards Organization.
“In general, if the transactions are gathered together ter blocks, and it is blocks that are secured on the chain using cryptography, and it is designed to be tamper-resistant and produce immutable records, the system qualifies spil a blockchain,” she said ter an email. “That said, ter general usage, blockchain is often a term that encompasses a broad range of distributed ledgers, even if transactions are not organized into blocks.”
Hier team has run into 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, sharing, and autonomy.” Thesis communities are not well-integrated into the ISO process, she said, and many members feel they are being overshadowed by large tech firms and other commercial interests.
Another challenge is the proliferation of legal definitions that “may mean that thesis jurisdictions are out of step, and complicate legal processes or application of the technology,” she said.
Lemieux is also well-acquainted with misconceptions about the capabilities of blockchains. “The concept of trustworthiness — at least from an archival science perspective — goes far beyond what the blockchain can do, or even promises to do, ter most cases,” she said. This idea implies that records are accurate, “which is not something typically ter scope of a good number of blockchain solutions” and exaggerates their reliability, which is an “issue if you have poorly written brainy contracts or novel and untested overeenstemming algorithms.” It also exaggerates claims of authenticity, which relies on the robustness of whatever identity system is paired with the blockchain. “Finally, immutability implies permanence, and there’s no ensure that ledger records created and kept on chain will last, even with lots of copies around, because of technological obsolescence and the fact that incentives to keep the system going may diegene off after a time,” she said.
Establishing a clear definition will help clear up some of thesis misunderstandings. “Developing a more precise understanding of what blockchain technology is will help us address its shortcomings and improve upon it so that it can better be used to ter the transformative ways that its proponents envision,” she said. “It’s difficult to have a conversation about advancing a technology or using it when wij all mean different things when wij speak about it.” Unluckily, she estimates the terminology standard will take approximately Legitimate months to be finalized.