DISCLAIMER: I’m new to the bitcoin and blockchain game. I’m not an economist, nor an expert on game theory. I’m not a cryptographer, mathematician, or world-class developer. I’m mostly trying to wrap my head around what I believe to be one of the greatest inventions since the modern internet – and I would love your help.
From what I understand, bitcoin is beautiful for three reasons:
- Consensus mechanism
- Cryptographically-secured distributed ledger
This last one, “self-containment”, is one that people often underrate when discussing bitcoin and blockchain technology. Bitcoin only records one thing: transactions of its native cryptocurrency, bitcoin. Bitcoin is immutable and the perfect record of “truth” because said truth is inherent in the network. Therefore, the question of “truth” is moot. There are no real inputs to the system except for those inputs which the system itself produces. The correct recording of transactions established via consensus becomes the only criterion of truth on the bitcoin blockchain, and thus becomes almost mathematical in nature.
Let’s examine the opposite extreme to elucidate; if I wanted to put the entire history of the United States government onto a blockchain to preserve that history ad infinitum (hopefully), how can I be sure that:
- The version of history which I would like to append to the blockchain is the most “truthful” and “historically accurate”
- That I do not make any errors while appending data to the blockchain
I only bring up the first point because people like to – mistakenly – refer to bitcoin and blockchain technology as the “arbiter of truth”. It’s not. It’s an arbiter of a truth, but it will never be the arbiter of the only truth unless that truth is a mathematical and self-contained function of the protocol itself, because the protocol says so. Again, this is what makes bitcoin beautiful. If you want to play the game, you play by the rules, and the rules are baked into the protocol. Otherwise, determining the one “truth” is a metaphysical problem that – unfortunately – bitcoin’s clever code doesn’t solve for.
Bringing this back to use-case-level issues, the question of “truth” in any enterprise’s data is equally tricky, because there are so many ways to think about a given piece of data, especially in context. So, even if a data point is true, it might be “truer” if recorded in the context of another data point, and another, until eventually you’re not really sure where the truth ends and/or begins. And that doesn’t even address the potential mistakes (the second point, above) that will be inputted due to “wet” human error and/or a lack of quality coffee.
Thus, the potential pitfalls for a single organization to “go blockchain” are many. In fact, a blockchain within a single organization – unless that organization is a large corporation with many divisions all seeking to reconcile disparate data – seems somewhat redundant and misinformed. Similarly, permissioned blockchains will face network disagreements over the recording of data due to centralized databases that individual nodes will no doubt continue to maintain and check against the blockchain for purposes of accuracy and security. No wonder Accenture wants to edit the uneditable, and build well-secured distributed ledgers where governing nodes can edit previous blocks without causing hard or soft forks. But that’s not a blockchain.
More interesting and apropos are the consortia, industry groups, and API/OS developers working with blockchain technology to – for all intents and purposes – develop P2P protocols, networks, and infrastructure. Bitcoin works because it’s self contained. So too, blockchain will allow businesses to smoothly operate bits and pieces of their business via large industry-grade P2P networks that connect to other industries, across borders and firewalls. Anything that brings permissioned blockchains closer to “zero input” and “self-containment” will strengthen and broaden the network.