Is blockchain everything it is supposed to be? There has been a great deal of discussion, seen at this blogsite as well, about blockchain's potential as an ultra-distributed and ultra-secure mega global database for transactions large and small. Some visionaries, including Don Tapscott, Alex Tapscott, and our own Dion Hinchcliffe, see blockchain as revolutionary as the Internet itself, wiping away middlemen and brokers, delivering unfettered but highly trusted storage of and access to transactions.
However, not everyone sees it on such dramatic terms. Blockchain may meld into the infrastructure, restrained by legal and compliance frameworks, or it even may simply become too unmanageable, and thus marginalized. Stefan Thomas, one of the moving forces behind Bitcoin, is having second thoughts on the technology that underpins the cryptocurrency. In a recent piece posted on Medium, he stated that "as a blockchain grows, the larger and highly vested user base becomes more and more difficult to shepard."
Thomas' doubts have grown since watching the progress of Ethereum, the blockchain-based smart contract and cryptocurrency platform open for all to use. Achieving "shared state" across a massive developer and user base is proving problematic, he opines. "In any protocol, everyone has to act the same. But in a blockchain like Ethereum, everyone has to think the same. Everyone's memory (also known as 'state' in computer science terms) has to be exactly the same and evolve according to the same rules.Shared state adds tremendous complexity and that has a big impact on developers: Blockchains are a pain to work with. Everyone who has done it knows what I'm talking about."
The reason the Internet and World Wide Web have been so successful is due to its stateless architecture, Thomas explains. The emphasis should be on a "minimal protocol and simple data format. Instead of blindly replacing centralized functions with blockchains, we should be thinking about ways to avoid having those functions be centralized to begin with. We need to build stateless protocols like the Web that can be incrementally improved upon in different corners of the system."
He adds this perspective: "The fact that blockchain has been largely ignored by major tech companies and embraced by the financial industry is partly because that industry has a relatively high tolerance for arcane and complex systems."
Damning words indeed. Tech vendors have been embracing blockchain, including IBM, which lately has been testing and piloting the approach in various capacities. Whether or not it will turn the computing world upside down remains to be seen, but it is likely to evolve as another important tool available to enterprises in their quest to build stable, secure and well-connected ecosystems.
Luther Martin, distinguished technologist at HPE Security, for one, says there is a historical parallel between blockchain and Public Key Infrastructure (PKI), created in the 1990s to provide trustworthy third-party trust to Internet-based transactions, had the same hopes and dreams associated with it.
Martin recently shared his views with me on why blockchain -- which he calls the "PKI of the 21st century" -- is likely to follow the path of PKI, which eventually blended into the infrastructure woodwork. (Full interview published here in RTInsights.) There are many similarities between PKI's promises in the late 1990s -- that it would be earth-shaking technology -- and what we're hearing about blockchain today, he says.
Blockchain's weakness at this point, Martin continues, is that it has yet to be tested in terms of regulatory and compliance requirements. Many legal and regulatory issues had to be straightened out with PKI as well in its early days. "We'll probably see a similar outcome to many of the investigations into blockchain technology. For example, many hospitals are unwilling to digitally sign some documents because the codes that HIPAA mandates may need to be manually corrected, and those corrections will break a digital signature. Similarly, recording real estate transactions in a public ledger like a blockchain isn't allowed in some countries because those transactions are considered private."
Still, after years of work sorting out the legal complications, PKI is ubiquitous, supporting "the secure connections to web servers that encrypt most of the world's e-commerce," Martin states. "It's now a vital part of how the internet operates. But it also didn't end up being as significant a technology as its supporters once thought that it would be."
(Disclosure: I am also a contributor to RTInsights, mentioned in this post.)