Blockchain is great at one thing: creating an incorruptible record of digital transactions. Pushed beyond these limited capabilities it will inevitably disappoint, says David Irvine, CEO of decentralised networking firm MaidSafe.
As frequently happens with any new technology the hype surrounding blockchain has become largely disconnected from reality. In blockchain's case though already inflated expectations have been pumped up even further by the meteoric rise in the value of bitcoin, meaning that everyone wants a piece of the action. We see blockchain and blockchain-based applications being shoehorned into ever more improbable projects and visions, many with their own money-making crypto tokens attached.
But blockchain was originally designed with just one goal in mind: to support an electronic medium of exchange as an alternative to fiat currencies issued by a banking system that failed so badly in 2008, something at which it has been remarkably successful.
"In my opinion the killer app of a blockchain is bitcoin," Irvine told V3.
"Blockchain is a terrific and paradigm-changing design for a public transaction ledger, and for an open digital currency that is a fantastic fit."
Step beyond its original purpose, however, and the fit is more of the square peg / round hole variety. Irvine describes many of the propositions being put forward as "pure marketing", especially those that advocate using blockchains as the basis for securing data.
That blockchains are an extremely robust way of maintaining an immutable record of transactions is beyond dispute. At the same time, though, they make for lousy databases, only suitable for storing very small files and with read/write performance that is glacially slow. This means that only pointers to data, rather than the data itself, can realistically be stored in a blockchain, which Irvine says is their security Achilles heel.
Blockchains are terrible as a mass storage containers, so data still needs to be stored somewhere else, and that somewhere else still needs to be secured
"Blockchains are terrible as a mass storage containers, so data still needs to be stored somewhere else." Irvine said. "And that ‘somewhere else' still needs to be secured."
So rather than actually protecting data, blockchains simply add an additional layer of complexity.
There are other obstacles with blockchains that need to be overcome before it can be seriously considered for commercial use. There are the well-documented scalability issues that have already led to forking of the bitcoin blockchain and a centralisation of decision-making authority. And securing the blockchain by ‘mining' requires a colossal amount of power - a single bitcoin transaction burns enough electricity to power an average US home for a day, many times more than used by a ‘standard' digital transaction.
"This design comes at a significant cost of wasted energy as it uses a proof-of-work algorithm," Irvine said. "That should not be the case in future iterations."
Current blockchain technology, then, should be seen very much as Version 1.0. Fortunately there is much work underway to rectify its shortcomings, and Irvine singles out the cryptocurrency Zcash as demonstrating promise with its ‘zk-snarks', a cryptographic technique for ensuring privacy and enabling decentralised peers to validate transactions without the wasteful proof-of-work.
MaidSafe itself has taken a different track to decentralised networking with its SAFE Network, eschewing blockchains entirely. Instead it's an autonomous data network that's designed to store and transfer real data, rather than pointers to data, from the off. Its architecture, Irvine claims, avoids many of the security, scalability, centralisation and performance problems faced by blockchains, making it more suitable for supporting a broad range of use cases including IoT and robotics.
"An autonomous data network removes all intermediaries and the flaws that negatively impact the management of data," he said.
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