In just a few years the whole world will be running on Blockchain. Or so it would seem having attended Blockercon, the Bristol conference drawing Blockchain enthusiasts and start-ups from all over. OK, some of the material was a little over my head (Artificial Intelligence Decentralised Autonomous Organisations, for example?), but that aside here are my 5 key takeaways:
Technical limitations – the Blockchain “trilemma”
Blockchain strives to balance the three following principles:
Unfortunately, these three principles are somewhat at odds with each other – if one wishes to put an emphasis on decentralisation and security for example, scalability will invariably suffer. In fact, scalability is seen as one of the major issues facing Blockchain at this moment. Bitcoin is known for solving the decentralisation problem well, however transaction time in recent years has averaged between 10-60 minutes which is generally deemed unacceptable for a currency platform.
Never store personal information on the Blockchain!
Rachel Black from Yoti (the identity provider app) spoke about the different paradigms that have been used over the years for managing identity and authentication. Blockchain offers the possibility of truly “decentralising” user authentication, as opposed to registering with every service we use, or depending on federated SSO services from “trusted” organisations such as Facebook (erm...). When this happens, however, Rachel reminds us that Blockchain should only be utilised to store unique identifiers that can be used to look up private data stored off-chain. Why? Because Blockchains are public and immutable – a GDPR no-no.
Will Blockchain be undermined by quantum computing?
The theory behind quantum supercomputers has been around for years. Although the technology itself is still in its infancy, large amounts of money are being ploughed into research and experimentation which suggests that they may be around someday. Why does this matter? The answer is that quantum computers would be so powerful that they could break the cryptographic ciphers that underpin Blockchain. If this happens, then all technology built on top of Blockchain would collapse. Of course, quantum computers are just theory for now…
Smart Contracts are neither smart nor legal
Smart Contracts leverage Blockchain technology to facilitate an agreement between two or more parties without the need for a middleman (e.g. a stockbroker). In actuality, Smart Contracts are simply pieces of code that are guaranteed to be running on multiple computers, and therefore deemed to be authentic. The code however could have been written by anyone (Smart…?), and has no legal foundation (Contract…?).
The environmental impacts of Bitcoin
Although it may not seem obvious at first, crypto currencies such as Bitcoin are posing a threat on the environment. Why? Bitcoin mining is the process by which computational power is used to solve mathematical problems thereby generating more Bitcoins. The more Bitcoins that are mined, the more complex the problem becomes, and therefore the more computational power is needed. At this point in time, computers around the world generating Bitcoins are consuming a significant amount of power. In fact, according to Digiconomist, if Bitcoin’s network were a country, it would rank 60th in terms of global energy consumption (on par with the nation of Bulgaria!). This is clearly not a sustainable situation and experts are trying to find a solution going forwards (watch this space).
Blockchain is currently a very exciting space and the possibilities are seemingly limitless. However, it is not without its shortcomings, and I wonder whether progress will be stunted by the current lack of expertise in the field, or the stigma associated with certain services using the technology (eg Bitcoin – widely favoured by criminal activity?). Either way, Blockercon is a great event to hear about the latest developments in the field, and question some of the tech behind it
Back in February, our Technology Director also shared his thoughts on Blockchain and how charities could benefit from it. Read it here.