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Blockchain: The Most Over-Hyped Technology
I went looking recently for success stories in the blockchain space. I was looking for real projects, actual implemented applications that use the unique qualities of blockchain architecture — distributed, open, anonymous, secure, redundant — to achieve some real-world task.
What I found was what I’ve found every time I’ve done this: lots of breathless articles with misleading titles and no substance, full of links to “real world success stories” that turn out to be puff pieces about the future of blockchain with no references to existing systems or real-world implementations.
As I’ve written elsewhere, I think blockchain is a niche technology that can rarely compete with more traditional information technology solutions. It’s an architecture that solves a specific collection of problems that is relatively rare, and solves it in an expensive and complicated way. It may find a successful niche outside of the narrow domain of cryptocurrency speculation, but I will be very surprised if it makes significant inroads in conventional IT domains.
In fact, I think it will be off the radar in three years.
Published in Technology
Blockchain is to the future as the CFL is to lighting. Except the CFL was at least somewhat useful.
Blockchain is useless, but the hype will stick around until AI hype replaces it.
Right. At least the CFL had Doug Flutie.
Back to Henry’s point: yeah, you are probably right in ways that the hyperventilators haven’t figure out yet. A trustless distributed ledger would presumably not have much application beyond things like, well, trustless distributed ledgers. And you’re wrong in some ways that no one has figured out yet, let alone started rolling out.
One angle I’m surprised I’ve heard nothing about:
Lots of ideas that provide some extreme quality at extreme costs, when used in pure form are incorporated into old ideas to achieve some sort of optimal design point.
If you wanted 60 of trustlessness/distributedness and 40 of cheapness, I wonder if there isn’t such a way of using blockchain.
I don’t trust the banking system 100. But I don’t trust it 0, either.
Likewise, I wouldn’t want to use 40% of the annual supply of electricity to get 100% of the advantages of blockchain money and banking.
But we might be able to get a delightful marginally increased level of technologically enforced prevention of central and commercial banking crime with a reasonably-priced hybrid of traditional and crypto- money and banking.
I haven’t thought it out. If you want to start down this path, start with this: I really really trust my local small-town bank. It’s reliability comes entirely from its localness. Your local banker never cheats you on Wednesday at least, because you’ll see him at choir practice that evening. The farther the banker from me, the less constrained he is to behave honestly. By the time we reach the Fed Chairman, well, it won’t help you to watch your wallet. He or she’s already got it and is rifling through it.
But even with gold in vaults, rather than kilobytes of dollars in the Fed Building, banking is worse, the more local banks are. We had a century of American bank panics and related depressions because well-meaning US politicians and bureaucrats forced banking to be too local. I don’t want to fly back home to get cash when I’m at a bistro in Paris.
So maybe there could be local, trustworthy banks, with vaults full of crypto passwords or password fragments with fragmentary purchasing power, or gold.
I ran into an acquaintance at the watering hole. Active kind of guy, but superficial, played war things a lot on the tablet and wore team attire, opinionated, and pretty decent overall drunk or sober. I’d recently sloughed off a shifty sounding software engagement somebody tried to sucker me into (Russian collusion!); he was in that circle.
He asks me what I think about blockchain, intently reading email. I say, after a relaxed pause and belch, that I think it’s a technology for managers only, not ready for engineers. Or something I thought was dismissive and funny. Give me a break, I was distracted.
Man, you’d have thought I’d … I don’t know, something vulgar. Dude went off for 5 minutes, insulted my intelligence, lineage, and drinking habits. Ok, it was more like 30 seconds. I suppose my posture might have shifted, but I kept it cool.
Blockchain. I first encountered crypto hash functions in the context of a graph of public records in the early ’80’s and that application wasn’t anything groundbreaking. Fads drive the industry way more than is healthy.
But it’s such an impressive name; it just has to be cutting-edge and revolutionary!
The digital signing with hash functions isn’t new, for sure. I don’t know that any of the other bits, like proof of work, the recursive chaining, and varying difficulty with nonces are really novel. I don’t remember all of the pieces because it’s been a long time since I studied it.
What impressed me at the time was how he (they, she, it) wired it all together to do something that at first sounded impossible, and then turned out to be…actually, turned out to be impossible, but it works anyway if you can trust all the good people in the world to way outnumber the largest manageable syndicate of bad people in the world.
It’s given rise to the great irony of banks having to print passwords on paper and store them in the bank because….they can’t trust the Internet!!! Digital money led the way to the most advanced form of money: physical currency! They could use silver coins to print the keys on and we really would have come full circle. I think that may have led me to the idea that, if you need local banks and physical currency ANYWAY, why not just go with it, and solve the problem of wasted electrical energy?
The other hybridizations we could do? Instead of one crypto-money and fiduciary media based on it (right back to fractional reserve!) (which the libertarians don’t realize that free markets would force Bitcoin to, once again) or just gold (and claims on it) maybe there could be a hybrid of monetary base. Throw in some central bank fiat money to make the glory-hungry politicians happy. Lots of other possibilities, and it’s not even happy hour yet.
Kinda like fetal stem cells and wind power. All hype, little or naught to show for it.
I remember when “fuzzy logic” was the Next Big Thing.
From your typing fingers to my company’s CEO’s ear. Some client asked him about blockchain at the last client conference and he went bananas, mandating that everyone in the company had to go through 10 hours of training (mostly watching stupid YouTube videos) on that, data mining, machine learning, yada yada yada.
Our company makes supply chain software. You think our clients are going to be happy if we start mining their data and providing the results to their competitors?
The git source-code control system is a successful blockchain application. It doesn’t rely on a huge cloud of hash computations for affirmation, just simple (relatively) asymmetric crypto signatures from trusted individuals. It is extremely popular in the software world, especially public, open-source projects.
The key to blockchain algorithms of all types, including cryptocurrencies, is that all relevant information is both public to its users and immutable. Applications that can actually tolerate such unalterable publicity are rare indeed. Which is why the hype has not panned out.
Blockchain, the only Blockchain I’m familiar with is far from the quantum world. I believe in hardware delivery.
A few A-10’s might have sped up the delivery of food and medical aid to Venezuelans on the Columbian border. The A-10 is ideal for this; “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way” – When it absolutely, positively, has to be destroyed overnight.
Um, what is blockchain?
Good, readable explanations are hard to find, and hard to relate to things we actually care about and with which we’re familiar. I’ll put something together in the next couple of days that captures the essence of it in a not-too-technical way. I’ll be back.
Doug,
Can I buy stock?
Regards,
Jim
As I get it and I could be way wrong blockchain is a method of transferring data that is more secure that the present internet. It also appears to be involved in some secure networks like Bitcoin, which benefit from transfers that can’t be intercepted by someone else. I don’t have the technological sophistication to say how significant that is, but to me it appears that the Average Joe is not going to be all that affected. But since things like wire transfers, bank accounts and other data transfers over the internet are being hacked at an alarming rate, entities like Banks, Tech companies, the government etc that need secure and verifiable transfers could really benefit from something like blockchain.
Basically, it’s software that creates a distributed ledger of transactions–typically these are monetary, but the linked example below demonstrates a blockchain application in a food supply chain. Because the blockchain is distributed–many copies exist simultaneously and there is a set protocol for updating/preserving the data integrity of the data. The “hype” factor is that this promotes trust, such that one could potentially substitute a blockchain for trust intermediaries (think of food inspectors, title companies, any situation where the authenticity of something has to be verified).
As many have stated on this thread, there are not a lot of blockchain examples. Bitcoin is the most famous open source example. Several software companies are jumping on the bandwagon to implement bitcoin technologies for their customers. It remains to be seen whether they will be successful–the underlying technologies are pretty straightforward, but the implementation for commercial applications have been pretty expensive thus far. It will be interesting to see whether the trust factor will drive more adoption by supply chains or other applications in the future.
This came across my feed a couple of days ago and might be a useful illustration.
Which, when you read about the Ethereum Hack, is provably false. (TL;DR The Ethereum Hack was when bad guys outnumbered good guys 51:49 and got enough public registers to record things the way they wanted it to be recorded, thereby stealing $1M worth of the crypto currency).
A “block” is a register of a transaction (or group of transactions) that has been verified by an independent entity and is added to other blocks to form the “blockchain”. The block consists of the transaction(s), identity of the transaction (the “hash” and the “nonce”), as well as a “proof of work”.
“Proof of work” is the result of a complex math problem that completes the block and the first entity to produce the result of the transaction is given credit for having done so. Their result, once accepted, is THE result recorded and added to the existing chain and promulgated to all the other independent entities within the same ecosystem.
Simply put, using a money example.
In Bitcoin parlance the “independent entity” is another name for bitcoin miner. They get paid via either a portion of the crypto currency that is “created” in the solving of the math problem or via a slice of the transaction (if all the currency has been mined.)
You were right on up till this. Simple digital signatures can be used for authenticity checking. Blockchain itself requires checking authenticity, and so it depends on digital signatures. But it adds a huge amount of baggage beyond that, in order to meet other requirements.
My brain processed that as “wind-powered fetal stem cells” for some reason.
@henryracette, when you do that, could you throw in something on the distinction between “distributed” and “disseminated”? Marketing types are prone to cultural appropriation of engineering terms.
I guess I shouldn’t be surprised that the “51% hack” that was satirized on Silicon Valley was based on a real thing.
My first thought also. Took forever to come up with the #$%^&* replacement for good old light bulbs
George Gilder seems to think it’s the future, for what that’s worth. He lays out a pretty convincing case in Life After Google.
I was eager to read Gilder’s book, and ordered it as soon as it came out. I was disappointed. I thought it was too, let’s call it “metaphysical,” and too vague. I don’t think his predictions of Google’s demise made sense, and I think he failed to defend blockchain from its obvious weaknesses.
I’ve read a lot of Gilder and enjoyed most of it, but I think this was a dud.