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News: Blockchain is an elegant concept whose properties and potential require careful research, but treating it as a solution for all problems without thinking things through is techno-determinism.
| Techno-determinism: It states that media technology shapes how individuals in a society think, feel, act, and how our society operates as we move from one technological age to another. |
What is a Blockchain, and why there’s a lot of hype around it?
A blockchain is a sequential append-only public bulletin board of transaction records with two main functional properties.
First, what can get added to the Blockchain is reconciled by multiple participating peers following a pre-decided consensus protocol. This process cannot be gamed under the assumption that a majority of the unrestricted number of peers are honest.
Second, the bulletin board is immutable; once a record is added, it is cryptographically ensured that it cannot be altered. Each participating peer normally has their own copy of the entire bulletin board, with identical content, and they can read and further copy at will.
| Permissioned blockchain network: Businesses who set up a private blockchain will generally set up a permissioned blockchain network. It is important to note that public blockchain networks can also be permissioned. This places restrictions on who is allowed to participate in the network and in what transactions. |
What are some concerns and issues related to Blockchain?
Following are some examples where Blockchain’s advantages have been hyped up and not been adequately researched.
On privacy: Despite many claims to the contrary, the blockchain structure has nothing to do with the highly-nuanced notion of privacy, or even the limited secrecy aspect of it. To ensure secrecy, traditional and well-established notions from cryptography — like encryption, key management and zero-knowledge proofs, are used. These techniques are not limited to blockchain.
On consensus: Consensus is inapplicable when there is only one authority responsible for the integrity of the transactions – For example, the Election Commission of India (ECI) when a vote is cast in the privacy of a polling booth or a person is added or removed from a voters’ list.
| Consensus: It’s an automated process to ensure that there exists only one single valid copy of the record shared by all the nodes. |
On Immutability of Blockchain: Immutability can simply be achieved by the concerned authority periodically publishing the bulletin board in a publicly downloadable forum, and using hash chains verifiable by all to make alterations impossible.
On Cryptocurrencies: Cryptocurrencies do make valid use cases for blockchains, though the political decentralisation of the participants involved is questionable. The larger macroeconomic implications of cryptocurrencies are not well understood. Apart from the crucial price stabilisation issues, their potential to further inequality is also considerable.
Other issues: There are proposals for using Blockchains for land records, asset registers, etc. Most such proposals suffer from issues similar to the voting. Indeed, a 2018 study found hardly any successful use cases.
The role of blockchain in RBI’s digital currency proposal is similarly doubtful.
Thus, the hype around the concept of Blockchain and its adoption in diverse fields seems to be faith-based, driven by unsubstantiated vendor and consultant claims
What is the way forward?
Convincing methods independent of “consensus” need to be developed to ensure the correctness and verifiability of transactions while protecting user privacy
Source: This post is based on the article “Beyond the hype of blockchain, a look at its reality” published in The Indian Express on 19th Feb 22.
