The interest and investment in blockchain continues its exponential growth. It seems there's no end to the long-intransigent problems it will solve!
There are just a couple little issues. First and foremost is that the virtues of blockchain, such as they are, have little to do with the problems it is supposed to solve. Second is that other technologies are better than blockchain, often by a factor of 1,000 or more. Finally, the most-discussed blockchain virtues solve problems that don't happen to exist in the real world. Other than that, blockchain is great!
Why then all the interest in blockchain, you might reasonably ask? You might as well ask lemmings why they are following the lead lemmings as they run off a cliff -- it's what everyone is doing!
Let's dig into just one aspect of this widespread delusion.
What does everyone say blockchain is? Some combination of the following:
- A distributed, immutable ledger
- The foundation of Bitcoin, only without the currency
We all think we know that Bitcoin involves cryptography, somehow making it safe, and that it electronically transfers data and value between distant parties. It's kind of like email in that regard, only so solid and safe that it works for money as well as a bank. Since blockchain is the "foundation" of Bitcoin, let's get blockchain to solve the many problems that involve getting data between places, and getting information exchanged. Let's go!
The widespread picture is that Bitcoin is just an application built on top of blockchain, kind of like how Oracle Financials is just one of many applications that are built on top of the Oracle DBMS. The idea is that blockchain is a platform on which applications can be built, like an operating system, DBMS, etc. That's what everyone is pushing, but it's a bogus idea!
The reality is that what we call "blockchain" is an artificial slice of an amazing piece of software that was artfully designed to solve a VERY hard problem -- and each piece of it depends on the others in order to work properly. Once you take the currency away, the whole thing falls apart. "Blockchain" is part of a whole, just like legs are great transport mechanisms, but only work as an integral part of a whole body.
Here is a sailboat:
The sailboat is like Bitcoin. It's got a hull, rudder, masts and sails. It's moving. It's an amazing invention. All the parts are designed with the others in mind.
Here is the same boat at the dock:
The sailboat at the dock would be like blockchain if you removed the mast, the furled sail and all related ropes. There is no doubt that the sailboat is "built on" the hull.
But what a ridiculous thing! What good is a sailboat without its mast and sail? There's no motor. It isn't even set up to be rowed with oars!
The reason is simple: the hull of the sailboat wasn't designed in isolation. It was designed as an integral part of a sailboat. You know, one of those things with sails. And without those sails it's nearly useless!
That's blockchain. A sailboat without the part that makes it useful.
The currency is what drives the blockchain forward.
Let's start by reviewing the capabilities banks have for normal currency. Let's remember that banks do DDA's (the thing we draw checks on and deposit checks into) just fine.
While we often hear people complain about not having enough money, we never hear it's because the bank has somehow lost it -- that their ledger has been falsified, so that money we deposited and thought we had disappeared. Bank ledgers are already "immutable." It's just not a problem.
Paper checks can take a couple days to clear. But certified checks can be turned into cash immediately, and you can get cash from any ATM. You can also use a PIN debit card to instantly access or transfer money. Fast access to and transfer of money is widely available. That's not a problem.
Banks have their electronic ledgers in multiple places, so that nothing is lost when there's a computer failure. Money can be moved between accounts in a bank in seconds. Banks already have distributed ledgers, and every modern DBMS supports replication of various kinds.
So what about Bitcoin? Has it invented things that aren't needed or already exist? Bitcoin represents an amazing way of implementing the following:
- A virtual currency
- which no single entity controls
- which incents "miners" to do the hard work of assuring that transactions are consistent and secure by rewarding them with newly-issued Bitcoin
It is not an advantage that Bitcoin has a "distributed ledger" for much of anything: it's got a "distributed ledger" so that no one entity is in control of Bitcoin. That's it! The "mining" is an extremely clever mechanism to pay groups to keep the ledger, stored in thousands of copies in many locations, up to date and consistent. That's why there's a consensus mechanism in Bitcoin, so that new transactions go into the ledger only when most of the miners agree they should.
In a normal bank DBMS, money is moved from one account to another in a fraction of a second. The transfer conforms to the traditional ACID properties of a DBMS, which assure for example, that the money is taken from one account and added to the other -- either both transactions take place or neither takes place. Any widely-used DBMS can do this many thousands of times a second. In Bitcoin, it takes on average 10 minutes for a single transfer to take place, with total throughput a tiny fraction of any modern DBMS. This is the cost of having a "distributed ledger," which is required to meet the key design goal of Bitcoin of having no single entity controlling the currency.
If you take away the Bitcoin, you take away the reward mechanism, and all you're left with is an insecure ledger that performs worse than a database on 50 year old computers. Worse.
The fact that the ledger is "distributed" is supposed by blockchain advocates to solve the problem of resolving data in different places, like between stock trade systems and hospital EMR's. Ridiculous. Blockchain is distributed only to meet the requirement of having no one in control. Any modern DBMS supports replication, which can keep remote DBMS's in sync while performing thousands of transactions a second. This works today. Blockchain is not an advance in this regard. In the end, all parties to a transaction have to get their data to a single place, and then have a couple copies of that single place for fault tolerance. DBMS technology is optimized for this use case. Blockchain accomplishes the same thing ... eventually.
Each case in which blockchain supposedly solves long-standing problems can be proven false, which is why you always hear about the wonders of blockchain:
- using the future tense, or
- in a proof-of-concept, or
- in an application that could have been built faster, cheaper and with better performance using modern DBMS technology.
When will the blockchain insanity end? Here are my earlier thoughts on why blockchain is so hot. Here is my analysis on blockchain applied to the stock transfer problem. Here's the upside, how blockchain will in the end deliver great value (heh).
I realize I haven't covered all the issues here, but when you're confronted by an entire mental hospital's worth of insanity, covering a single floor's worth of problems feels like a lot.
So its a sailboat without sails? Fine. Use the "inherent" utility of the cryptocurrency in the blockchain. What's the problem? I havent heard of too many blockchain proposals that DON'T use cryptocurrency! In fact,its my understanding that the currency or token is an inherent part of the system of blockchain.Your argument is strange in that I dont hear too many folks stating a sailboat without a mast or sails if a great sailboat!
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Posted by: David Johnson | 11/04/2017 at 02:53 PM