The post explains some of the most basic things about Blockchain. For more detail and analysis, see this and the links therein. For a basic definition, see the one at the end of this post.
Blockchain
“Blockchain” refers to widely varying bodies of code ripped from the Bitcoin source code, always leaving out the currency, and usually varying other key aspects of the code. These subsets of the base code are typically described as an "Immutable distributed ledger" or some such. Blockchain implementations are often created to respond to some crucial defect of the base system for a particular application. Such implementations wander far from the features that Blockchain is supposed to have in the minds of most people.
Ledger
Blockchain is most often described as a distributed ledger. The fact that it’s a “ledger” refers to the fact that blockchain is an extremely primitive DBMS that lacks a query language. As a “ledger,” about all it can do is support data writing and reading. Not only does it lack a query language, but it’s effectively a key-value store. This means that you better know the key of the ledger entry you want to read or update; without this, you are totally without recourse. Some anguished early investors in Bitcoin discovered this when they saw that their original investments had grown into the equivalent of millions of dollars, but they couldn’t access the Bitcoin because they have lost their key. Many others have lost their investments due to other security disasters.
As a result of this glaring deficiency, a couple resourceful people I have met who are building blockchain applications use a relational DBMS such as Postgres side-by-side with the Blockchain, copying all the data put into the Blockchain into the DBMS, along with the additional information required to make it a practical system. Why keep the Blockchain? Simple: who would invest if the venture didn't incorporate the hot new solves-all-problems miracle technology?
Distributed
Many Blockchain applications depend on the fact that it’s a “distributed” ledger to justify using the technology. Unfortunately, as implemented for Bitcoin, the fact that the ledger is distributed is a painful but necessary consequence of the design goal of having no one in charge of the system. It's a necessary evil! The distribution is due to an unknown number of “miners” who enforce the simple but computationally intense rules of the system; there may be over tens of thousands of miners, maybe even more than 100,000, no one knows. In the Bitcoin implementation, distributing the ledger in this way leads directly to the ten minute time typically needed to complete a transaction, and an unsatisfactory implementation of standard database ACID properties and the problematic CAP theorem for distributed databases.
Many Blockchain implementations attempt to overcome these problems by using common-sense measures that effectively eliminate the key features of Bitcoin. The most typical compromise puts the Blockchain under the control of a single organization; that opens it to the same kind of insider hacking that has broadly affected large commercial and government organizations. See this, for example.
Many users seem to think that being “distributed” is an advantage that makes Blockchain applicable to solving long-intractable problems involving related data in different locations managed by different organizations and systems. The fact that Blockchain can be implemented as a distributed ledger is completely irrelevant to solving problems of this kind. Blockchain's implementation of data distribution is vastly less effective and efficient than proven methods, and its general deficiencies make it far less useful than standard DBMS’s in such applications.
Immutable
Blockchain gets sold based on the notion that it’s “immutable,” implying highly secure. In the context of Bitcoin, it’s true that the only way an outsider could come in and change the ledger would be to organize a conspiracy of the miners. However, even with the incredible security provided by an army of miners, people have still lost their investments in Bitcoin by a variety of prosaic means, such as corruption or dysfunction in the wallet or system that represents you for holding or buying/selling bitcoin. There have been a number of such incidents that have been publicized, and more that have not.
The second you move from Bitcoin to Blockchain, the level of immutability plummets to little more than rhetoric. This is because the main security in Bitcoin is provided by miners, who are incented to keep the system secure. Once the miners are gone or under the control of a central organization, the usual methods for subverting software come into play, only without the layers of security that have prevented central bank systems from being hacked, at least so far. The typical Blockchain implementation is less immutable than a properly managed RDBMS with an appropriately replicated and secured log.
Given the widespread computer security breaches that have taken place, and will continue to happen, it's comforting to imagine that having an "immutable" distributed ledger would solve the problem. However, what the Blockchain does is replace the database in a normal system. So the question is, is the pervasive lack of security in today's enterprise systems due to vulnerable databases, or some other reason? The answer is clear: the database is the MOST secure aspect of today's systems, and security in it is rarely breached, and in no case of a properly administered one of which I'm aware. The security breaches are always "top down," i.e., the hacker gets into the system as though he were a legitimate user by one of a wide variety of means, and sometimes is an authorized but crooked user. Then he sucks data out of the system. The DBMS has NOT been breached in this kind of attack, and Blockchain is equally vulnerable to such exploits. And that's not even getting into the ultimate attack, which is an insider modifying source code, which has been the source of some of the most inventive banking attacks. SInce the database is not the problem, Blockchain is not the solution.
Smart contract
A “smart contract” is a key feature of the Etherium cryptocurrency and several Blockchain implementations, and is the foundation of many of the proposed applications of Blockchain. A “smart contract” is the exact equivalent of a DBMS stored procedure. In other words, it’s a body of code buried inside the blockchain (DBMS) that goes beyond storing and retrieving, implementing any logic the creator chooses. Most “smart contracts” today are written in newly created software languages; for example, Solidity is the one used in Etherium. These languages and systems are relatively new, and have flaws that have already been exploited by hackers. Using the name “smart contract” is effective rhetoric, but that’s all it is. It’s an immature programming language running inside a seriously deficient database.
If the version of Blockchain is run like a typical DBMS, with master/slave – in other words, going against all the principles that are supposed to distinguish Blockchain – then a Smart Contract could work like a stored procedure, though crippled by lack of functionality in the DBMS. Worse, there are serious unaddressed issues maintaining the basic ACID properties that any normal person would expect – things like either the money is removed from account 1 AND added to account 2, an absolute guarantee that BOTH happen or NEITHER happens, even in the face of machine failure. If it’s run like a “distributed ledger,” then you’ve got even worse problems.
Computer History and Context
Blockchain is experiencing a huge uptick in interest, involvement and investment. Many people and organizations are convinced that it is the key to solving many long-standing problems in various industries. Generally, the fact that there are huge problems of long standing and no clear path to solving them is correct. The thought is that, with so many obviously smart and hard-working people involved with software, the solution must be elusive because of a fundamental technology barrier. The solution must hinge on the arrival of some transformative new technology that will change the game. Blockchain!
Sadly, the long-standing barriers have nothing to do with technical break-throughs, and everything to do with incentives and standard industry practices that inevitably yield such results. A study of computer history and the way things work in various industries -- something that is rarely done -- would make this clear. While it's a huge subject, here are some posts (including the many embedded links) that can provide a starting point:
- The awful state of software development
- The AI trend in healthcare, the relevance of hot new technology
- Computer security issues that don't go away, and reporting vs. reality for security
- Concentrating on things that matter
- Tech fashion trends, for example Innovation
In spite of all the above, there's a way that Blockchain can be a big win in certain applications, when applied in smart ways by top-notch teams. There's a clear historical pattern to follow. Here's how.
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