> Why Blockchain isn’t changing the world. Yet.
Why Blockchain isn’t changing the world. Yet.
September 25th, 2020
Blockchain technology was arguably created in the Bell Labs in the early 90s in order to create provable time stamps. However, it first grew to fame with Bitcoin, the brainchild of a person or group with the pseudonym Satoshi Nakamoto. Cryptocurrencies like Bitcoin allow the transfer of value through transactions recorded on a blockchain. While blockchain has proven very useful for financial transactions, there are countless people looking for other problems it can be productively applied to for a solution to the problem of “trust.” Blockchain was introduced to create trust in a trustless environment, an idea that will have major implications for nearly every sector of business, if properly implemented. However, it has only managed gain traction in solving the initial challenge of designing cryptocurrencies.
Blockchain has changed the world for cryptocurrencies, and as a result more “money” is able to change hands without governments and banks knowing who is involved or why. There are many legitimate reasons to use cryptocurrencies (e.g. avoiding fees and delays associated with international money transfers) and, as is well documented, there are many more uses which are illegitimate.
There are new types of blockchains that have emerged since the original bitcoin code was shared, that changed everything from how big the blocks can be, to how they are mined, and even who can mine them. However, they all suffer from the same flaw, namely that you can either make transactions faster or make them more secure than transactions in the system you are replacing, but not both.
One of the more promising applications that is already in use is the Hyperledger platform which is being used for tracking supply chains across the world. While this is working on a small scale so far, there remains the issue that has plagued software since early computers: garbage in = garbage out. To ensure that a container with 1 ton of oranges that leaves Florida on a truck arrives with the cargo undamaged, you must validate information from sensors. If you can’t verify that the temperature has remained within the constraints, none of the fruit was off loaded, the doors were not opened, and everything proceeded as expected, with all costs reported on the blockchain along the way, and the truck arrives at a store in New York with 1 ton of grapefruits, then the blockchain didn’t help at all.
In order to ensure that the physical world is completely represented by a digital ledger, then all the data that are recorded need to be verified as well, and if it is all verified, then there may no longer be a need for the blockchain.
It seems then the need isn’t for a better blockchain solution, but rather for better oracles, Internet of Things devices which can better report the information, which will help improve the supply chain process. These devices will be able to record off the blockchain and just record the proofs to a blockchain, all while making sure that what was fed into the blockchain at the beginning wasn’t garbage.
These things don’t work well with a traditional blockchain due to the high amount of processing involved, which is where the devices of the future will need to step up. From improved device security, to power usage and communications, IoT devices will need to be stronger to secure blockchains, and only then will blockchains be able to scale enough to secure IoT.
Today the ecosystem continues to grow, and we are watching while the “Things” change the world but blockchain technology will need to adapt to work better with them, or else something else will.