Do you need a blockchain? | TechCrunch

https://techcrunch.com/2018/04/19/do-you-need-a-blockchain/
Blockchain technology is set to have a profound impact on a wide variety of industries. Blockchain technology is still surrounded by its fair share of hype and uncertainty. It seems that the term blockchain has become a bit diluted as the hype has continued to bloom.

There is an inherent risk that managers eager to explore new technologies jump to conclusions without properly exploring alternative options. Go through decision models to see if makes sense to consider blockchain or not.

Blockchain differs from a database in many ways, but the most significant exception is the decentralized nature of blockchain. However, this feature comes at a cost especially on public blockchains: considerably slower than traditional databases and users must pay a fee for each “transaction”. So if performance and transaction speed and cost ate the most important factors, you most propably should stick with a more traditional database.

Thete are new private blockchains that promise benefits. Critics also argue that the term private blockchain is just a confusing name for a shared database. For example Estonia’s digital identity solution is an example of the use of the blockchain as a marketing tactic.
While there are many reasons to steer clear of blockchain technology, there are equally many potential valuable use cases.

24 Comments

  1. Tomi Engdahl says:

    Cryptocurrency’s Estimated Draw on World Resources Could Power Bangladesh
    http://www.electronicdesign.com/power/cryptocurrency-s-estimated-draw-world-resources-could-power-bangladesh?NL=ED-003&Issue=ED-003_20180502_ED-003_605&sfvc4enews=42&cl=article_1_b&utm_rid=CPG05000002750211&utm_campaign=17046&utm_medium=email&elq2=f8a135d001bd433e8c8c34e45863e79a

    Is the phenomenon of cryptocurrency sustainable? A number of factors come into play here, but as it expands, power consumption and requisite cost become the main issues.

    When it comes to mining cryptocurrency and how much power is consumed during mining operations globally, nobody knows for sure. However, based on varied utility costs alone, it’s estimated at 53.99 TWh, or enough energy to power the country of Bangladesh annually, according to the Digiconomist Bitcoin Energy Consumption Index—a website dedicated to providing in-depth analysis regarding cryptocurrencies.

    Cryptocurrencies are digital assets (currencies) designed for use as a medium of exchange in the same fashion as traditional assets or money. However, they use cryptography to secure transactions as well as control the creation of additional units and the verification of transfer assets. Most, such as Bitcoin and other altcoins, are decentralized, with control mitigated through blockchains. Blockchains are continuously growing lists of records that form blocks (i.e., ledger) containing a cryptographic hash (mathematical algorithm), which makes it tough to alter the data and therefore makes the digital currency secure.

    Reply
  2. Tomi Engdahl says:

    RSA yet to be sold on magic pixie dust qualities of blockchain
    https://www.zdnet.com/article/rsa-yet-to-be-sold-on-magic-pixie-dust-qualities-of-blockchain/

    Just because you can solve your problems with a blockchain, doesn’t mean you should, according to RSA CTO Zulfikar Ramzan.

    While the world rushes to slap a blockchain onto a growing number of applications to generate hype and excitement, RSA CTO Zulfikar Ramzan has told ZDNet that he is not convinced that many use cases of blockchain couldn’t be addressed by more traditional mechanisms, such as a database.

    “For example, we talk about like supply chain management, people tout that as a very classic blockchain use case,” he said. “But to me, that seems like that’s a shared database use case — and you know, it’s funny because people who don’t understand the security nuances don’t understand why a database is not worse than a blockchain, in fact I think in many cases it is better.”

    Ramzan said that in many cases, blockchain is a “heavy duty model” designed to address problems with a lack of trust, but often the solution has a number of trust assumptions built in. For instance, in the case of tracking an object, the process for assigning identifiers and adding the identifers to the blockchain need to be trusted.

    The CTO told ZDNet that blockchain is starting to be regarded as magic.

    “It’s become this magical pixie dust, where people think you can solve all problems, and yes, maybe you can use it to address a certain set of problems, but just because you can and doesn’t mean you should.

    “You can buy a sledgehammer to push a thumbtack into a wall. You could also just use your thumb. It’s a much cheaper solution, and probably better for other reasons as well. I think that’s where we are.”

    However, Ramzan was not prepared to write off blockchain totally.

    “I don’t want to discount that there will never be any applications, or there aren’t legitimate use cases where you could try blockchain outside of cryptocurrencies. But I think people who haven’t really spent time understanding the nuances will … use a buzzword to get people excited about technology.”

    Reply
  3. Tomi Engdahl says:

    Accessing Blockchain on ESP8266 Using the NodeMCU Board
    https://hackaday.com/2018/05/02/using-blockchain-explorer-apis-on-nodemcu/

    Blockchains claim to be public, distributed, effectively immutable ledgers. Unfortunately, they also tend to get a little bit huge – presently the Bitcoin blockchain is 194GB and Ethereum weighs in at 444GB. That poses quite an inconvenience for me, as I was looking at making some fun ‘Ethereum blockchain aware’ gadgets and that’s several orders of magnitude too much data to deal with on a microcontroller, not to mention the bandwidth cost if using 3G.

    Having imagined a thin device that I could integrate into my mobile phone cover (or perhaps… a wallet?) dealing with the whole blockchain was clearly not a possibility. I could use a VPS or router to efficiently download the necessary data and respond to queries, but even that seemed like a lot of overhead, so I investigated available APIs.

    As it turns out, several blockchain explorers offer APIs that do what I want. My efforts get an ESP8266 involved with the blockchain began with two of the available APIs: Ethplorer and Etherscan.

    Ethplorer (Github) responds with data to HTTP GET requests. Some key features are that it allows you to retrieve trading data like pricing and volume for both coins and tokens.

    Etherscan on the other hand focuses on more things that I’m interested in. It has some basic smart contract features like checking execution status, and in addition to HTTP GET requests it supports websockets for something approaching real-time alerting.

    Both services are presently free to use and can check Eth balances, transactions histories, and the other features you’d expect in this type of blockchain explorer. I chose Etherscan for this project because I wasn’t interested in price data and I thought of some fun things websockets would allow. Both services provide data in JSON format, which is quite convenient as we’ll see later.

    Reply
  4. Tomi Engdahl says:

    Simple Ethereum Vending Machines with NodeMCU
    https://hackaday.com/2018/05/10/simple-ethereum-vending-machines-with-nodemcu/

    Recently, we covered how to use the Etherscan API to query data (a wallet balance) from the Ethereum blockchain with NodeMCU. It’s a very useful method for retrieving information from a blockchain on embedded systems where storage and memory are an issue.

    It has some limitations though. Most notably, it’s polling the API at some interval to retrieve information whether it has changed or not.

    Simply send to an address via some method, and receive goods!

    It turns out we can do exactly that with NodeMCU using WebSocket. Like HTTP, WebSocket is a communications protocol that uses TCP connections (typically over port 80), but it allows full-duplex communication. In other words, you can establish a connection to a server, and send/receive messages without needing to poll the server.

    Accessing Blockchain on ESP8266 Using the NodeMCU Board
    https://hackaday.com/2018/05/02/using-blockchain-explorer-apis-on-nodemcu/

    Blockchains claim to be public, distributed, effectively immutable ledgers. Unfortunately, they also tend to get a little bit huge – presently the Bitcoin blockchain is 194GB and Ethereum weighs in at 444GB. That poses quite an inconvenience for me, as I was looking at making some fun ‘Ethereum blockchain aware’ gadgets and that’s several orders of magnitude too much data to deal with on a microcontroller, not to mention the bandwidth cost if using 3G.

    Reply
  5. Tomi Engdahl says:

    3 Obstacles to Moving Social Media Platforms to a Blockchain
    https://spectrum.ieee.org/tech-talk/computing/networks/3-obstacles-to-moving-social-media-platforms-to-a-blockchain

    On average, there about 10 million active sessions a day on Taiwan’s version of reddit, a 25-or-so-year-old bulletin board system called PTT.

    Last month, PTT’s administrators started developing a modified platform that could store data on distributed ledgers—permanent records shared among users themselves. Today, PTT’s servers hum on a National Taiwan University campus in Taipei

    If data is instead distributed across just enough independent entities, then the risk of censorship is much lower. And there’s another benefit: users would “own” their data and control their own privacy.

    Reply
  6. Tomi Engdahl says:

    6 Common Misconceptions About the Security of Blockchain Technology and Smart Contracts
    https://www.tripwire.com/state-of-security/risk-based-security-for-executives/connecting-security-to-the-business/6-common-misconceptions-about-the-security-of-blockchain-technology-and-smart-contract/

    As blockchain technology becomes an increasingly popular option for companies searching for secure business solutions, we’re seeing more use cases for the network and smart contracts.

    A smart contract is a computer protocol that is used to digitally facilitate, verify and enforce the performance of credible transactions without the need for a third party. When operating on a blockchain network, smart contracts are utilized to verify or enforce a set of promises through various digital security methods.

    However, there are a wide range of misconceptions about the security that blockchain and smart contracts offer.

    Blockchain Misconceptions
    THE MAIN BENEFICIARIES OF BLOCKCHAIN TECHNOLOGY ARE CRIMINALS
    When blockchain technology first emerged into the mainstream, it was commonly portrayed as a hub of criminality, particularly on the dark web.

    BLOCKCHAIN IS UNHACKABLE AND UNMODIFIABLE
    One misconception that is commonly spread about blockchain technology is that it’s completely unhackable and unmodifiable. Although the blockchain is one of the most secure options available to businesses, no system is 100 percent safe from being hacked or altered. In theory, any person or group within a blockchain network is capable of gathering enough mining resources to take control, though it is highly unlikely.

    A BLOCKCHAIN NETWORK CAN BE SHUT DOWN BY THE GOVERNMENT
    But since a blockchain network is decentralized and not able to be controlled by a single entity, it’s virtually impossible to shut down unless every network participant stops working within it.

    Smart Contract Misconceptions

    SMART CONTRACTS ARE LEGALLY BINDING CONTRACTS
    A smart contract is software code within a program that follows the instructions set forth by an agreement between two parties. As explained on Coindesk, smart contracts essentially act as a list of “if/then” statements that operate automatically when a specific condition or promise is met. However, there is nothing legally binding about them

    SMART CONTRACTS OPERATE WITH COMPLETE AUTONOMY
    smart contracts such a secure solution is that they can only be executed if a transaction or message is sent to the smart contract.

    ALL SMART CONTRACTS HAVE THE SAME FEATURES
    Unlike Ethereum, most blockchain networks are either not capable of operating with smart contracts or only do so in an extremely limited capacity. On top of that, smart contracts possess completely different features depending on the blockchain network they’re running on.

    Conclusion
    It’s no surprise that the recent emergence of blockchain technology and smart contracts has created misconceptions among the business world and general public.

    Reply
  7. Tomi Engdahl says:

    How I became Leonardo da Vinci on the Blockchain
    https://shkspr.mobi/blog/2018/06/how-i-became-leonardo-da-vinci-on-the-blockchain/

    One in particular caught my attention. On the surface it seems to solve an important economic problem – art forgery and provenance.

    By putting your artwork on the “BitCoin Blockchain”, Verisart will ✨hand wavy magic✨ increase the trust in art dealers and reduce fraud.

    That’s a pretty neat idea. A distributed public ledger of who I have sold my art to.

    what if I sell a fake and keep the original in my Underground Vault?

    There’s no way to permanently attach a digital certificate to a physical work of art.

    Incidentally, this is the problem with all the startups claiming the blockchain will revolutionise the integrity of global logistics markets. Sure, you can slap a QR code on a crate – but nothing stops an unscrupulous middle-man from replacing or adulterating the contents of the crate.

    Long story short, I convinced them that I painted the Mona Lisa. An excellent situationalist prank. Much avant-garde, so postmodernism.

    Reply
  8. Tomi Engdahl says:

    Blockchain: Not just for cryptocurrency
    There’s a lot more to blockchain than Bitcoin.
    https://opensource.com/article/18/3/blockchain-not-just-cryptocurrency?sc_cid=7016000000127ECAAY

    A colleague and I sat down and said, “we need to figure out this blockchain thing,” because we didn’t even know how it was relevant, let alone what problems it might be able to fix.

    Blockchain basics
    A blockchain is a distributed set of data that uses cryptography to verify and secure that information. Each piece of data in a blockchain is called a block, and the blockchain is the entire set of that data.

    A blockchain is a distributed set of data that uses cryptography to verify and secure that information

    Reply
  9. Tomi Engdahl says:

    Blockchain in action: 5 interesting examples
    https://enterprisersproject.com/article/2018/7/blockchain-action-5-interesting-examples?sc_cid=7016000000127ECAAY

    We look at five areas where blockchain projects are showing tangible progress, including supply chain, real estate, and healthcare

    Reply
  10. Tomi Engdahl says:

    Blockchain evolution: A quick guide and why open source is at the heart of it
    https://opensource.com/article/18/6/blockchain-guide-next-generation?sc_cid=7016000000127ECAAY

    From Bitcoin to the next generation of blockchains.

    Reply
  11. Tomi Engdahl says:

    Many of your thoughts on cryptosystems are not true

    The world is slowly moving towards a completely digital monetary system and cryptographic currencies have an important role in this development. The company called GlobalData reminds us that many of the allegations associated with the CRM are not true.

    In its “Cryptocurrencies – Thematic Research” survey, GlobalData says that while block logs and DLT (Distributed Ledger Technologies) play an important role in modernizing financial systems, thinking that the boulders themselves have brought tremendous savings, is an imagination.

    - Many of the arguments put forward by the crypto curators are not true. It is alleged that the crypt sword will speed up financial transactions, remove the middlemen from the deal and be free, but none of these is true, says GlobalData analyst Gary Barnett.

    Chryptovegoods are not free. At its peak, the price of a Bitcoin transaction exceeded $ 50, which was not very well matched with $ 25 groceries. Although the purchase price is about one dollar when there is no load on the web, the amount will inevitably increase as the volumes rise again.

    Still, no cryptographic currency will be accepted and exchanged widely.

    The big problem is that the crypto currencies can not be scaled. Visa system can support 24,000 transactions per second. In Bitcoin, it is difficult to access more than 10 transactions per second. The only thing close to the Visio’s readership is the Ripple

    Source: http://www.etn.fi/index.php/13-news/8177-monet-luulot-kryptovaluutoista-eivat-pida-paikkaansa

    Reply
  12. Tomi Engdahl says:

    One of our observations of existing systems is that consensus operations are very expensive. our network protocol design allows compute committees and storage committees to process transactions without relying on heavy-weight consensus protocols.”

    Source: https://techcrunch.com/2018/07/09/distributed-ledgeroasis-labs/?utm_source=tcfbpage&sr_share=facebook

    Reply
  13. Tomi Engdahl says:

    Rental attacks mean that blockchains must evolve or die
    https://techcrunch.com/2018/07/22/rental-attacks-mean-that-blockchains-must-evolve-or-die/?utm_source=tcfbpage&sr_share=facebook

    Blockchain technologies have a well-earned reputation for hacking and fraud, but the recent theft of more than twenty million dollars of second-tier cryptocurrencies like Bitcoin Gold, Verge, and ZenCash was a fundamental attack on the core mechanisms that allow cryptocurrencies to function. The way that most blockchains (including Bitcoin and Ethereum) function now is called Proof-of-Work; miners must solve hard computational problems to add new blocks of transactions to the chain and the majority (i.e., 51%) of the computational power can determine what transactions appear in the public ledger.

    In May and June, these second-tier cryptocurrencies suffered from what is called a “51% attack”, where attackers rented more processing power than the honest participants of the network, enabling them to control the transaction register and engage in nefarious behavior.

    any blockchain with reasonably low transaction fees is fundamentally vulnerable to 51% attacks. The risk of these attacks was known, informally, from the earliest days of cryptocurrency, and to counter this risk exchanges do not immediately credit deposits.

    The average Bitcoin transaction fee is about a dollar; Budish suggests that these fees should be 100x higher (or more) to secure Bitcoin’s blockchain.

    why Bitcoin appears secure while other currencies are not: only a small fraction of the mining capability of the Bitcoin network is available to rent. Bitcoin remains secure because there is a great deal of scarcity in the market for latest-generation mining equipment, such as the expensive ASIC chips

    Looking at the hourly attack-rental prices on Crypto 51 (generally only a few thousand dollars) it is easy to draw the conclusion that every cryptocurrency other than Bitcoin and (perhaps) Ethereum should simply not exist because it is too easy for scammers to destabilize them.

    The threat of rental attacks means that Proof-of-Work blockchains must evolve or die. Ethereum is in the process of rolling out just such an evolution, called Casper.

    Casper would be a big change to the way Ethereum works and it faces considerable pushback from the community. To be fair, it is not a finished product yet

    Budish’s economic argument suggests that any Proof-of-Work blockchain with low transaction fees will be vulnerable to rental attacks. If blockchain technologies have a future, it will not be from Proof-of-Work.

    Reply
  14. Tomi Engdahl says:

    The 5-Point Crypto Decentralization Checklist
    https://medium.com/datadriveninvestor/the-5-point-crypto-decentralization-checklist-d9514b555b0

    Whether a particular cryptocurrency can be considered “sufficiently decentralized,” however, is not something that’s set in stone — no official metric exists to determine such a parameter. But given the crucial role that decentralization plays within the blockchain ecosystem, it is worth investigating the extent to which it applies in practice.

    A checklist can help in this regard.

    1. What percentage of the total coin supply do the top n token-holders own?

    2. Is the project open source?

    3. Do mining/staking pools exist? How much validating influence do they have on the network?

    4. Are validators incentivized to secure the network?

    5. How does the governance structure work?

    Reply
  15. Tomi Engdahl says:

    How blockchain will influence open source
    https://opensource.com/article/18/8/open-source-tokenomics?sc_cid=7016000000127ECAAY

    Interactions between users and developers via smart contracts will give new power to open source.

    Reply
  16. Tomi Engdahl says:

    What the Facebook Crypto team could build
    https://techcrunch.com/2018/08/10/facecoin/

    Facebook is invading the blockchain, but how? Back in May, Facebook formed a cryptocurrency team to explore the possibilities, and today it removed a roadblock to revealing its secret plans.

    Former head of Messenger David Marcus, who leads the Facebook Crypto team, today announced he was stepping down from the board of Coinbase, the biggest crypto startup. Marcus was formerly the president of PayPal

    Now Facebook is cleared to start publicly talking about its plans, though it hasn’t yet.

    So what could Facebook be building? I see three main consumer-facing opportunities.

    3% off with FaceCoin
    P2P and micropayments
    Facebook Connect for crypto

    A top problem in the world of decentralized blockchain apps is how you bring your identity with you. Securely connecting your wallet, blockchain-based virtual goods and biographical info to new dApps can be a laborious process.

    Reply
  17. Tomi Engdahl says:

    PiPFS: Portable Pi Printer Console
    https://www.hackster.io/glowascii/pipfs-portable-pi-printer-console-56b521

    Connect to the Interplanetary File System and print documents on-the-go with this spaceworthy console!

    What is IPFS? It’s a blockchain-based alternative internet, which shares files peer-to-peer, similar to a mesh network. You can get files from other people nearby, even when the actual Internet is down!

    https://ipfs.io

    A peer-to-peer hypermedia protocol to make the web faster, safer, and more open.

    Reply
  18. Tomi Engdahl says:

    Preparing data management for blockchain and other advancements
    AUGUST 10, 2018
    https://www.ibmbigdatahub.com/blog/preparing-data-management-blockchain-and-other-advancements

    The rate of innovation for technologies impacting IT architectures is staggering, particularly where data management is concerned.

    Advances such as blockchain technology are steadily gaining traction both in terms of investment and adoption. Well-informed IT professionals are starting to deploy these new technologies to establish a more connected, knowledgeable and secure business.

    Here are some ways blockchain technology and database advancements are working together to help facilitate some of those benefits.

    Reply
  19. Tomi Engdahl says:

    How blockchain can complement open source
    https://opensource.com/article/18/9/barter-currency-system?sc_cid=7016000000127ECAAY

    Learn how blockchain can become the decentralized open source subsidization model.

    Reply
  20. Tomi Engdahl says:

    Tokens can better incentivize startup employees than equity
    https://techcrunch.com/2018/09/09/tokens-can-better-incentivize-startup-employees-than-equity/?utm_source=tcfbpage&sr_share=facebook

    AdChoices

    Tokens can better incentivize startup employees than equity
    Joyce Yang
    @Globalcoinrsrch / Yesterday

    Ah yes! Did it! A dream of the young brunet entrepreneur came true, very excited, amazed, shocked, wearing smart casual, celebrating in the office
    Token structuring and tokeneconomics are among of the most important considerations when designing a blockchain. When thinking about how best to distribute these tokens, founders often think about how the tokens will impact external stakeholders such as their investors, the community, and stakers (people that can mine or validate block transactions according to how many coins he or she holds). But token economies are also bringing disruption to organizations internally, especially when it comes to HR and compensation.

    If the tokens are structured properly for a blockchain, external stakeholders will be directly aligned with the goal of the project. Those incentives can encourage participation on the blockchain platform and/or drive token demand with community-building and marketing.

    Reply
  21. Tomi Engdahl says:

    What blockchain can learn from open source
    https://opensource.com/article/18/11/what-blockchain-can-learn-open-source?sc_cid=7016000000127ECAAY

    To be successful, blockchain startups must build communities the open source way.

    Reply
  22. Tomi Engdahl says:

    Mattereum, perhaps the world’s weirdest and most daring startup, intends to own literally everything
    https://techcrunch.com/2018/11/11/mattereum-perhaps-the-worlds-weirdest-and-most-daring-startup-intends-to-own-literally-everything/?utm_source=tcfbpage&sr_share=facebook

    brewing a bizarre and/or brilliant plan for a bridge between the blockchain and the real world — a system whose success is directly proportional to the extent to which it achieves legal title over every physical object in the world.

    AdChoices

    Mattereum, perhaps the world’s weirdest and most daring startup, intends to own literally everything
    Jon Evans
    @rezendi / 2 weeks ago

    mattereum
    How’s this for eyebrow-raising? In London, for the last year and a half, a team of lawyers, cryptographers, software engineers, and/or former military consultants have been brewing a bizarre and/or brilliant plan for a bridge between the blockchain and the real world — a system whose success is directly proportional to the extent to which it achieves legal title over every physical object in the world.

    Wait. Let me explain. Their name is Mattereum, and they are not Bond villains seeking to conquer the planet. Rather, they are trying to bridge the gap between programmable blockchain “smart contracts” and actual legal contracts. As you might imagine, that gap consists of an almost infinitely knotty tangle of legal precedents, gray areas, and jurisdictions.

    Mattereum has came up with a remarkable way to sever this Gordian knot. A legal concept universal across almost all jurisdictions is that assets have owners, who can decide (within legal limits) how to dispose of them. If registrars of the Mattereum network are granted legal title over assets, the thinking goes, they can then establish on-chain smart contracts with which physical assets can be programmatically bought, sold, rented, assigned, and partitioned — and use their ownership of these assets to resolve disputes and enforce those resolutions.

    Their flagship object right now is a Stradivarius violin valued at $9 million. Assigning legal title over that violin to one of Mattereum’s registrars (say, Mattereum itself) which then licenses control via a set of smart contracts (say, on the Ethereum blockchain) means the violin instantly becomes not just a physical asset but a digital one, which can now be programmatically tokenized and sold to multiple investors

    Reply

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