Blockchain Makes Promises, but which ones can it deliver?

The birth of Bitcoin brought Blockchain technology to the world. Blockchain and distributed Ledger tech (DLT) became the bywords for organisational disruption across the globe and across multiple different industries. However, can DLT genuinely deliver on the promises that blockchain developers see in its potential?

Let’s start at the very beginning…

The blockchain arrived with Bitcoin,and it serves a particular purpose. Blockchain answered a specific question in regard to finances, currency transfer and control of personal wealth.

“How do we create an environment for digital money, which is resistant to censorship and official confiscation?”

If we are completely honest, it doesn’t even do that particularly efficiently. There are improvements to make. Bitcoin’s blockchain was the first step on the development path. It didn’t take very long before others recognised not only the potential of the concept but also the areas for improvement.

The first ones to follow the lead of the mysterious Mr Nakamoto stuck to the same concept of digital currency. However, someone had already spotted the potential for something other than digital currency and began working on the next generation of blockchain environment.

Ethereum or Pandora’s Box?

With the creation of the Ethereum environment the potential for using the blockchain, or distributed ledger technology (DLT), for purposes other than digitising global currency began itsjourney. At the development of Smart Contracts (programmable ‘branches’ to the blockchain) came the concept of allowing the ledger to do more than merely acting as an immutable database of transactions.

Blockchain became a Pandora's box of industries to disrupt, not just in the financial world. Some of the sectors marked for potential disruption by blockchain tech were:

• Copyright, licensing& royalties (music, art, photography etc.)

• Food Safety (source-to-customer tracking and shipping information)     

• Academia (immutable logs of qualifications, QR codes on certificates etc.)

• Charity (streamlining fund distribution, verifying volunteers, tracking aid distribution)

• Entertainment (games and other entertaining apps or Dapps)

• Medicine (medical, dental and other databases for treatment, payment and logging, pharmaceuticals)

This is by no means an exhaustive list, merely an example of theindustries identified as targets for blockchain development projects. Still, its enough to start illustrating the pros and cons of DLT development beyond the realms of finance infrastructure.

Some of these have begun to be implemented,and some have failed at the first hurdles.

Blockchain isn’t the answer for everyone

It's fair to say that some industries that have embraced blockchain tech have created wonderful things. Walmart and IBM are working together on food safety and tracking usage for source-to-consumer traceability. After asuccessful test run that compared tracking mangos, first without blockchain, which took six weeks and then with blockchain tracking, which took a few seconds, it was definitely a fantastic display of the benefits of DLT in non-financial sectors.

However, one failed experiment involved a start-up blockchain for the provenance of art and creative ownership. In the spirit of testing the validity of this project one man claimed to have painted “La Gioconda”. He provided a photograph, his name cited as the artist,and it was added to the blockchain. Unfortunately, there  were a few steps missing in the process. The painting,  “La Gioconda”, is better known as “The Mona Lisa” and was definitely not painted by Terence Eden.

Another failed attempt was aimed at putting royalty payments to musical artists on the distributed ledger. The process was convoluted, the artists were baffled by the less-than-user-friendly technobabble, and the tech guys working on the project didn’t have enough understanding of the industry they were trying to revolutionise.

Not all blockchains are equal

When discussing blockchain in conjunction with cryptocurrency, two of the main features of the technology are its distributed and decentralised nature and its immutability. What we often fail to realise is that established organisations and banking sectors don’t like this feature of the blockchain. In fact, those companies that have embraced blockchain and have made it work for them tend to work on private and permissioned blockchain environments.

In other, words the concept is the same, but not everyone can read it, and only permitted users can add to it. In some cases they have even made it so that the blockchain can be altered, leaving a “scar” in the chain to show the alteration that took place.

Santander is using the Ripple network, the Spanish Central bank has used both private blockchain, Hyperledger, and placed the transaction on the public Ethereum blockchain (almost, it’s on a test net because the bank can’t hold Ether to power the live environment).

It’s important to note that while public DLT networks require native coins to power them, the same is not true of the private and permissioned environments, for example, Ripple Labs’ network doesn’t need XRP in order to function.

Objective vs Subjective

The essential requirement for creating a blockchain environment for any sector requires a deep understanding of the industry the developers are trying to disrupt from the “old” ways of doing things.

So far, the development of DLT has been primarily focused on finance and technology spaces, because they are the sectors from which the technology has grown. Even the plans to put food tracking on the blockchain has come from a business point of view.

The arts-based blockchains don’t seem to have done so well because there is a lack of inherent understanding between the technologists brought in to ‘blockchainify’ the industry and the industry experts. In contrast to the assertion that blockchain is a ”truthmachine”, it can only assert the facts given.

You can have the immutability of blockchain, and it will hold the information held there as sacrosanct, but if you put erroneous data in you will always get inaccurate data out again. Consequently, the arts provenance blockchain will continue to believe that Terence Eden painted the Mona Lisa, and blood diamonds will continue to find their way into circulation through fake information input. Like any other information tech (aside from machine learning AIs) it only knows what we tell it.

In conclusion…

It’s a vague conclusion, but blockchain can be a spectacular revolutionary idea for some sectors, just not for others. However, the security and immutability of blockchain, in general,does make for a fabulous ‘ideal’ when dealing with important things such as food safety, land registry, employment, taxes, election, and a whole host of other sectors.

It is a truism often used, “garbage in, garbage out”.

Perhaps the truth is that while the decentralised and distributed nature of DLT makes it ideal for keeping an eye on finances and monetary holdings (let’s face it money = numbers= maths = facts, and computers do a better job of keeping those in check than almost any human mind), more esoteric uses require expert input; the gemologist who can tell you the region in which a diamond was mined; the art expert who can tell you that actually this is a lesser-known, early Turner, not a new painting by ‘BobNobody’. These are people with reputations to protect and are far more trustworthy than the unscrupulous miner or the wannabe artist.

The blockchain is not the answer to everything in its current state. A decentralised web of miners can all confirm (or not) that a specific transaction took place, as it is simultaneously broadcast among the nodes. However, a multitude of miners can prove that information was input to the system, but they can’t verify the veracity of statements pertaining to factual accuracy.