In this article, Paul W. Homer, the CTO at OneLedger, shares his views on how the blockchain could make a difference to the existing traditional systems. Some systems which are quite new and not that powerful, some which are powerful yet outdated. The blockchain technology will revolutionalize these systems in the coming years by striking the perfect balance between power and innovation. Still, in its infancy stages, there is a long path to walk ahead.
Synchronizing a highly redundant set of copies of data across the world is an extraordinarily resource-intense activity. So it’s no surprise that mining and validating blockchains consume a huge amount of CPU, disks and network bandwidth.
If blockchains perform so badly, why would anyone want to use them?
What we’ve seen, time and time again, is that ‘control’ is often a big problem for our species. We make a Faustian bargain with other people to take care of some problem for us, thus ceding control. But we do so in the hopes that they won’t abuse that ‘control’.
Sometimes they don’t. But most often, slowly… over time…, they exert more and more control, usually with an increasing amount of their own self-interest in mind. These relationships degrade and we end up paying the consequences, while the abuser benefits. We’ve seen this in politics, monopolies and any other competitive endeavour, where overtime, there is less and less real competition.
Since this is a common repeating problem, we have an endless number of cases within our modern, complex societies where this natural degeneration is impeding progress. Where our societies are put at considerable risk, based on our own natural behavior.
The most common case is the exchange of goods and services.
We’ve evolved a system of detaching our transactions from direct barter, by representing them with money. We’ve modified this system to detach that money from underlying assets, making it fiat. These levels of indirection decrease the friction of movement, but they open us up to the endless middlemen required to make the system work. This often decays.
Blockchains can give us the same levels of indirection, but they require expending resources as a replacement for the middlemen. There are still some issues to work out, but it seems as if wiring a decentralized system at the base of our monetary transactions could protect us from this type of problem.
That is, the costs of running a blockchain seem fair when balanced against the risks of surrendering control to people with questionable agendas.
But it’s not just money that benefits from this reliable independence. We weave complex webs of corporate interactions in the quest to build up larger and larger consumer goods.
A single product may involve hundreds, if not thousands of interacting companies as it progresses from it’s natural raw state all the way up to something usable by a consumer. This forms a complex hierarchy of nested relationships that have evolved over time.
We’ve seen, far too often, that within this set of manufacturing organizations, some of the quieter players are not playing fairly with those around them. As they act in their own self-interests, the problems percolate throughout the supply chain and grow.
It’s in everyone’s best interest that we detect and fix these types of problems before they mushroom into debilitating crises for consumers. The people that trigger these snowballs believe that their own part is just so inconsequential that it doesn’t matter if they are a little unethical, but we’ve seen that these little lapses compound as they work their way through our supply chains.
The signs of trouble are encoded within the data produced as the components are shaped and assembled. With oversight we could pick out these issues before they become a problem, but this data is hidden and often temporary.
Blockchains, driven by reasonable incentives, can ensure that nobody controls this process; that the data cannot be hidden or altered to protect the guilty; that a large collection of little lies does not combine into a destructive force for a huge number of people. When we make things transparent, the clever little games that people play can be stopped in their tracks. This keeps small problems from turning into giant issues.
Certainly in this case, the costs of running a blockchain seem quite reasonable when balanced against the increasing risks of our modern product complexity.
When the data should be public, and trustable, we see the resource usage as essential. There are also occurrences where people want to contribute data, but don’t want the specific data linked directly back to them. This type of anonymous sharing can enrich our understanding in areas like healthcare and finance. With more shared information comes our ability to make smarter decisions.
The world is littered by poor choices, and we are hampered by their effects daily. If, without negative effects, people can contribute to a more informed existence, then we can really start to lift our societies out of the weeds. We get trapped by our own complexities simply because we don’t understand them well enough.
A smarter society can never come for free, and it seems like the resource usage from an anonymous blockchain isn’t really that significant, if we can achieve this.
There are plenty of other examples where the end justifies the costs. Some things in life are cheap, and are worth what we paid for. Some things in life require the full cost in order to get them solved.
Blockchains are resource intensive. They don’t solve every problem, but there are certainly a large number of problems out there for which their expense is small compared to the benefits. We haven’t fully explored the decentralized space yet, but for a few extra resources we are now able to tackle previously unsolvable problems. Why wouldn’t we do that?