There is much hype about Blockchain technology, not the least of it is the promise to be the magical solution to secure our everyday transactional data. Last year, at our Innovation and Breakthrough Forum, our Principal Guest of Honor, Dr. Radia Perlman, Senior Fellow of Co-operatives of Innovative Intellectuals and Chair of the Executive Committee of the Agile Blockchain Consortium, has dispelled much of these misguided hopes.
The fact is, Blockchain, in its current state, faces many challenges:
By early 2018, there are more than 100 blockchain platform providers.
Enterprise solution providers competing in the ecosystem today range from community-driven projects (such as Bitcoin and Ethereum) to vertically focused consortiums (such as Hyperledger Fabric and R3 Corda) to venture-capital-funded startups. Their business models vary hugely: from open-source tools to open core to proprietary products. There is no uniformity or interoperability between platforms, making data migration between platforms extremely challenging and expensive.
This situation reminds us of the 1980s, among the many operating systems from different computer manufacturers (IBM, Digital Equipment Corporation, Data General, Wang Laboratories, etc.), and the different versions of UNIX. Eventually, UNIX (more precisely Linux) emerged as the winner, despite comparatively inferior feature set and instability in its early days.
In the heyday of computer standard wars, many industrial partnerships and joint-development efforts have tried, and yet failed: e.g. the ACE Computing Environment (Acer, MIPS, Microsoft, Compaq, Digital Equipment, NEC, Toshiba, Santa Cruz Operation, Siemens, Silicon Graphics & etc.) was formed to replace the Intel and Sun Microsystems. The AIM alliance (Apple, IBM, Motorola) effort to replace the Intel processor and the OSI (Open System Interconnection) model, by the International Organization for Standardization and the French CCITT Comité Consultatif International Téléphonique et Télégraphique, to combat the much simpler TCP/IP model.
We expect to see similar consolidation and joint efforts to end with similar fate in the blockchain space.
Consensus Management is one of the key differentiators in both public and private Blockchain fabric. Yet currently available consensus management schemes are not scalable enough for high volume public use. Innovation in this aspect is sorely needed to make wide-spread use of public Blockchain transaction a reality.
Another key adoption hurdle for blockchain is its transaction performance. Transaction medium has to sustain a very high transaction rate (e.g. Hong Kong Exchange & Clearing Ltd.’s initial requirement for their new securities trading system is 60,000 transactions per second,
Current major players in the blockchain space fall well short of such target. (An independent research carried out by the National University of Singapore compared the performance of Ethereum, Parity, and Hyperledger. The result was discouraging:
This study highlights the performance challenges blockchain faces.
Blockchains, as append-only open ledgers, are designed to be immutable. Once a block is written to the chain, it cannot be changed. The data (or block) can be trusted because the protocol requires consensus among a large number of participating nodes. Such decentralization of decision enhances the security of the data – until mal-intended individuals or groups take over the majority of the nodes (51% attack). In such case, they can alter blocks to manipulate transactions to their advantages. Such attacks have happened in the past:
“Pigs can’t fly. This is an absolute truth that we all know and agree on. But, given a phenomenally strong wind, pigs can fly. Nothing digital — including blockchain — is entirely immutable. But blockchain is a massive, distributed digital ledger which is as good as it gets for electronic storage.”
Another threat to blockchain security is the encryption algorithm deployed. So far, such algorithm is still safe and will require tremendous computing power to break. But with Quantum Computing on the horizon, and when mature, it may render existing encryption algorithm useless. Therefore, it may be wise for us to be prepared by understanding the potential impact of quantum computing on our networks' security.
Despite these challenges, Blockchain is here to stay. Blockchain still holds a lot of promise to revolutionize our use of data. We need to address its shortcomings for adoptions and applications,so we can realize Blockchain technology and its tremendous impact to its full potential.
Let’s march forward in this digital revolution to make our world better together.
Blockchain is not limited to Bitcoin or any other cryptocurrencies. It is broader than finance. It can be applied to any multi-step transaction where traceability and visibility is required.
However, a wise man once said, "Don't believe the hype." Blockchain has become a major tech buzzword of 2018—but virtually no company is actually adopting the distributed ledger technology, according to a Thursday report from Gartner. Only 1% of the more than 3,100 CIOs surveyed said they had already adopted some kind of blockchain within their organization. Just 8% said they were in short-term planning or active experimentation with blockchain, the report found.
On the flip side, 77% of CIOs said their organization has either "no interest" in the technology, or "no action planned" in terms of investigating or developing it, Gartner 2018 CIO Survey found.
Blockchain technology requires the understanding of, at a fundamental level, aspects of security, law, value exchange, decentralized governance, process and commercial architectures. It therefore implies that traditional lines of business and organization silos can no longer operate under their historical structures.
Blockchain technology doesn't have to exist publicly. It can also exist privately - where nodes are simply points in a private network and the Blockchain acts similarly to a distributed ledger.
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A non-profit organization registered in Hong Kong that offers blockchain fabrics for specific business technologies, including but not limited to ledger framework, smart contract, client database…