I’m an engineer, aspiring entrepreneur, this is where I write interesting things I’ve learned. In the imponderable things bitcoin few months, blockchain has been heralded as an invention on par with the internet itself, an invention that will revolutionize business and the world.
Blockchain could bring vast efficiencies to supply chains by bringing an entirely new level of reliability and accessibility to data about a good’s journey. As goods move, each company logs a record using an irrefutable digital signature. What does that extra trustworthiness provide? Consider packaging on food at the grocery store that claims GMO free, fair trade, etc.
How do you know that packaging is telling the truth? This additional trustworthy data has the potential to remove countless expensive human checks and reconciliations. A store orders 10 apples, but only gets 9, who counted wrong? Extra data could expose new opportunities and insights, as well. A farmer could post about a truckload of lettuce that will go bad if not sold quickly. But blockchain does not deliver these promises on its own.
Companies must agree on standards of data, what software to run, and who should have what access. It seems to be proving hard for companies to show benefits with small tests. Blockchain is not just a faster database that can be swapped in. It likely requires new business models and new ways to interact with other companies.
Some of the benefits may only be apparent when a critical mass is achieved. Regulation will certainly prove challenging, especially with the GDPR now taking effect. How can you delete data from an immutable database? If data is encrypted, perhaps throwing out the encryption key will be sufficient. On the other hand, it is hoped that blockchain can actually help on the regulatory front. The blockchain behind Bitcoin shares everything to everyone, is extraordinarily slow, prohibitively expensive, and has no clear rules for how to upgrade its software. Luckily many different organizations have already spent years creating blockchain software optimized for the enterprise world.
The consensus algorithm is the core of a blockchain, the part that truly gives it shared and decentralized control over the data. It’s where the group agrees on and locks in the data. In a stock market, if 5 people all submit a buy request at once, which one should get the stock? The system needs to reach consensus on this. The choice of consensus algorithm is vital because it generally has a major impact on performance. It takes a lot more communication and time for 1000 computers to agree on something than 5. Hyperledger actually comes with several different choices that let you make the best tradeoff for your application.
I do want to point out one software package that I hadn’t yet researched when the course went live: Hashgraph. It promises a superior combination of decentralization and performance over any of the other algorithms I’m aware of. On the downside, it is very new, and patented. At the end of the course, I provide some commentary on public vs private networks and digital currency. Many believe private blockchains are just slow distributed databases, and without a public network and digital currency, they offer nothing new to the world. As the application grows, eg, global supply chains, the case for public networks seems stronger and stronger. Would I trust a record stored on a network of 5 big shipping company computers or the Ethereum network’s thousands of machines spread all over the world?