Amber Baldet, leader of J.P. Morgan’s Blockchain center of
excellence
Brian Behlendorf, Exec. Dir., Hyperledger
What are blockchains?
- Distributed ledger
- Smart contract
- Enables storing and computing data without need for a
central hub or authority
They can:
- Record transfer of ownership of digital assets
- Prevent double spend of these assets
- Automate and enforce processes between participants
- Be configured as private or public
- Be censorship resistant
Decentralization of blockchain allows resistance of
tampering.
What is a distributed ledger?
- It is append-only log of transactions, distributed among
network participants
- Everyone sees the same data in the same order, guaranteed
- Might have a governing body controlling access
- Might manage assets
Smart contracts – smart contracts allow adding rules around
the transactions such as “if-then” or conditionals.
How will businesses use this?
Experimentations are moving from the
distributed DB to the public blockchain
Public blockchain, from a development standpoint, is like
the internet in the 80’s, in terms of maturity.
Blockchains become more secure the more people you add to
them.
In the traditional financial world, the initial thinking
around blockchain was that it was a threat, because of bitcoin. But once the mechanism was better understood,
the financial world realized blockchain could be used to improve transactions
at a lower cost. Some of the use cases include
payments, wholesale banking, digitization of existing sovereign fiat cash and
others.
If the technology existing 15 years earlier, and was used for
keeping home records and mortgages, it would have helped mitigate the 2008
financial crisis, as it would have made it easier to understand the housing
market, and would have made it harder to hide toxic assets.
Outside of finance, blockchain is applicable to any other
industry that uses transactions and that needs to get agreement by multiple
parties about the facts on the ground.
Any supply chain can benefit from blockchain, and indeed we’re beginning
to see entry of blockchain based ledgers in product industries. In fishing, there are strict quotas, so a
ledger tracking which fish was taken where is important. In diamonds it’s important to establish the
origin of the diamonds – that they are not blood diamonds. In the shoe industries companies want to
trace back their products to factories that use approved work practices, and so
on.
Healthcare is another domain that can be revolutionized by
blockchain. Accreditation is a good
example: when a doctor moves in the US from one state to another it can take
weeks to get clearance to work, as you have delays looking up credentials in a
trusted way from a central repository. A
public blockchain of doctor credentials would reduce that to almost instantaneous.
In general a blockchain system can change healthcare from a
hub-spoke network to a distributed ledger model.
Healthcare records – you could make them more portable, be
more patient centric rather than doctor centric. You would store permissions and the ID info
in the ledger, not the actual health records, as blockchain is not a good
general purpose database.
Self sovereign ID - instead of being defined in a database,
you have data in your wallet. As you go
through life, you accumulate more data in your records, and other sites can be
given permission to view that data. ID
is not one thing, but a collection of identification contexts. There’s not one
ID that fits everything about you; need to be able to aggregate together types
of identity.
What other opportunities are there for disruption?
At this point it’s hard to tell. It’s a lot harder than it seems, figuring out
who owns data, compliance, how you upgrade and so on. Nevertheless, blockchain removes the
uncertainty of trust from transactions, enabling and enforcing verification; as
such, businesses built on being the gateway or the central authority will need
to rebuild themselves in the age of blockchain.
What about the energy consumption of blockchain?
Blockchain is purposefully computationally intensive for
proof of work, but for many other things you don’t need blockchain to be so
energy intensive, so we may see a reduction in the amount of energy needed to
run a blockchain. For smaller, private
chains there may be other ways to do consensus management that don’t require
computationally intensive processes.
What is the future of blockchain security in the age of
Quantum computing? Since the essence of
blockchain is the hashing mechanism that locks blocks, there might be an
impact. One assumes that while quantum
computing may potentially make cracking encryption easier, they will also
likely enable new forms of encryption, so just use those in the
blockchain. Certainly the data itself in
the blockchain should not be kept encrypted – just a hash of the data. Regardless, the problem of quantum computers
breaking encryption is a general one, not a specific one to blockchain.
How do you correct a mistake written in the blockchain? Can you
pull data back out of the blockchain?
Since the whole point of the blockchain is to make a permanent trusted
ledger, changing data in it is a hard problem to solve. There’s no real way to claw back information.
There are three basic ways to delete data from a blockchain:
- Unwind, remove and reply the transactions – can be very
expensive
- New algorithms applied that will enable “whiting out”
records without having to rewrite the chain
- Everyone agrees not to look at the mistaken record.
What are the current technical challenges facing blockchain?
- Governance – how do you manage something which no one owns
- Scaling
- Privacy (in a public chain)
