Block chain is nice, but not going to “completely change the internet”

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We are hearing a lot of noise recently around block chain, the technology that Bitcoin is based on, and how it is going to completely change the face of today’s internet to “something completely new, totally different, a revolution”. Well this is wrong. Yes, block chain is a bright revolutionary idea, but in this article I will argue why I think that it is not going to turn the internet upside down, and what are the really good things that block chains could do for us.

So what is Block Chain?

Block chain is basically a type of a decentralized database. Instead of the data been owned by one entity which distributes its data to users, with a block chain the data is distributed between the users, while they exchange/replicate the information about data updates on some frequent basis. Block chains have some unique design which, from one hand, lets the data be distributed between all users, but from the other hand is secured from any malicious data corruptions. The way it is done could be simplified to a primary school explanation: imagine that both you (node A) and I (node B) want to exchange information with Clara (node C) without anyone else (node D) disrupting the authenticity of the data, even if we pass it by node D before node C receives it. So both node A and node B would send the data to node C via other nodes, but in such a way (and this is a core block chain design), that decrypting the data would take lots of time, so much time that it will be longer than the time required for the data to be exchanged and compared. Node D would compare the data given by node A and node B, and if they are different, it would know that it was breached by one of the previous nodes. Recall that decrypting the data and encrypting it again (the operation required by malicious act that would like to pretend that it is kosher) would take much more time than just to “compare” it, therefore, the scammer would be caught if anything malicious was done. It also explains why block chain is called “crypto database” and why Bitcoin is called “crypto currency”: this is because the process is based on those encryption and decryption calculations.

So why Block Chain is NOT going to turn the internet upside down?

Block chain is not going to “change” the internet upside down, because it is merely a decentralized database, and databases are not the only thing that exists on the internet. Beside that, there are other types of databases which are decentralized, and actually you could find lots of complete systems – like P2P (Pear To Pear) systems, which are 100% decentralized by design (i.e. not just decentralized databases but the system as a whole is decentralized). Beside that, many internet systems are required by design to be centralized (for example, this blog database). Let me explain those three points in detail:

  1. The internet is not just about databases: the internet is built on many layers, from the user interface (which is the graphic design), to the browsers (which are running HTML and Javascript) to the backend/server application software (which is usually based on a programming language + a database) and then the hardware (the CPU, hardisks, network cards etc), the communication protocols and other layers (total of 7 layers). As you can see, block chain is touching only a small part of one layer of the internet – the database which is part of the application layer. So even if block chain is a revolutionary idea, nothing dramatic is going to happen by it to the other layers of the internet
  2. Some applications must be centralized: distribution of data is a matter of requirements and design. Some web applications (actually most web applications ) require the data to be centralized, this is the case for example with this blog and its database – users are required to connect to a database which is run and maintained by one and only one user (me) whom is the source of information. Decentralization, on the other hand, is important for very specific requirements, especially when data from one user is relying on data/information or actions by other users. A good example would be transaction systems or contracting systems.
  3. Some decentralized applications need more than just a decentralized database: What I mean, that the block chain design is relying on a locally installed piece of software (e.g. a browser or another software that a user is running) that connects to the distributed database. However, not all internet applications are running on a browser, and not all of them are running on the local machine but sometimes on a server or some other setups (e.g. geo-spatial servers / mapping services / weather API services etc).

Security: is block chain providing full anonymity ?

No. Plain and simple – No, block chain is not a vault that hermetically secures us from hackers, fraudsters, copyright breaches and viciously spying governments, it is actually open to security breaches at least like, if not more than, any other system over the internet. The security fuss around it is just another miss-understanding of how the internet is built. Even if block chain is nicely securing the way data is stored and distributed, this is only one aspect of internet security out of many others. People that claim that block chain is giving full anonymity to users are wrong, and misleading others: yes, indeed the application itself is providing anonymity, however by all means of the other layers of the internet – the ISP (Internet Service Provider) layer, the Mobile Network Internet Provider, the network layer, the hardware layers – in all those layers any type of data that you send to the network and all actions that you perform are fully exposing you. Block chains won’t help people hide!

And there is another aspect to the block chain security which is actually exposing every block chain network to security risks which do not exist with centralized databases: if a critical amount of users (or of CPU, i.e. computer power) decide to manipulate the block chain data, they could easily do that. If we take Bitcoin as an example, if a big Hollywood firm or a powerful government organization like the NSA (both are entities that have got a lot of CPU power) would decide that they want to manipulate the Bitcoin exchange currency, they would be able to do that. Most likely that such an action is illegal, but still – if they wanted, they would be able to do it. And I’m not sure if it is so easy to track down such a block chain security breach as it is easy to track it when someone is breaking to a centralized database, since when a block chain database integrity is breached, the manipulated action would become the “source of truth” for all other block chain users.

So what is it good for?

I’m not trying just to bash block chain here, but to give the right perspective about the new trend to worship block chain like “the biggest thing the internet ever saw”. We had such IT worshiping rituals with the “bug 2000” buzz, with the “web 2.0” buzz, with the “cloud services” buzz and now with block chains buzz. Still – bug 2000 was a risk (just not so big to the magnitude that it was described by “experts”), “web 2.0” offered a new way to look at things (just not as revolutionary as “famous” people claimed) and “cloud services” are a really useful service, only that they existed before Amazon and before it was even named “a cloud” (the name was “scaled services” etc). The same applies to block chains – the block chain concept is great, and is very useful for certain distributed databases, like for contracting systems, banking systems, social network systems and other applications, however – block chains are not a super nova that would wipe the whole IT galaxy without any surviving bits. So yes, we will see a lot of block chain databases and applications coming into the market, but no it is not the thing that would turn the internet upside down. I would say that the block chain invention is as important as the invention and introduction of the SQL databases (mySQL, MsSQL and other SQL standard databases), but not a lot more than that.

In one of my next blog items I plan to look at the Bitcoin currency and to discuss – is it a fraud, or a legit currency? Would you want to invest in it?



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