Introduction
Blockchain is an innovation in transaction: an innovation that transforms the way we organise transactions among us. This is a general notion of blockchain, leaving other details unanswered at this stage.
What transactions are subject to blockchain innovation? How it happens? And when it happens?
It all depends on what sort of transformation we are talking about.
In the ocean of blockchain topics in the web space, similar idealistic blockchain mantras echo and shape our perception about blockchain innovation. Here are some examples in paraphrases.
What transactions are subject to blockchain innovation? How it happens? And when it happens?
It all depends on what sort of transformation we are talking about.
In the ocean of blockchain topics in the web space, similar idealistic blockchain mantras echo and shape our perception about blockchain innovation. Here are some examples in paraphrases.
<Idealistic Blockchain Mantras>
Blockchain:
- creates trust between strangers, without the need for any intermediary: enables a system for electronic transactions without relying on trust (Nakamoto, N.D.);
- realises a peer-to-peer transaction system;
- guarantees the immutability of once-validated historical transaction records;
Such idealistic mantras are often associated with fundamentalistic notions about blockchain—such as disintermediation (elimination of middlemen) and peer-to-peer system (elimination of a central governing authority). Those fundamentalistic notions sound beautiful: casting a radical notion that blockchain-base distributed systems can eliminate central governing authorities and rent-seeking middlemen; and, as a result, it shall deter, or even eliminate, the possibility of an abuse of the system by rent-seekers, such as monopolists and/or oligarchs.
However, the reality of blockchain as of today is far from, is even contrary to, the radical notion above. The gap between idealistic fundamentalistic notions and reality has caused confusions, at least to me.
Despite the contrary reality, their beautiful mantras continue to echo and have strong influence in shaping our collective perception about and our collective behaviour toward blockchain.
Are we hypnotizing ourselves with those deceptive mantras? Or, are we in the middle of a long journey to realise such a radical revolution in the way we organise transactions?
There are many ways to slice this topic. This series contemplates the issue from the following three perspectives.
In my journey in contemplating these questions, I encountered a variety of open sources of useful references. This series intends to share some of those references with readers. That said, it does not intend to enumerate a comprehensive list of issues. Overall, the intention here is to encourage each reader to create own list for their better informed-decision making.
Now, let’s begin the first chapter to explore the first topic, linguistic ambiguity in literature.
However, the reality of blockchain as of today is far from, is even contrary to, the radical notion above. The gap between idealistic fundamentalistic notions and reality has caused confusions, at least to me.
Despite the contrary reality, their beautiful mantras continue to echo and have strong influence in shaping our collective perception about and our collective behaviour toward blockchain.
Are we hypnotizing ourselves with those deceptive mantras? Or, are we in the middle of a long journey to realise such a radical revolution in the way we organise transactions?
There are many ways to slice this topic. This series contemplates the issue from the following three perspectives.
- Linguistic ambiguity in literature;
- Trilemma of Consensus Protocols;
- Myth-conception (myth arising from misconceptions);
In my journey in contemplating these questions, I encountered a variety of open sources of useful references. This series intends to share some of those references with readers. That said, it does not intend to enumerate a comprehensive list of issues. Overall, the intention here is to encourage each reader to create own list for their better informed-decision making.
Now, let’s begin the first chapter to explore the first topic, linguistic ambiguity in literature.
The gap between fundamentalistic ideal and reality:
Now, let’s paint a big picture about the gap. Popular fundamentalistic blockchain ideals portray blockchain as an innovation that
Often, blockchain technology is portrayed as a highly potent innovation that disrupts incumbent intermediaries.
In a way, what resonates from those fundamentalist’s notions is a libertarian revolution in how we organise transactions. The fundamentalistic pursuit for blockchain gathered a momentum, as their libertarian desire to repudiate existing regimes of human governance grew out of their distrust toward it. Here is a relevant reference that portrays a libertarian notion of blockchain in a historical perspective of economic thoughts: http://cryptoeconomics.com.au/2017/10/byzantine-political-economy/ (Berg, Davidson, & Potts, 2017).
Now, we have a reality check. In reality, we observe many contrary cases in the evolution of blockchain applications. And those cases:
Simply put, fundamentalistic notions of blockchain are not happening today as a viable replacement for the existing regime of human governance.
Moreover, here comes a further essential question: is blockchain really free from human governance?
- verifies and validates transactions in the absence of a centralised governing authority, crystalizes validated transaction records (immutability), and shares its record in publicly accessible ledger;
- guarantees the security of transactions;
- realises distributed (unstructured vs. centralised) ecosystem that enables peer-to-peer transactions;
- eliminates rent-seeking middleman businesses and democratizes processes (disintermediation);
- maintains an autonomous self-regulating governance;
Often, blockchain technology is portrayed as a highly potent innovation that disrupts incumbent intermediaries.
In a way, what resonates from those fundamentalist’s notions is a libertarian revolution in how we organise transactions. The fundamentalistic pursuit for blockchain gathered a momentum, as their libertarian desire to repudiate existing regimes of human governance grew out of their distrust toward it. Here is a relevant reference that portrays a libertarian notion of blockchain in a historical perspective of economic thoughts: http://cryptoeconomics.com.au/2017/10/byzantine-political-economy/ (Berg, Davidson, & Potts, 2017).
Now, we have a reality check. In reality, we observe many contrary cases in the evolution of blockchain applications. And those cases:
- invalidated once-validated historical transactions (fork);
- revealed vulnerability of the system’s security (e.g. attack-prone Smart Contract/ Ethereum);
- promoted highly concentrated systems that rely on a few pre-approved parties;
- enhanced the intermediary’s controlling power over the system for both incumbent and new breeds of middleman businesses;
- required interventions of human governance;
Simply put, fundamentalistic notions of blockchain are not happening today as a viable replacement for the existing regime of human governance.
Moreover, here comes a further essential question: is blockchain really free from human governance?
1. Linguistic Ambiguity
How and when blockchain transforms our transaction culture, all depends on what sort of transformations we are talking about.
Cut the long story short, it’s not any type of blockchain that is designed to incorporate those ideal goals into reality. Those transformations that those fundamentalistic notions contemplated would require a certain type of blockchain.
The point here is: the word, blockchain, is a blanket term that covers different types of its constituents. And the blanket term is a general term and tautologically is not specific enough to characterise the differences among all types of blockchain. As shown later, there are three subcategories of blockchain: “permission-less, public blockchain,” “permissioned, private blockchain,” and “permissioned, federated/consortium blockchains.” In daily literatures rampant use of this general term is partly causing confusions in describing certain specific topics.
Cut the long story short, it’s not any type of blockchain that is designed to incorporate those ideal goals into reality. Those transformations that those fundamentalistic notions contemplated would require a certain type of blockchain.
The point here is: the word, blockchain, is a blanket term that covers different types of its constituents. And the blanket term is a general term and tautologically is not specific enough to characterise the differences among all types of blockchain. As shown later, there are three subcategories of blockchain: “permission-less, public blockchain,” “permissioned, private blockchain,” and “permissioned, federated/consortium blockchains.” In daily literatures rampant use of this general term is partly causing confusions in describing certain specific topics.
Variations within Blockchain space:
Let’s have an overview about these sub-categories of “blockchain” and illustrate the differences. For this purpose, I would like to share the following reference: “Blockchains & Distributed Ledger Technologies”: https://blockchainhub.net/blockchains-and-distributed-ledger-technologies-in-general/ (BlockchainHub, ND). This reference, which was recommended to me by a prominent blockchain specialist, compiles other existing references and organise a balanced knowledge about different types of blockchain. My arguments below are based on this reference.
The term “blockchain” refers to a general concept about an innovation that uses distributed ledger. And it can be sliced into different types. There are two ways to do so. One way is to slice it into two: permissioned vs permission-less. Another way is to slice it into three sub-categories: private blockchain, federated/consortium blockchain, and public blockchain.
The term “blockchain” refers to a general concept about an innovation that uses distributed ledger. And it can be sliced into different types. There are two ways to do so. One way is to slice it into two: permissioned vs permission-less. Another way is to slice it into three sub-categories: private blockchain, federated/consortium blockchain, and public blockchain.
Categorizing different types of Blockchain:
The first framework slices the blockchain universe based on the difference whether it requires permission or not for downloading protocols, writing codes, and validating transactions.
In this first framework, by design, permissioned blockchain rather reinforces the power of intermediaries: it is not designed to realise the notion of disintermediation. Only permission-less blockchain could fit into the notion of the fundamentalistic mantras.
The second framework slices the blockchain universe according to the structure of the distribution in the eco-system, of the right and power to download protocols, write codes, and validate transactions. This series uses the following simplified version of terminologies:
In the second framework, the first two types (private blockchain and federated/consortium blockchain) are fundamentally different from the third one (public blockchain): the former two are permissioned blockchains; the latter, permission-less. The first two types, therefore, confront the fundamentalistic mantras. They restrict the right and responsibilities of the control over the system to pre-approved governing parties only. These systems operate under trust-base human governance and require governing parties in validating transactions as well as guaranteeing the security of the system.
Since there is no consensus in the definition of the terminology, we need to come to our own consensus. This series sets the following three types: permissioned, private blockchain; permissioned, federated/consortium blockchain; and permission-less, public blockchain. (Some might argue that these terms suffer from tautology)
The popular fundamentalistic blockchain mantras refer only to the third one, “permission-less, public blockchain.”
Repeatedly, the first two types actually enhance the concentration of control over existing business interactions. In this sense, they are actually good friends for incumbents, serving as a convenient tool for them to enhance efficiency (in cost and process), security and fraud detection. These types would even give rise to a new breed of intermediaries. Therefore, these blockchains would create a paradise for intermediaries—rather than democratising control.
On the other hand, in principle, the third one, “permission-less, public blockchain,” could pose a disruptive threat to some incumbents through disintermediation (eliminating middle-men)—although this principle notion will be challenged as myth-conception later in the series. In contrast to the first two alternatives, “permission-less, public blockchain” is expected to incorporate into reality the idea of pure peer-to-peer transactions.
- Permissioned blockchain requires an advance permission for a party to download protocols, write codes, and validate transactions.
- Permission-less blockchain allows anonymous parties including malicious ones to download protocols, write codes, and validate transactions without any advance permission.
In this first framework, by design, permissioned blockchain rather reinforces the power of intermediaries: it is not designed to realise the notion of disintermediation. Only permission-less blockchain could fit into the notion of the fundamentalistic mantras.
The second framework slices the blockchain universe according to the structure of the distribution in the eco-system, of the right and power to download protocols, write codes, and validate transactions. This series uses the following simplified version of terminologies:
- Private blockchain grants the right to a single pre-approved organisation. It is a permissioned scheme. It can reinforce the monopolistic control of a given eco-system;
- Federated/consortium blockchains grant the right to pre-approved multiple organisations. Thus, they are permissioned scheme. And it can reinforce an oligopolistic control of a given ecosystem;
- and public blockchain grants the right to anonymous parties. It is open to the public and requires no permission for the right. In principle, this permission-less system could enable peer-to-peer transaction systems.
In the second framework, the first two types (private blockchain and federated/consortium blockchain) are fundamentally different from the third one (public blockchain): the former two are permissioned blockchains; the latter, permission-less. The first two types, therefore, confront the fundamentalistic mantras. They restrict the right and responsibilities of the control over the system to pre-approved governing parties only. These systems operate under trust-base human governance and require governing parties in validating transactions as well as guaranteeing the security of the system.
Since there is no consensus in the definition of the terminology, we need to come to our own consensus. This series sets the following three types: permissioned, private blockchain; permissioned, federated/consortium blockchain; and permission-less, public blockchain. (Some might argue that these terms suffer from tautology)
The popular fundamentalistic blockchain mantras refer only to the third one, “permission-less, public blockchain.”
Repeatedly, the first two types actually enhance the concentration of control over existing business interactions. In this sense, they are actually good friends for incumbents, serving as a convenient tool for them to enhance efficiency (in cost and process), security and fraud detection. These types would even give rise to a new breed of intermediaries. Therefore, these blockchains would create a paradise for intermediaries—rather than democratising control.
On the other hand, in principle, the third one, “permission-less, public blockchain,” could pose a disruptive threat to some incumbents through disintermediation (eliminating middle-men)—although this principle notion will be challenged as myth-conception later in the series. In contrast to the first two alternatives, “permission-less, public blockchain” is expected to incorporate into reality the idea of pure peer-to-peer transactions.
The general term, blockchain, does not explain much:
In other words, the term “blockchain” itself is too general. It causes ambiguity when we need to distinguish contrasting characteristics of blockchain constituents. It not only fails to explain much about the differences, but also could cause confusion, since it conveys confronting notions within.
Furthermore, many, if not all, blockchain mantras use the general term “blockchain” to describe the notion of “permission-less, public blockchain”; as a result, it causes linguistic ambiguity about the topic we discuss.
A good news is that we can overcome confusions arising from linguistic ambiguity by linguistic clarification. So, let’s specify the type of blockchain, when we talk about it.
A bad news is that writers might not be necessarily enthusiastic about making an extra effort for clarification and continue using the general term, blockchain, without distinction.
In this setting, we, as readers, need to guard ourselves with an organised knowledge.
Now, we know that popular fundamentalistic blockchain mantras refer primarily to theoretical notions associated with the design of “permission-less, public blockchain.” Furthermore, in practice as of today, successful scalable applications emerge primarily from the space of the other types of blockchain, which do not fit into the characteristics of the popular fundamentalistic mantras. This is a part of the reason why we sometimes see the gap between blockchain-fundamentalistic notions and our understanding about reality.
Furthermore, many, if not all, blockchain mantras use the general term “blockchain” to describe the notion of “permission-less, public blockchain”; as a result, it causes linguistic ambiguity about the topic we discuss.
A good news is that we can overcome confusions arising from linguistic ambiguity by linguistic clarification. So, let’s specify the type of blockchain, when we talk about it.
A bad news is that writers might not be necessarily enthusiastic about making an extra effort for clarification and continue using the general term, blockchain, without distinction.
In this setting, we, as readers, need to guard ourselves with an organised knowledge.
Now, we know that popular fundamentalistic blockchain mantras refer primarily to theoretical notions associated with the design of “permission-less, public blockchain.” Furthermore, in practice as of today, successful scalable applications emerge primarily from the space of the other types of blockchain, which do not fit into the characteristics of the popular fundamentalistic mantras. This is a part of the reason why we sometimes see the gap between blockchain-fundamentalistic notions and our understanding about reality.
Summary
So far, this blog contemplated linguistic ambiguity as the first suspect behind the confusion arising from the gap between reality and the popular fundamentalistic notion of blockchain.
This chapter narrowed the scope of our attention from the entire blockchain universe to “permission-less, public blockchain.” The next chapter (blog) focuses on the issues surrounding the cornerstone of “permission-less, public blockchain,” consensus protocols.
Michio Suginoo
This chapter narrowed the scope of our attention from the entire blockchain universe to “permission-less, public blockchain.” The next chapter (blog) focuses on the issues surrounding the cornerstone of “permission-less, public blockchain,” consensus protocols.
Michio Suginoo
Reference
- BlockchainHub. (ND). Blockchains & Distributed Ledger Technologies. Retrieved 1 19, 2018, from BlockchainHub: https://blockchainhub.net/blockchains-and-distributed-ledger-technologies-in-general/
- Nakamoto, S. (N.D.). Bitcoin: A Peer-to-Peer Electronic Cash System. Unknown: Unknown. www.blockchain.com. (N.D.). Difficulty. Retrieved from www.blockchain.com: https://blockchain.info/charts/difficulty?scale=1×pan=all