Permissioned blockchain login
Public blockchain networks are costly to deal with for a simple reason: Public blockchain networks of logic optimized blockchain nodes e. So every time a contract needs to go into a loop, users of that contract must pay to run that loop.
How much users are required to pay will be determined by how many times the contract must iterate through the loop. The more times through the loop, the more computational operations will be required, and the more money must be spent.
What happens on such a network if users do not send enough money to a contract when they interact with it? That transaction does not happen. There is a valid reason for why these networks have such rules: Controlling this attack vector on a permissioned blockchain network can happen in a very different manner than having to rely on market and pricing dynamics. These are very different things indeed.
A blockchain network which does not have an access control layer baked in as a first class citizen of its clients is a very different animal than a blockchain network which is able to expressly whitelists those that are able to participate in various network tasks such as validation, contract creation, and the like.
Unpermissioned blockchain networks such as bitcoin use distributed computing power to process and verify transactions broadcast upon them. This provides an incentive to continue securing the network, although there are certain risks — such as inter-miner collusion to incorporate false transactions into the blockchain — that the model also presents. The security model of public blockchain networks is not the overall amount of computing power as many suspect.
The overall size of the pie does provide a barrier to entry and also a barrier to quickly acquiring a sufficiency of the non-predictive distribution of power over block creation. The security model for permissioned blockchain networks is very similar, namely it is the non-predictive distribution of power over block creation among nodes unlikely to collude. This attack vector is extremely unlikely it must be reinforced, however it is mathematically possible. Many of the advantages and disadvantages of blockchain architecture stem from the idea that nodes on the network are not necessarily trustworthy.
Most blockchains are designed to withstand untrustworthy nodes within the network via their consensus mechanism. This design parameter, however, begets some limitations. The idea which many blockchain advocates take from the consensus protocol is the idea of extended trustlessness to an ever wider range of the overall application, of which the blockchain is providing one piece.
While the idea of increased certainty and verifiability is, indeed, appealing, the idea of moving to a fully trustless environment presents many challenges. Further, it is not necessarily always the case that trust is a pain point for consumers. When dealing with a bank, for example, consumers trust that deposits or funds held on account are safely kept; where these are not, other mechanisms such as insurance or deposit guarantees are available to secure them. When using web-based applications such as social networks and e-mail, consumers rely on the provider of those services to back up and secure their data.
Indeed, if trust vis-a-vis data and financial services providers were truly a vexing pain point for most consumers, there would be a rush of hosting providers for ownCloud and email-in-a-box solutions along with a drastic increase in transactional volume of non-fiat currency. While we see limited upticks in adoption some of those systems, there is by no means a rush.
Mechanisms that run completely automously and which cannot be broken also cannot be fixed. It is not as if trustworthiness is a new problem. Entire industries have been developed to handle the boundaries and rules of various points along the the trust-to-trustlessness spectrum — not the least of which is the legal system, which operates as a potent safeguard for consumers and commercial entities alike.
For the vast majority of commercial entities, legal norms provide a material constraining mechanism which bounds the actions which that entity can take. While there are indeed challenges which remain to broaden access to justice, and while we feel that things do need to improve, it does not follow that one should throw out hundreds of years of legal and commercial norms simply because we now have elliptic curve cryptography and cryptoeconomics.
While trustlessness is a tricky subject commercially for all the reasons discussed above, increasing the verifiability of data-driven interactions is a goal which all entities and organizations — whether commercial, corporate, not-for-profit, or individual — can benefit from.
It is an interesting argument where Andreas compares Bitcoin network to the Internet and the private blockchains as the secure intranet within enterprises.
He compares them to the Sewer Rat and the Bubble Boy:. Its snout was badly mangled in an accident in last year. You have a system that is antifragile and dynamic and robust. We can apply the same regulations. It will be more efficient than our existing banking system.
Eventually, successful, vibrant, innovative companies are the ones that turn their IT infrastructure inside out. In the future of finance, successful, vibrant, and innovative banks are the ones that turn their infrastructure inside out and make it part of an open, borderless financial system that serves the other 6 billion, that serves all the people who have been excluded from finance.
I for one cannot wait to see how this whole debate will shape up the future of finance. It will change the way of how we build systems of the future. You can watch the full-text interview with Andreas here and the video of his talk here. You are commenting using your WordPress. You are commenting using your Twitter account. You are commenting using your Facebook account. Notify me of new comments via email.
There are many reasons why this is the case: Privacy — using a permissioned blockchain allows only actors who have rights to view the transactions. A permissionless blockchain is ideal as a shared database where everyone can read everything, but no single user controls who can write.
Imagine you are a large bank who uses a shared ledger with a list of other banking partners within a consortium — you do not want the volume of your transactions to be visible to your competitors.