Earlier this week, I had the pleasure of attending a Meetup event that discussed many of the important tech trends of the year.
The topics discussed were machine learning, autonomous vehicles, chatbots, and the one that got me excited, blockchain.
Blockchain’s potential hasn’t been fully tapped into yet, but many are sure that it will play a vital role in how we live our lives in the future. This is the technology of the future due to its unrivaled ability to make transactions simpler and more secure. Then what are we waiting for?
The blockchain speaker was Peter Borovykh, a Solution Architect at BlockchainDriven. His knowledge and passion for blockchain got me very excited about blockchain’s potential. Here are some of the important things I learned from Peter at this event:
Individuals, private enterprises and regulators all over the world see great potential in utilizing the technology of blockchain, but its integration into business models is somewhat slowed down due to the lack of agreement on which protocol to stick with. Blockchain is currently a very fragmented space, and the community surrounding will have to come together and focus on advancing blockchain’s integration into businesses.
However, the blockchain space isn’t only excitement and potential. While at this event, I learned of some problems that blockchain is facing, as well as some interesting solutions to those problems. First, Peter introduced the two biggest problems that blockchain as a whole is facing.
Problem #1: The blockchain community is divided
Not all blockchains are the same. Bitcoin is different from Ethereum, which is different from other blockchain protocols. Despite many points of differentiation, the two major poles pertain to:
- Consensus mechanism: Proof-of-Work (PoW) vs. Proof-of-Stake (PoS)
- Level of access: Public vs. Private
For example, both Bitcoin and Ethereum are public blockchains allowing any user to join the network, while Hyperledger offers a permissioned ledger with strong control over who could join. Bitcoin implements a PoW mechanism to validate transactions, which implies that individual nodes in the network all have to use computational power of their machines to either accept or reject the transaction. On the other hand, Ethereum utilizes the PoS consensus, which basically means that the more Ether coin one holds, the more voting he or she gets.
Given sufficient level of control over users in the network and limited access, private blockchains can typically offer faster and, often times, cheaper process of transaction verification. Public blockchains could struggle with the speed of transaction processing as a payoff for offering a seat at the table to everybody who is willing to join the network.
Problem #2: Blockchains are meant to be distributed, but struggle to be
Blockchains are supposed to be distributed in nature, meaning they treat each user as an equally important part of the web. In centralized or decentralized models, there are one or several points of weakness in the system, which you can see in the graphic above. Centralized is the weakest of these three, due to its incredible vulnerability at one point and one point only. Decentralized is significantly better, as it doesn’t rely on just one point, but is still weaker than the distributed model, which has a reliance on every point in the system, meaning breaches are nearly impossible.
Conceptually, the majority of blockchains on the market are distributed in nature. However, distributed networks almost do not exist. Blockchains with PoW consensus rely on the cheapness of electricity, thus causing it to favor China, emerging economies, and geographical regions with favorable, cooler climate (due to savings related to cooling of heated machines). PoS is similarly at risk of not being fully distributed because the model treats the price of the cryptocurrency as the price of a vote in the network, meaning that a large enterprise with large resources of financial capital could attempt to centralize the voting power.
The Solution: Geospatial Technology and Data
Peter believes that the synthesis of more than one technology could be the solution that would unite different blockchain camps together. Geospatial technology could be one of such technologies. Geospatial technology represents equipment that could visualize, measure, and analyze features of our planet to produce very helpful and meaningful geospatial data.
Blockchain currently has no geographical aspect to it. It treats all nodes the same, regardless of where they are located. However, utilizing geospatial technology and data could help add a geographical component to every participant of a blockchain network, resolving existing conflicts regarding consensus mechanism and level of access to the blockchain network.
Peter believes that an algorithm of selecting a representative sample across geographies could turn existing blockchain technologies into a more distributed network; and that can be applied to blockchains based on both PoW and PoS consensus mechanisms. Examples of such algorithms include selecting a representative sample based on region population, number of nodes in the region, or population density. Smart geospatial authentication integrated into a series of smart contracts on the network could help get the middle ground between some of the existing dichotomies.
Geospatial technology is one of many exciting tech opportunities that are bound to be incorporated into blockchain in the very near future. As these new opportunities emerge, exciting developments to blockchain will take place. While blockchain might not currently be perfect, it is still arguably the most exciting space in existence, and bettering it can only have a positive effect on the future.