It’s hard to imagine now that there was once a time when barely anyone cared about blockchain. Bitcoin had started to gain momentum but the technology behind it was rarely every part of conversation out the hardcore tech forums. This trend has completely changed in the past couple of years and now blockchain is one of the hottest technologies in the world and everybody wants to be a part of it.
From major corporations to brand new tech startups, everyone is trying to utilize the blockchain as much as they can. This is resulting in some people worrying that blockchain has become too mainstream and is starting to lose the appeal it once has and that enterprise blockchain gentrification is going to start taking place soon. Andreas Antonopoulos comments on this.
It’s Already Happening
“Gentrification is already happening, the attempts to wrap all of this in a sanitized corporate environment. The brilliant thing about it is, that doesn’t take away the core principles and values anymore. They have built their own little neighborhood and it is boring. They are doing their own little thing. The consultants are making fantastic money The funny thing is, I predicted this in 2013. I suggested that the banks, large software companies would start blockchain projects and gather funding. With this funding, they would train software developers to work on “blockchain” applications.
“How will they train software developers to work on “blockchain” applications? They might buy my book, or do some courses online, and start learning from the existing Bitcoin code base. They will to copy the existing code, learn about cryptography fundamentals and elliptic curve mathematics. They will learn about private-public key pairs, hash algorithms, and consensus algorithms. They will learn about proof-of-work. So, at some point, these developers will discover Bitcoin during their training.”
If you are trained on the boring corporate dime and then one day –after doing work with Hyperledger and ‘distributed ledger technology,’ etc. – you come across Bitcoin and it blows your mind. It blew my mind and it blew your mind. We had that same experience of, ‘Wow, this is very different. It is weird and exciting!’ When you get involved and start reading, you go down the rabbit hole.” We will continue to see that happening. I think that is one of the most exciting parts of this space.
Blockchain vs Existing Databases: Why Companies are investing in blockchain over other database technologies.
There is one important consideration as to why they are investing in private blockchains, which is the hype factor. Private blockchains, and especially the word “blockchain” itself, come with so much hype. People automatically make incorrect assumptions about its characteristics and capabilities just because it has the word “blockchain” in it.
“People assume that if it is a blockchain, then it must be immutable. That is not the case. They assume that if it is a blockchain, then you have decentralized control. That is not the case. They assume that if it is a blockchain, then it is censorship resistant, neutral, able to “track truth,” or no one can cheat the rules. None of these things are true. These are not characteristics of all blockchains. They are characteristics of some blockchains with certain consensus algorithms.
“Those are characteristics of a blockchain which are formed through decentralized consensus. People use the word “blockchain” in order to imply all of these characteristics, whether they are true or not because they can raise a ton of money. The consultants who sell this junk to private businesses don’t care if it is not true. They will be funded whether or not their advice leads to a project that succeeds. A lot of them never go beyond the proof-of-concept, prototype, or minimum viable product (MVP) phase. So far, they have been failing in very large numbers.
“Developing on a blockchain is complicated. It requires new knowledge, skills, and tooling. If you will spend all of that effort, you need to get something in return. If all you are doing is making a software clone of Ethereum and running it as a private network, using proof-of-authority instead of mining, with a few nodes on the cloud via Amazon Web Services (AWS), that is not secure. It is not decentralized and therefore it is not immutable. It is not neutral or censorship resistant.”
“Even though it has none of those characteristics, it will still be hard to develop that platform. It still requires new tooling. It will have edge cases that are often unpredictable, like the possibility of forks, attacks, problems with the propagation of transactions, nodes going out of sync, upgrades, and maintenance. This means you have just exposed yourself to a whole boatload of new, untested, experimental technology. You will get nothing in return, other than a slow, inefficient, centralized database.”
“There may be applications where private blockchains are relevant, applications where the current status quo is a centralized organization. For example, the clearinghouse function. In those cases, you have a bunch of banks, financial institutions, or parties who don’t trust each other. They will want to implement a type of federated, closed blockchain. The problem is, if they try to build their own, the project will turn into a standards war. Design-by-committee projects, where competing parties within this coalition framework will try to insert their own intellectual property. Members of the committee will try to create technical standards on the front-end, while all of their lawyers are securing patents on that technology in the background, to get an edge on everyone else. Each party will introduce their own pet projects and protocol changes to get a competitive advantage.” Effectively, they will still have the same problem they originally had.”
“The reason the parties chose to use something like this is that they don’t trust each other. They end up sabotaging development efforts. One of the interesting aspects of open public blockchain development is that decisions are not, and should not, be driven by corporate interests within a committee. Instead, it is driven by a very large number of volunteers who are developing with different motivations. Many of those motivations are neutral toward interests of various corporations involved in development. Even if there are corporate-sponsored developers, they come from so many different industries, representing a range of interests and applications that they are not directly influencing the protocol.”
“They may try to influence the protocol, but they usually can’t influence the protocol [such as] to give advantage to any one party. It is very difficult, even in the case where you want to build a federated closed system, which is only slightly better than a completely centralized database used by a clearinghouse or trusted third party.”
Andreas Antonopoulos makes it clear that while gentrification of blockchain is happening, it is not really happening for the right reasons and that most corporations and companies that are working on blockchain would be better off sticking to their existing databases.
This article is a transcription of Andreas Antonopoulos’ explanation on Enterprise Blockchain Gentrification.