Disrupting Blockchain (Part 1)

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In a lively discussion about blockchain and disruption, once again the question was raised “what will disrupt blockchain?”, and the answer to that question is as simple as it is straightforward. Blockchain itself will disrupt blockchain.

As carrier for disruption of many industries and applications, blockchain has become a catalyst for change and transformation. Although not yet in full scale implementation besides some successful crypto-currencies and pilots in for example supply chain, the potential is clearly identified. Unleashing that potential into real-life and large-scale applications of blockchain based platforms will quickly turn the power of disruption on blockchain itself.

The prime USP’s of blockchain based technology are decentralization and encryption, creating a trustless environment with security-by-design. As soon as we take a closer look under the hood of this “new” technology, we quickly identify that there isn’t that much new technology involved. Analyzing the concept of decentralization beyond the label, it is true that there isn’t a central trust- or owner-body for the data involved but there are other levels of centralized control which make it significantly less decentralized as it appears. And then there is the matter of resources required to build and operate a public blockchain based platform, especially when the scale goes beyond the small scale implementations we have seen so far outside of cryptocurrencies.

Those are however all problems and challenges “underneath the hood” of the concept, and the evolution of blockchain and its technology will eventually solve these challenges. Nonetheless there is a much bigger challenge to be addressed, and experts recognize that there might not be a short term solution: legislation and compliance.

Before blockchain based technologies can become mainstream large-scale and real-life applications beyond cryptocurrencies, blockchain needs to be disrupted! Blockchain based technology offers in theory a decentralized trustless system which is not directly controlled by an organization or a government. In short, the power of control over the system and its content is decentralized.

In reality however, blockchain enabled platforms are under centralized control at an entirely different level. For example, the mysterious founder of bitcoin Satoshi Nakamoto, whomever he or she may be, determined the design and implementation of Bitcoin, and neither the distributed ledger nor the peer-to-peer protocols can change that. Proof of work, proof of stake, a hybrid or any of the other consensus protocols, are decisions made by the originator of the blockchain enabled platform.

In a hard fork of Bitcoin Cash in Bitcoin Cash ABC and Bitcoin Cash SV, not much unlike the Linux kernel fork and related disputes between Alan Cox and Linus Torvalds, the unity and consensus on future development of Bitcoin Cash has been broken permanently and there is likely more to come. This fork demonstrates clearly that there are still groups of people and stakeholders determining the future of blockchain and crypto currency platforms, as much as it demonstrates that their interests can make or break a platform in the same way as the stakeholders of a so called centralized platform can.

What the advocates of decentralization and their believers do is present the distributed ledger and peer-to-peer aspects of blockchain as a unique feature of a decentralized platform. And they do that knowing (or at least we should hope that they understand what blockchain enabled platforms are) very well that blockchain platforms are not really decentralized. Not from a technology perspective and not from a control perspective. Comparing blockchain with centralized platforms, and emphasizing the alleged decentralization benefits of blockchain in its current form, is as valuable as comparing apples with apples. They might taste different, they might look different, but they are still apples.

After an initial phase of skepticism and reluctance, big players are entering the market and develop blockchain enabled platforms. They design and develop the platforms, make the critical decisions about the protocols, structures and fees. An essential ingredient of the strategy of large technology providers is to protect their IP with patents, and there are currently already well over 5,000 blockchain related patents, further breaking down the decentralization myths around blockchain.

A further nail in the coffin of the myths around the decentralization of blockchain enabled platforms is the rise of private blockchain platforms and platforms based on pre-minded blocks by the originator. Decentralized? Not really!

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