Posted By ECT News Network on 02/14/2019 in Technology

Solving Blockchain's Problems

Solving Blockchain's Problems

By Tom Anderson 

The blockchain field is an interesting space full of lofty ideals, large amounts of misinformation, wild characters and personalities, huge thefts and fraud, and impressive technical achievements all mixed together to create a world-changing technological area that will be as significant to society as the Internet has been.

Even with all the potential that blockchain has, there are a number of issues that need to be addressed before it can fulfill that potential -- such as cost, scalability, privacy, fraud/theft/loss, and stability, for example. In order to understand how to address those issues (and why they haven't been addressed already), it is helpful to understand the nature and culture of the space, as well as why it is such an important field.

Through the Looking Glass

The origins of the blockchain field lie in a cypherpunk mentality that originally intended the use of cryptography and technology to replace much of the power and control that governments and other central authorities have. The unique evolution of the blockchain space has led to many contradictions and paradoxes.

Where the origins of blockchain were directly tied to admirable values and goals, greed and crime have defined much of its growth. Where it was originally philosophically envisioned to be able to be run by anyone, a small number of groups have gained the majority of control in how blockchain systems are run.

Where the original impetus of creating blockchain systems in the first place was founded on addressing the greed and corruption of central authorities such as banks, absurd consensus algorithms like proof-of-stake (where the rich get richer, and influence is simply bought) have been blessed and are accepted as a viable path for growth.

Where the initial vision of how blockchain should be used was rooted in a contrarian philosophy, the entire space has a follower mentality of "how things should be" unlike nearly any other field other than religion.

At a blockchain conference you're as likely to run into programmer with a ponytail and t-shirt, a Venture Capitalist wearing a suit, a crypto-enthusiast who knows to his core that Bitcoin is going to $100,000 and the only thing to do is HODL, and a hacker who is using your phone's Bluetooth to steal from you.

Despite blockchain being an extremely secure technology, it ironically is one of the most dangerous areas for theft and hacking.

A few weeks ago my phone stopped working, and I quickly discovered that someone had convinced a phone store employee in a different state to switch my number (and therefore all of my two factor authentications) to their phone. This was literally two days after I sent an email to a recent acquaintance that I was sorry to hear about his story of the same thing happening to him, as well as (again, ironically) a description of how our technology could be used to address those types of problems.

I also had given a talk a week earlier at a blockchain conference, and I literally mentioned "SIM card swaps" as a problem while I was on stage.

Months before my phone was hijacked, I found myself racing down my neighborhood street, desperately trying to get to my house to sell some cryptocurrency I had acquired in the past hour, before prices went down more than they already had in the past two hours. I ended up losing $20,000 during that frantic drive. (The whole day will be an interesting blog post at some point, but that is for another time.)

The list of contradictions goes on and on, as do all the crazy stories one gathers month by month being involved in the blockchain field. A walk into the crypto space often feels like a walk through the looking glass.

Despite all the contradictions, the blockchain space is set against a backdrop of a truly world-changing idea. Blockchain is more than a robust database. It is more than an immutable record of transactions. It is more than a cryptographically secured set of transactions. It is even more than a solution to the double-spend problem.

At its core, and the reason it will be so significant to society, blockchain represents trustless computing. The idea that our data is controlled by us is enormous. The idea that we can all transact together independently, without working through central authorities like banks, Google or Facebook, is enormous.

The idea that many different parties, all with disparate interests, can all maintain their data on the same system is enormous.

When one is really evaluating the potential of blockchain, one must realize that this concept is where the true revolution lies. Trustless computing is the point, and too many people (unfortunately, some who consider themselves experts in the field) don't fully understand or appreciate this point. To address all of the challenges in blockchain, one must realize why it is an important technology, and design around those goals.

The Path Toward Fixing Blockchain's Problems

With an understanding of how different the blockchain space is compared to other technical fields, along with an understanding of how important the field is as a whole, it should be clear there is innately a lot of opportunity at hand.

To realize that opportunity, though, the industry will have to grow up. Despite the unique origins of blockchain, and the resulting unique mentalities and unique types of growth in the space, for blockchain to fulfill its potential it will need to ultimately follow a more traditional path and address real business use cases as well as solve real business problems in a scalable and cost-efficient way.

When I first started looking at the blockchain space a couple of years ago, my team and I evaluated what it would take to build a "real business" using blockchain. We were looking at the problems back then that many still don't have on their radar.

When we looked at the state of the blockchain space, we saw that there were enormous problems that needed to be addressed before one could build a real company that relies on blockchain for its foundation. We saw that there were significant problems with scalability, stability, fraud/theft/loss, privacy, immediacy, efficiency, and probably most importantly, cost.

We decided that we needed to address all these issues in a single solution and design our own blockchain protocol. If one builds a house on a faulty foundation, nothing good will come of it.

By far, the biggest area of growth in blockchain over the next few years is going to be in enterprise use. If large corporations are going to use the technology on a global scale, then blockchain needs to address the real business requirements that those corporations will have.

Scalability

One of the biggest problems in the blockchain space is scalability -- or in other words, the ability of a blockchain to handle enough transactions over a given time period. Bitcoin can handle about 5 transactions every second. Visa, in contrast, can handle about 24,000 transactions per second.

One of the worst things any company can do is stake its future on something outside of its control. If a company starts using blockchain to maintain its records or handle its supply chain operations, or anything else critical to its operations, and that platform reaches a point where it cannot grow any further, that could lead to a devastating outcome.

If you need 30 transactions per second to run your business, and the platform you are using can handle only 15 transactions per second, then you will find yourself in a situation where your entire business is handicapped.

Also, therefore, real companies won't rely on blockchain and put themselves in a situation with that kind of risk. Real businesses know the costs of moving to a new platform after business operations are already established, and real businesses manage those kinds of risks.

My company doesn't see other blockchains as our competition nearly as much as we see the status quo as our competition. No one will use blockchain if it creates bigger problems than it solves.

In order to address the problems we saw, we developed our own consensus algorithm, called Proof-of-Validation. With that, we solved the sharding problem, which is a big area of research in blockchain. For those interested in learning more about how our sharding solution works, here is a straightforward explanation.

With our sharding solution, we can process millions of transactions per second. Our latest benchmarking demonstrated over 8 million TPS. These transactions represent on-chain transactions on a global public network that is highly decentralized (in our benchmarking, we utilized tens of thousands of validator nodes).

Fraud, Theft and Loss

When I first started looking at the blockchain space, one of the most shocking revelations was how people in the space viewed theft. Hundreds of millions of dollars are stolen in an instant, without recourse, and everyone simply shrugs and says "yeah, that's just how the crypto space is." It is an amazing concept to be so casually accepted across the entire industry.

It is basic business sense that a system that allows massive theft without recourse, is not acceptable for global acceptance and use of a technology.

The difficulty with solving this problem is that blockchains are both cryptographically secured and immutable. Blockchains were designed to not work through central authorities, and central authorities are historically where protections from fraud, theft and loss come from. One can see, therefore, why people shrug and simply accept the risk as innate in the space. One doesn't need to, though.

Our solution for fraud/theft/loss, at its most basic level, is that a blockchain can be designed so that a business entity can have special permissions like fraud/theft/loss protection or privacy protection. The logic is straightforward -- if one does not like the idea of a central authority overseeing aspects of the blockchain's operations, then one simply does not use those features. It is entirely optional, and people can use our blockchain without any interactions with a central authority.

That said, most people want those protections. I don't lose sleep at night worrying that my bank account is going to be drained of funds, but I do worry quite a bit about even the simplest cryptocurrency transactions ("I hope when I push this button, all of my cryptocurrency doesn't disappear into a never-recoverable void.")

 What happens when someone dies, and they take their private key to the grave with them, leaving their family without access? What happens when you buy something online and it doesn't arrive? What happens if a criminal gets access to your phone through no fault of your own, and therefore access to your accounts, and then steals from you?

Devvio's protection solution is clever, and it is founded on the principle that people control their own assets, identity and records. A user who has value on our blockchain (whether it is fiat, cryptocurrency, commodities, securities, etc.), can mark it as being "DevvProtected" with a timeframe associated with it. Any transfers out of a DevvProtected wallet (such as a theft) cannot be made by the recipient for the defined timeframe.

If you discover a theft during that timeframe, then while the asset is held in an escrow state, Devvio can return the funds after you prove who you are with predefined requirements, such as multifactor authentications, passwords, authenticator codes and even biometric-signatures.

Of course, there are complexities like dispute resolution procedures, but that is the case now with how people are comfortable interacting with digital finances. Our solution allows a trustless, immutable blockchain to work with features that are customary and needed for users' protections.

We view each of the three problems of fraud, theft and loss as a specific logic puzzle in order to find a solution. They are fun logic problems to think through, if you like logic puzzles. You can read more about our fraud/theft/loss solution in our BluePaper.

Privacy

Similar to the problems with fraud/theft/loss, privacy is a critical problem to solve in order for blockchain to be used on a global scale. Privacy is an important requirement for legitimate uses.

Companies always have private information they don't want their competitors to see and use. Most of us don't want our bank account balances to be known by everyone. Privacy is an important concept, and blockchain can't ignore it. Pseudonymous privacy, like Bitcoin's, is not good enough.

On the other side of the coin, the privacy solutions that have evolved in the blockchain space have largely been created within the overall cypherpunk mentality permeating the space and its origins. Solutions like Dash, Monero and ZCash indeed give true privacy, but the problem is that those solutions also allow illegal activities that are unchecked.

As shocking to me as the blockchain community's views on theft is the lack of acknowledgement in the space of a need to have a privacy solution that works within government regulation.

It is basic business sense that a system that allows money laundering, terrorism or any other illegal activity is going to be severely handicapped by governments.

Governments may not ultimately be able to entirely shut down platforms that provide full privacy that can be used for criminal activity, but governments surely will create significant barriers to their use. To think anything else is a pipe dream, and widespread use of blockchain will need to work within regulations.

The only kind of privacy that will thrive is "true privacy, other than court-ordered transparency," which is how I would describe Devvio's privacy solution.

Our privacy solution uses transactions that flow through Devvio. Again, for a crypto-purist, it is entirely optional, and one does not need to use our privacy solution. For most people and companies, though, working with another company to provide private transactions is a reasonable solution.

The solution provides safe and secure private transactions and also gives the government the ability to provide court-ordered subpoenas of information to help prevent illegal activity. Our privacy solution is a practical and scalable one.

To learn more about our privacy solution, you can read more in our BluePaper.

Cost and Other Features

There are a number of other problems with blockchain that we have addressed. Our energy usage is green, and it is orders of magnitude less than Bitcoin's. We have smart contract functionality. We can process transactions in milliseconds using our Dallocation concept. Again, for one to use blockchain on a global enterprise scale, one needs to provide a solution for all the needed requirements.

Perhaps most importantly, though, any solution needs to be cost-effective when compared to the status quo, which in blockchain's case is traditional databases. Cost efficiency was one of the main criteria in our design, and the efficiency of our sharding solution indeed gives a cost-effective solution that still provides the benefits of blockchain's trustless and robust approach.

The Whole Is Greater Than the Sum of the Parts

The vision of blockchain is a powerful one. The idea that our data is ours to control will become ubiquitous thinking in the near future. There will no longer be years of problems with identity theft when someone gets access to your social security number and your address.

The control of data, rather than the data itself, will become what is important. The ability to have security across trillions of interconnected devices will be realized. The ability of thousands of companies to have their operations coordinated with thousands of other companies, while maintaining privacy, will become standard.

Massive recalls of food will be a thing of the past; efficient forms of currency will become commonplace, and records will be readily available to those that have the rights to access them in a secure, efficient, and inexpensive way.

The improper power that central authorities hold over us will be removed.

We will always live within governments and laws, but if used effectively and appropriately, blockchain represents a future where people control their own data, their own privacy, and their own assets.

The bottom line, however, is that in order to fulfill that vision, blockchain needs to work so that it can be used at a global scale, it can be used within government regulations, it can provide protections that society demands, and it can be used cost-effectively.

Devvio's solution can meet all of those requirements now, and we intend to lead the charge towards blockchain's future.

Tom Anderson CEO at Devvio Inc

About the Author
Tom Anderson is CEO of Devvio, based in Alberquerque, New Mexico. He is one of the earliest pioneers in the field of Haptics (adding the sense of touch to Virtual Reality). Tom developed a blockchain protocol from scratch that addresses all of blockchain's biggest challenges such as scalability, stability, fraud/theft/loss, and privacy.


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