In the midst of block chain hype, i read an HackerNoon article which reminds us that one (or plenty) dose of healthy skepticism regarding the technology is necessary.
Kai Stinchombe elaborates many points on why blockchain characteristics (distributed, encrypted and anonymous ledger) might not be best suited to “revolutionize” many of the hypothethical use cases of this technology.
Really enjoy this article. I share some of the pessimism regarding this technology. One of my team mate is really excited to research block-chain on one of our business problem, but i still havent convinced yet because i felt like that is merely a ledger problem which will be overkill to solve it using distributed ledger.
Read the full article here, do make sure to read the comment discussion as well since there are many contrarian points which adressed nicely by Kai.
Here are some of the highlights :
On payments and banking :
– For processing payments, Visa currently can handle 60k transactions per second while blockchain-enabled Bitcoin current maximum is 7
– With 0.01% performance, Bitcoin estimated to use 35 more electricity than VISA
On Anonymity and freedom from government overreach
– Government-backed banking system provide guarantee, reversibility, identity verification, audit standards and investigation system. Bitcoin on the other hand has none hence Bitcoin is akin to banking institution in the middle-age
– Smart-contracts are self-executing contracts which can be encoded in block-chains
– Theoretically, Smart Contracts are more cost effective than “dumb contract” because they will execute the clause automatically with no ambiguous interpretation
– Dumb contract are better and safer because of their “slow” nature. it makes it possible for human intervention and leave room for debate from both-sides of contract
On blockchain as distributed storage, computing and messaging
– Blockchain as distributed storage seems make sense : break document up into “blocks”, encrypt, and put them in a distributed ledger
– However current common solution for this (Dropbox, GDrive) is better in many ways : multiple factor authorization instead of private keys, price and features
On blockchain as stock issuance (ICO)
– Primary role of government-backed stock exchange (e.g Nasdaq) is compliance and security provider. Taking these factor out of stock-issuance is a recipe for daylight robbery
On blockchain as authenticity verification
– Other usecase for blockchain is to make public, unalterable, undeletable statement published publicly
– However, in blockchain, there are no way to delete the records or override the transaction
– Adopting block chain technology makes theft or impersonation more likely rather than less
– Advantage of existing existing human and software systems surrounding transactions outweigh promised benefits of blockchain as well as hidden costs, of irrevocable, automated execution
– With all the hype, nobody currently asking questions whether current user of existing system (payments, credit card holder) are seeing the benefit of blockchain