In this opinion piece, Hagelstrom takes on the private vs public blockchain debate, arguing that, while bitcoin could also be a more interesting technology, private blockchains offer real business utility.
I’m sure reading the comments on this piece won’t be pretty…
There are countless blog posts describing what a blockchain is, and particularly what private blockchains are, but you’ll notice the funny incontrovertible fact that none of them accept as true with one another .
I won’t attempt to give another definition. Instead, i will be able to attempt to add some more fuel to the hearth . Private blockchains add up , and yes, I shall argue that time albeit I consider myself a bitcoin maximalist.
Now, let me address a number of what I expect are going to be your key arguments:
‘Private blockchains aren’t as secure because the bitcoin blockchain’
Sure, so what?
Have you ever thought that the extent of security needed for an open and anonymous network isn’t an equivalent needed for one where all the participants are known and have some level of trust between each other?
‘You need a token to incentivize miners to secure the network’
Of course, but as long as you would like to use proof of labor . When transactions aren’t anonymous, you would possibly want to use an easier consensus mechanism.
After all, you simply want to stay the info consistent between nodes and be ready to detect if someone doesn’t follow the principles .
In bitcoin, miners need an incentive to take a position resources independent of the transactions they’re going to be validating and securing. in any case they don’t even know who is transacting and what those transactions are for.
On the opposite hand, during a private blockchain, participants are incentivized by the goal established thereon particular business network. If they think that by achieving multi-organization integration on a specific process will bring them cost reduction, that’s incentive enough to play their role on the network.
‘There isn’t real immutability without proof of work’
We agree again. But, we’d like to differentiate between tamper-proof and tamper-evident systems.
If grouping data in blocks and chaining them through hashes makes it possible to detect that somebody changed history, it’d be enough if i’m ready to identify the one who did.
Remember, we aren’t talking about anonymous members, so things could be easier when there are contracts in situ that govern what happens when someone cheats.
‘Those use cases are often solved by traditional databases’
Technologically speaking, probably.
But, governance is typically the toughest issue to tackle on intra-organizational integration projects. Implementing a standard database, even a distributed one, means the organizations got to agree on:
Who will own the info
Who are going to be the central authority to vary or delete that data
Who will own the appliance layer that runs the business logic that validates the transactions when recorded.
Good luck thereupon .
But, if we will have a decentralized system where everybody can have a replica and only append new data validated by the remainder of the members of the network, a really big obstacle is removed.
‘That technology isn’t really interesting’
OK, but big companies don’t implement new tech because it’s ‘cool’ or ‘interesting’. the entire point of investing in technology is to realize some quite efficiency in their business.
If running a multi-company business process can help them to scale back manual steps or validations, costs and risks, or maybe create new revenue streams, it’d be enough to travel for it.
In fact, their duty to their shareholders is to enhance their bottom line, not having the good technology on the block.
‘Do you think that that non-public blockchains are as revolutionary and world-changing as bitcoin?’
But, as I said before, as long as we will achieve efficiencies or a stimulating return of investment, it’s still a really attractive technology for enterprises.
In the meantime, we will all continue learning about the technology, test new functionalities and grow the ecosystem with human and monetary resources.
You never know, a number of that, directly or indirectly, might even find yourself benefitting bitcoin.