“Some scholars have argued that the invention of double-entry book-keeping enabled the rise of capitalism and the nation-state. This new digital ledger of economic transactions can be programmed to record virtually everything of value and importance to humankind: birth and death certificates, marriage licenses, deeds and titles of ownership, educational degrees, financial accounts, medical procedures, insurance claims, votes, provenance of food, and anything else that can be expressed in code. The new platform enables a reconciliation of digital records regarding just about everything in real time. In fact, soon billions of smart things in the physical world will be sensing, responding, communicating, buying their own electricity and sharing important data, doing everything from protecting our environment to managing our health. This Internet of Everything needs a Ledger of Everything. Business, commerce, and the economy need a Digital Reckoning. … So why should you care? We believe the truth can set us free and distributed trust will profoundly affect people in all walks of life. Maybe you’re a music lover who wants artists to make a living off their art. Or a consumer who wants to know where that hamburger meat really came from. Perhaps you’re an immigrant who’s sick of paying big fees to send money home to loved ones in your ancestral land. Or a Saudi woman who wants to publish her own fashion magazine. Maybe you’re an aid worker who needs to identify land titles of landowners so you can rebuild their homes after an earthquake. Or a citizen fed up with the lack of transparency and accountability of political leaders. Or a user of social media who values your privacy and thinks all the data you generate might be worth something – to you. Even as we write, innovators are building blockchain-based applications that serve these ends. And they are just the beginning.– How This Worldwide Ledger Works, Chapter 1. The Trust Protocol, p7-8
DISCUSSIONS ON REVOLUTIONARY POSSIBILITIES OF THE BLOCKCHAIN TECHNOLOGY ONLY IF
There has been so much hype on Bitcoin and the blockchain technology that’s running behind Bitcoin. While I was reading this book since last summer, Bitcoin’s traded value experienced a spectacular rise and fall in its own history in the market, making it difficult for me to clearly see and build a perspective about the blockchain technology.
Clearly, as of today, we see divided opinions about the blockchain technology (and Bitcoin, not to mention). Proponents such as the authors of this book claim the technology has a huge revolutionary potential for changing the whole facet of our society, while critics including Nouriel Rubini don’t hesitate to claim the only achievement of the blockchain technology is thousands of cryptocurrencies that have proliferated ever since. 1
So with all these hopes and criticisms in the background, I gave myself a bit more time to gain more knowledge and insight so as to build a clear and balanced view about the technology as well as the authors’ claims in the book.
With huge endorsements at the opening page, the book brings us to the full landscape of technology’s developments and of discussions on its potentials through extensive interviews with numerous stakeholders during 2014 through 2015.
However, considering the fast evolving nature of today’s technology, it’s natural to assume that what the authors saw as great potentials while writing the book may have changed in some way with new variants added into the technology space.
So, it is in this context that I would like to cautiously review the book. To conclude first, my opinion on the authors’ assertions is that they may be rather ideal than practical in the near future, except the fact that the revolutionary aspects clearly indicate where our future improvements should occur in the long run.
I need to apologize first. My book review for this book is very long and in-depth. So, I will split my writing into a series of posts with a readable length.
I will start my book Summary first with ‘terminology’ to clearly define rather confusing technical terms out there, followed by ‘the trust protocol,’ ‘ten revolutionary aspects’ that the blockchain technology can realize, ‘challenges’ it faces and ‘the future governance.’
Then I will move on to Contemplation section where I discuss my own ideas on ‘prerequisites’ for the technology’s success first, followed by ‘SWOT based analysis’ to see where the technology stands today, and thereby opportunities, and lastly on the technology’s ‘promise versus as-is.’ Finally, I will move on to Closing with brief review on the book itself. Below are the order and the subjects in bullet points.
● Terminology (Separate Article)
● References (Separate Article)
● The Trust Protocol
● Blockchain Revolution in Ten Areas
● Implementation Challenges
● Moving Forward : Blockchain Governance
● CONTEMPLATION: SEEKING EVOLUTION OVER REVOLUTION
1. Prerequisites for the Success of the Blockchain Technology
(A) Private Money Issue
■ Currency with No Legal Tender
■ Deflationary Monetary Policy: Three Issues
■ Historical Lessons
■ Invitation of Central Banks into Competition
■ Speculation of Possible Ponzi Scheme
(B) Leadership Issue
(C) Technology Issues
■ Mining Economics
– Environmental Cost
– Block Time
– Speed versus Security
– Blockchain Size versus Security
– Block Size(Transaction Capacity) versus Network Integrity
– Social Malaise: The Greedy Knows No Limit
■ Miners Economics
– Becoming Miners (Nodes)
– Capital Intensive Investment
– Concentration Tendency (Mining Process, Capital, Geography)
– Decreasing Rewards and Profits
– Bitcoin Value versus Miners versus Security
– Implications on Other Consensus Models
■ Incentives (Rewards) Economics
– Fixed Supply of Bitcoin as Incentives
– Once All the Bitcoins Have Been Mined
– Reliance on Anonymous Incentivized Miners
– Reaching Break-Even Cost amid Bitcoin Price Instability
– Satoshi Nakamoto’s Identity
– Incentives versus Leadership (or Absence of It)
– Compromise of Network Integrity versus Incentives
■ Frictions in the Real World
– Digital Wallets
– Cryptocurrency Exchanges
– Private Key Security
(D) Summing Up: Meeting 7 Conditions as Prerequisites?
2. SWOT Analysis: Where Do We See Opportunities?
3. Promise versus As-Is
Q3. Businesses’ Interest on Permissioned Blockchain
Q4. Initial Coin Offerings (ICOs)
Terminology is very important to avoid confusion. I would like to ask readers to carefully go through the terms I have listed in a separate article to get clear understanding.
Kindly refer to the separate article.
(End of Part 1. To be contined in the next article)