2017-08-31

Beauty of #blockchain – separating the wheat from the tares

As we know, the blockchain technology is actually a multi-user, centralised (logically) and distributed (physically) archive with excellent availability and integrity characteristics. Such an archive collects various records and packs them into chained and (practically) immutable blocks.

Why is it centralised? Because of the single uniform code base and the consensus process, i.e. a combination of “administrative” means and technology.

Numerous applications (e.g., bitcoin) use the blockchain technology to resolve the problem of “double spending”, i.e. if a record (which is a transaction in this case) spends the same “piece” of cryptocurrency more than once then that double “piece” of cryptocurrency it will be detected as “untrusted” and, finally, such a record (i.e. transaction) will be rejected by the blockchain-as-an-archive of records (or a ledger).

Thus, in such applications, blockchain plays two roles: ( see also http://improving-bpm-systems.blogspot.ch/2016/06/disassembling-blockchain-concept.html ).
  1. validating that a used “piece” of cryptocurrency is “trusted” (logical integrity or counterparty risk is acceptable) and 
  2. guarantying that a record is safely stored (physical integrity).
Because these roles are not explicitly separated, the average time to store a transaction in the bitcoin application is about 10 mins because each transaction must be packed into a block and the “block time” is 10 mins. And, the "wait time" for POW blockchain is approximate 60 mins for minimal risk of a transaction is rejected. Obviously, this is not practical at the point-to-sale to buy a cup of coffee.

Actually, at the point-of-sale, a buyer and a seller need only the logical integrity, i.e. validating that a “piece” of cryptocurrency to be used in the transaction is “trusted”. The physical integrity is an “internal business” of the blockchain-as-an-archive.

So, the blockchain-as-an-archive has to have a validating function that confirms a particular “piece” of cryptocurrency is “trusted” by three conditions:
  1. it is based on existing transactions which are stored in the blockchain-as-an-archive, 
  2. those transactions used “trusted” “pieces” of cryptocurrency and 
  3. those transactions are “old” enough (e.g. they were included into the blockchain-as-an-archive at least 60 mins ago). 
There can be several simple algorithms for implementing such a validating function, e.g. by asking to vote a random collection of miners.

Of course, not all “pieces” of cryptocurrency are always “trusted”. Their normal life cycle is “under validation” and then “trusted” or “untrusted”. This means that an owner of some “pieces” of cryptocurrency will have to use in his/her transactions only “trusted” “pieces” of cryptocurrency.

The both sides of any transaction (the seller and the buyer) may check independently the level of trust for involved “pieces” of cryptocurrency. For example, the seller may define its own level of “trust” thus rejecting some “untrusted” (from his/her point of view) “pieces” of cryptocurrency. This is very similar to old good practices when a cashier (or booking-clerk) was checking some new banknotes.

Also, the blockchain-as-an-archive has to have an adding function that sends a transaction to the blockchain-as-an-archive.



Thus, by separating the logical integrity and the physical integrity, it would be possible to improve performance of some applications which are based on blockchain-as-an-archive.


Thanks,
AS

And thanks to Charles Moore for reviewing this blogpost.
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