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Blockchain - A Year Later

By Gregory Ceton, CSI, CDT posted 07-22-2019 15:43

  

About a year ago, I authored an article on the possible implementations of blockchain in construction. In that article, we covered the basics of what a blockchain is and the value it can provide for many information management scenarios in the AEC industry.

Those use cases haven’t changed much in the intervening year, but what has changed is acceptance of blockchain in other applications and movement in how it may be implemented. I think this activity will have a downstream effect that may speed implementation in construction, so it is worth looking at these developments in a little more detail and seeing what they may contribute.

Facebook is in the House!

One of the biggest developments in the world of blockchain and its application in cryptocurrency is the announcement by Facebook of its latest project, Libra. Facebook is working with an impressive array of partners who have each invested $10 million or more in the project. For that investment, the partners will have a share in Libra governance and revenue.

The system is being run in a surprisingly open manner for a corporate cryptocurrency. Often corporate blockchains follow the basic protocols but have all nodes controlled directly by the corporate owner, such as a bank or insurance company, thereby making them centralized and not shared by disinterested nodes. In contrast, by sharing ownership and governance with many other companies in a nonprofit structure and providing an open-source development environment and open blockchain, the system as proposed adheres closely to basic blockchain concepts and architecture.

The goal of Libra is a big one, to provide financial access to the nearly a quarter of the Earth’s population who do not have bank accounts (including 10 million Americans) and to make a cryptocurrency usable for everyday transactions. Bank accounts provide tools to make life easier, reduce predatory fees, and build savings and assets. A non-bank independent solution that is tied to users’ mobile phones has the potential to change the economic status of billions. Facebook already has the contact and influence to assist small businesses and other advertisers in taking advantage of Libra, accomplishing the second aim.

More to the point, if Facebook and its partners do it right, it will put an understandable interface between users and the blockchain that powers their accounts, something that doesn’t yet exist. This will effectively normalize the reality of blockchain by moving it to the background where it belongs.

Obstacles Remain

In addition to the lack of a comfortable interface for participating in traditional blockchains, cost is another obstacle that stands in the way of information use cases that otherwise seem almost designed for blockchain. The financial and social costs of maintaining an active blockchain can be significant.

As we know from last June’s article, blocks are continuously added to the chain by people who want to store information (transactions in the case of cryptocurrency) in the chain. Under current protocols for administering a blockchain, this happens continuously as regular opportunities are provided by the chain for a block to be added.

This raises administrative questions for a blockchain. How do we choose between blocks that are presented at similar times, verify the legitimacy of the transactions, and also provide a defense against meaningless or valueless attempts to post (i.e. spam) or a denial of service attack? Blockchains have developed consensus protocols for accomplishing this. 

Most of these protocols presume use of blockchain for cryptocurrency and rely on this exchange of value to pay the actors who help the system maintain consensus about addition of blocks. This can create competition in the case of a dominant consensus algorithm like Proof of Work. These types of contests can waste resources. As recently as 2017, the Bitcoin network used 0.14% of global energy production annually, or 31 terawatt hours.

Since use in construction will likely combine cryptocurrency with other information management use cases, that will push construction blockchains away from protocols like Proof of Work or Proof of Stake.

Of the alternatives, and there are many, Proof of Weight has a lot of promise for non-cryptocurrency blockchains, because of its lower costs, decentralized nature and ability to provide incentives to store non-monetary information by allowing that information and its generation to be measured as part of the “weight” that provides a node’s contribution to and share of fees from block generation. Another that has promise for these types of systems is Delegated Proof of Stake (DPoS). In DPoS, a group of delegates approve blocks. This approval by a select group means that it is not pure consensus like with Bitcoin. The delegate bloc is shuffled regularly to prevent too much centralization and the order they deliver blocks in is determined by the system software. This has the advantage of efficiency and incredible block generation throughput, both of which set the stage for implementation of public blockchains that can be used for a variety of information management tasks while providing protection for the block contents.

The other big obstacle to blockchain continues to be the lack of easy-to-use software and interfaces for managing and participating in a blockchain. If the Facebook Libra project survives Congressional hearings and is successful, it could provide both more familiarity and comfort for average users. That could provide a blueprint of what may be needed to allow blockchain to do more than manage currencies.

Are you interested in blockchain and what it could bring to your practice or the industry as a whole? Do you think that growth in the Internet of Things will influence adoption of blockchain? What about AI? Tell me what you think in the comments below or email me at gceton@csinet.org

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