This is a (not well done) translation from the italian post “La Blockchain non esiste“.
We hear more and more often people talking about “the Blockchain”: the blockchain for voting, the blockchain for the production chain, the thousand uses of the blockchain.
As if it were an entity, as if it were the Internet or the Web.
Politicians, opinion leaders, TV presenters, started talking about it and they have already begun to polarize the public opinion, as if it were the umpteenth political instrument at the service of this or that electoral campaign.
Here I offer you your daily shock: “the Blockchain” does not exist.
Or rather, it’s not what you think.
A very first definition of blockchain could be the following: a distributed and decentralized ledger (or list) of digital data entered in a temporal order.
You will understand that I have told you everything and nothing.
What data? Register distributed among whom? How decentralized? Which temporal order is established by whom?
In short, a definition of that kind raises more questions than answers.
Let’s pretend for a moment that we know nothing about that and we have never heard a legislator define the Blockchain as the panacea for all the ills of our society.
A distributed ledger.
The concept of distributed ledger (DLT, Distributed Ledger Technology) is very generic and refers to a technology that allows to store data in a distributed way, avoiding centralization on a single large server, which if attacked could lead to the fall of the entire system and the consequent loss of data.
Distributed Ledger Technology is decentralized in data management but does not necessarily imply decentralization of the organization that adopted it or created it.
A distributed ledger is therefore not necessarily a blockchain, but a blockchain is a distributed ledger.
Are you confused? I know. Go on.
The concept of “chain of blocks” (later “block chain” and then “blockchain”), was introduced by Satoshi Nakamoto in 2008, in his document “Bitcoin: a peer-to-peer electronic cash system”: to ensure that there could be a completely digital monetary system that could not be attacked by third parties, such as hackers, governments and private institutions, it was necessary to find a way to decentralize the network management and the issue of monetary units. It was also necessary that the new system would not allow the user to spend the same money several times, just as it is not possible for the same person to pay twice in a row with the same dollar bill.
So here is the idea of using a system to validate transactions using blocks; each new block contains a certain number of transactions and is linked to the previous block by a string of data called a hash. The previous block contains the hash that connects it to the one before and so on, in a long chain that leads directly to the initial block, the Genesis Block, from which everything started.
The issue of monetary units is carried out by the software distributed among all the participants of the network, not by a central entity, and this rewards with new monetary units the miner who has “closed” the new block, who has discovered the solution to a mathematical problem difficult to solve but easy to verify. I suggest you to read “Mastering Bitcoin” by Andreas M. Antonopoulos for a thorough understanding of this process called mining and block validation.
This system takes away the management of the network and the issue of units of money from the hands of the central banks and returns it to the members of the network itself.
It was designed for this and does its job well.
Since Bitcoin is an open source system, it is possible to freely use the code not only to check it and correct any bugs, but also to replicate it and use it for its own purposes.
So many clones and other alternative projects were created; they have different characteristics, some improvements, according to the creators, and numerous trade-off. They are the altcoins, each of which has its own blockchain that follows the rules established by its creator, whether they are similar or different to those of Bitcoin.
The Blockchain, the blockchains, a blockchain.
Are you even more confused? I know. Go on.
We said that Bitcoin exists and altcoins exist. There is therefore the blockchain of Bitcoin and the blockchain of the various altcoins.
But if there are so many blockchains, one can say at this point that “the Blockchain” does not exist. How many Internet do they exist? How many Webs do we use?
If the Blockchain is a useful tool in some way, then it must have a socially accepted univocal definition.
But now there is a problem: we have not yet understood what the usefulness of this Blockchain with a capital b really is . The Blockchain is, at this point in the article, an indefinite utility looking for a problem to solve.
If the Blockchain is a distributed ledger with specific characteristics that differentiate it from a generic distributed ledger, then we must understand what these characteristics actually are in order to give a definition that can be socially accepted; so that we can say: “The Blockchain is that stuff there, otherwise it’s one of many blockchains, or it’s just a distributed ledger (DLT).”
Let’s start with decentralization.
Decentralization in the conservation and validation of data entered on this ledger should be as high as possible.
In this way the system decreases the chances of an attack against it and the consequent loss of data stored on it.
How do you make an IT tool as decentralized as possible?
Basically it has to be useful to a large number of people, it must be available for the highest number of platforms and operating systems, it must be completely open source, permissionless and driven by the widest consensus, and it must be as light as possible.
In the case of the Blockchain, is it possible to define such a ledger that actually works following the blocks logic but that is not for permissionless, ie not controlled by a central authority?
We are trying to give a definition of “the Blockchain” so we take back the generic definition of blockchain and add what has been clarified above: a distributed ledger (with the highest level of decentralization) of digital data entered in a temporal order.
Those who use the term “Blockchain” often do it out of context and therefore think that all kinds of data can be put on a blockchain: from personal information to products, from the results of an election to the algorithms that make an AI.
Basically a blockchain is used to carry data concerning monetary transactions. It is precisely the monetary incentive to make the system work, and the highest possible incentive is precisely the bitcoin.
What is the incentive that would have you installed on your PC a useful software to run a decentralized network if not the monetary one? Surely there are those who would be willing to maintain a decentralized network for academic or civil interest, but the number of participants (also called “nodes”) it would be far less than what keeps Bitcoin up.
Does the fact that the data are transaction information implies that it is not possible to use this ledger for anything else?
Absolutely not. We can enter (limited) information within the transactions we make but we cannot do the opposite: we cannot move other data and therefore information on a blockchain without making monetary transactions. If we want to do this we have other tools that are more efficient and cheaper or even free.
Let’s go back to the generic definition of blockchain and add the clarification above: a distributed ledger (with the highest level of decentralization) of digital data related to monetary transactions entered in a temporal order.
If tomorrow we discover an incentive other than monetary, it will be possible, indeed dutiful, to revise this definition, but until then let’s keep it for good.
Why do we need to enter data on a decentralized system?
In a nutshell, for safety: security of conservation, non-tampering and non-censorship.
It’s not useful to transfer data to its recipient as soon as possible.
Secondly, to reduce costs: keeping distributed servers for storage has a greater cost than using an already existing and safer decentralized network.
If you remember we said that, to ensure the highest level of decentralization, it’s necessary among other things that the ledger is as light as possible: it follows that the data that we could put on “the Blockchain” will be relatively few compared to others distributed but not very decentralized ledgers.
So few data, but essential, at a price, but less than that of a generic distributed network.
But what gives security to the system if not the computing power used by miners to get a reward (Proof of Work)?
We already have everything, we just have to say it.
Let’s take a last look at the generic definition of blockchain so far given to understand, once and for all, what “the Blockchain” is:
a distributed and decentralized ledger, with the highest level of decentralization possible, of bitcoin transactions, inserted in blocks respecting a temporal order in which the last block “closed” by the “winning” miner is memorized after the block closed by the previous winning miner.
In short, the Blockchain is the register of validated blocks of the Bitcoin protocol.
Without Bitcoin, the Blockchain, as a standard definition, does not make sense to exist. The reason is soon said: there is currently no system that can guarantee the broader and much desired decentralization that is not Bitcoin.
Bitcoin is the most decentralized digital money system in absolute, governed by consensus and kept up by the highest proof of work.
So, the next time you hear someone, your baker or your legislator, talking about “the Blockchain”, ask him what he means exactly, to see if it’s the same thing you mean. After all, even a definition should be guided by consenus to be socially accepted, right?
Did you like this article?
Send me some satoshi! BTC: 335Prmr6aTtWtWs5KGhtFqARzmdeG7BKx
Don’t you want to send me BTC? Offer me a job! I am looking for an additional job o support my family, possibly in the crypto field, as a columnist or translator from English to Italian for apps or crypto oriented articles. If you have something to offer, write me at firstname.lastname@example.org. Thank you!