Final word on blockchains

It seems that blockchain hype is beginning to encounter a bit of reality as exemplified by Matt Gault's recent posting.

With one honourable exception this blogger, the OLTP Head, has never received proper answers to key questions on the whole technology but the following details are, he believes, widely accepted.

  • Blockchains are based on an old data structure, the linked list, enhanced with some encryption technology and used to store transaction records for the transfer of digital tokens. Any connection between the digital tokens and real world objects, from gold ingots to legal contracts to works of art, must be defined and enforced separately in law courts or other regulatory organisations. Or you could put your trust in organisations like the bitcoin exchanges. Blockchain transactions cannot be cancelled so you need to be confident about who you put your trust in.

  • Bitcoin, the reference application for blockchain technology, currently averages 1.5 transactions per second and has a theoretical limit of 7 tps. Whereas the current value for the TPC-C benchmark for more traditional transactions is over 5 million tps. Additionally Bitcoin has essentially ignored the regulatory and governance frameworks in which real world transactions occur.

In summary Bitcoin as the reference application for blockchain technology:

  • Has never been load tested regarding potential transaction volumes and the potential size of the universe of digital tokens that could be managed.

  • Has ignored all real world regulatory and governance issues as well as ignoring the organisational issues involved in introducing new mission critical technology to replace layer upon layer of tried and trusted technology into conservative business organisations.

Therefore this blogger's conclusion is that the bitcoin/blockchain system can, at best, be seen as a proof of concept project that has yet to prove anything of real significance. When it, or some other proof of concept project, does actually prove the concept then it will be time to talk meaningfully about its potential uses.

With that parting shot this blogchain is now signing off.

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