Karl Kohlmoos

Blockchain- An Initial Perspective

Blog Post created by Karl Kohlmoos Employee on Mar 17, 2016

In their infancy, both the personal computer and the Internet were considered by the masses with some level of perplexity: “What am I going to do with this?” It took only a few short years for the ideas of visionaries to start transforming these technologies into products and services that today would be difficult to live without.  Some believe the Bitcoin blockchain technology, now in it’s infancy, will become as significant as personal computers and the Internet .


Blockchain technology provides a completely open and global digital ledger that is permissionless. Blockchain is a distributed database spanning the globe across thousands of nodes that has gained notoriety through its commercial implementation as the crypto-currency Bitcoin. All Bitcoin transactions are collected by "Miners" and added to the blockchain in 1 MB blocks approximately every 10 minutes.  What’s remarkable about the Bitcoin blockchain is that it operates without a central authority. The Bitcoin blockchain is not run by any company, and there is no one person making decisions about what can and can't go into the database.


Blockchain technology enables broad use of innovations such as:


-Digital currency:  As with the Bitcoin implementation, transactions between strangers are simple, and secure without requiring a payment management service company in the middle to validate individual identity, availability of funds, and the movement of funds. Currently there are 653 alternative cryptocurrencies.


-Micro-payments: by removing the expensive payment management service noted above, micro-payments can be enabled between parties that support incremental, demand based, content usage with an equally incremental payment capability such as paying only a few pennies or fractions of a penny for what you incrementally use.  For example, consider purchasing just a part of a digital news article or part of a digital video, or paying ten cents to remove content adds for your media viewing or content using session.


-Digital signatures: A cryptographic blockchain could be used to digitally sign sensitive information, and decentralize trust; along with being used to develop smart contracts and escrow services, tokenization and authentication


-Security Outsourcing: Blockchain technology could allow developers a way of outsourcing security. For example, instead of creating secure IoT devices and networks, much of the heavy lifting could be effectively offloaded to a blockchain, freeing up resources on the client’s side and speeding up development.


-BlockCDN: Content Delivery Networks. BlockCDN could store your application’s static resources in a blockchain and sidechains and serve these over the distributed peer-to-peer network and between visitors on your site. By leveraging site visitors on your website and the closest blockchain nodes in proximity to the visitors, BlockCDN could minimize HTTP Requests and reduce server response time while reducing bandwidth costs.


-Publishing and protecting digital content: Alexandria is an open-source standard using blockchain technology and is in active development to allow users to publish and distribute original content themselves, from music to videos to feature films, 3D printable inventions, recipes, books and just about anything else. Alexandria contains a unified, ever-growing library of art, history and culture which users interact with through a variety of front end apps.



There are some challenges:


The Bitcoin blockchain implementation is limited in terms of size, scalability and latency and is not yet a world changing technology. The current limit of the size of each block on the Bitcoin blockchain is 1MB and one Bitcoin block is mined about every 10min on average.  Some estimate the transaction rate at low 3 tps. The Bitcoin blockchain has also proven to be vulnerable to disruption from DOS attacks.


There are also philosophical battles within the Bitcoin blockchain open source developer community which divide the community between the “purists” who want to leave the Bitcoin blockchain as it was originally architected and maintain it’s original usage model verses progressives who want to extend it to address broader adoption and capability (and perhaps keep control out of the hands of a few developers).  Several code forks are now competing for dominance (see: https://coin.dance/nodes). It’s also possible that the next incarnation of Bitcoin blockchain will not be blockchain, but rather “blockchainified” databases which overcome these limitations and are a profound technology that can scale and change the world.


There are several alternative Blockchains in use and in development, each designed to extend the functionality.  See: Florincoin, Etherium, and Namecoin for examples.  Of more notable interest: Hitachi is part of a consortium called the “Open Ledger Project” which aims to create an open-standard, public, decentralized public ledger based on blockchain technology called “Hyperledger”.


I did not include any discussion about the Bitcoin blockchain architecture and how it works. Rather than trying to summarize this I recommend reading the below series of articles written by Conrad Barski which describe the fundamentals well:

Six part series by Conrad Barski, Computer Dealer News, Published: March/April/May, 2015

Bitcoin for the befuddled

The complexity and confusion of Bitcoin

The Bitcoin address

Creating your first Bitcoin wallet

The Bitcoin blockchain

The mysteries of mining Bitcoins