Blockchain World

Do You Need a Blockchain?

This chart will tell you
if the technology

A
can solve your problem By MORGEN E. PECK

c c or di ng t o a st u dy r e l e a se d t h i s j u ly by Juniper Research, more

than half the world’s largest companies are now researching blockchain
technologies with the goal of integrating them into their products. Projects are
already under way that will disrupt the management of health care records,
property titles, supply chains, and even our online identities. But before we
remount the entire digital ecosystem on blockchain technology, it would be
wise to take stock of what makes the approach unique and what costs are
associated with it. n Blockchain technology is, in essence, a novel way to manage
data. As such, it competes with the data-management systems we already have.
Relational databases, which orient information in updatable tables of columns
and rows, are the technical foundation of many services we use today. Decades
of market exposure and well-funded research by companies like Oracle Corp.
have expanded the functionality and hardened the security of relational
databases. However, they suffer from one major constraint: They put the task
of storing and updating entries in the hands of one or a few entities, whom you
have to trust won’t mess with the data or get hacked.

Blockchains, as an alternative, improve upon this architecture in
one specific way—by removing the need for a trusted authority. With
public blockchains like Bitcoin and Ethereum, a group of anonymous
strangers (and their computers) can work together to store, curate,
and secure a perpetually growing set of data without anyone hav-
ing to trust anyone else. Because blockchains are replicated across a
peer-to-peer network, the information they contain is very difficult
to corrupt or extinguish.
This feature alone is enough to justify using a blockchain if the
intended service is the kind that attracts censors. A version of Facebook­
built on a public blockchain, for example, would be incapable of
censoring posts before they appeared in users’ feeds, a feature that
Facebook reportedly had under development while the company
was courting the Chinese government in 2016.
However, removing the need for trust comes with limitations.
Public blockchains are slower and less private than traditional data-
bases, precisely because they have to coordinate the resources of
multiple unaffiliated participants. To import data onto them, users
often pay transaction fees in amounts that are
constantly changing and therefore difficult to
predict. And the long-term status of the software
is unpredictable as well. Just as no one person
or company manages the data on a public block-
chain, no one entity updates the software. Rather,
a whole community of developers contributes to
the open-source code in a process that, in Bitcoin
at least, lacks formal governance.
Given the costs and uncertainties of public block-
chains, they’re not the answer to every problem.
“If you don’t mind putting someone in charge of a
database…then there’s no point using a blockchain,
because [the blockchain] is just a more inefficient
version of what you would otherwise do,” says
Gideon Greenspan, the CEO of Coin Sciences, a
company that builds technologies on top of both
public and permissioned blockchains.

38  | OCT 2017 | NORTH AMERICAN | SPECTRUM.IEEE.ORG

 I Want Can a
traditional
Does
more than one

a Block- database
technology
participant need
to be able to

chain! meet your

needs?
update the
data?

DO YOU Does
yes no yes no the data
REALLY NEED need to be
a blockchain? kept
They can do private?

some amazing
things, but they Do you
and all those yes no
are definitely not updaters
the solution to trust one
every problem. another?

Asking yourself Is this

database likely Do you
a handful of to be attacked or yes no need to control
the questions censored? Do you need who can make
redundant copies in changes to the
on this chart blockchain
multiple distributed
can set you on computers? software?
the right path
Would
to an answer. all the
You’ll note that participants yes no
there are more yes no trust a third
party?
reasons not to
use a blockchain
than there are yes no
reasons to do
so. And if you
do choose a
blockchain, be YOU DON’T YOU MIGHT NEED YOU MIGHT
ready for slower NEED A A PERMISSIONED NEED A PUBLIC
BLOCKCHAIN BLOCKCHAIN BLOCKCHAIN
transaction (FAST (MEDIUM (SLOW
speeds. TRANSACTION TRANSACTION TRANSACTION
SPEED) SPEED) SPEED)

With this one rule, you can mow down quite a few
blockchain fantasies. Online voting, for example,
has inspired many well-intentioned blockchain
developers, but it probably does not stand to gain
much from the technology.
“I find myself debunking a blockchain voting
effort about every few weeks,” says Josh Benaloh,
the senior cryptographer at Microsoft Research.
“It feels like a very good fit for voting, until you dig
a couple millimeters below the surface.”
Benaloh points out that tallying votes on a
blockchain doesn’t obviate the need for a central
authority. Election officials will still take the role
of creating ballots and authenticating voters. And
if you trust them to do that, there’s no reason why
they shouldn’t also record votes.
The headaches caused by open blockchains—
the price volatility, low throughput, poor privacy,
and lack of governance—can be alleviated, in part, by tweaking the
structure of the technology, specifically by opting for a variation called
a permissioned ledger.
In a permissioned ledger, you avoid having to worry about trusting
people, and you still get to keep some of the benefits of blockchain
technology. The software restricts who can amend the database to
a set of known entities. This one alteration removes the economic
component from a blockchain. In a public blockchain, miners (the
parties adding new data to the blockchain) neither know nor trust one
another. But they behave well because they are paid for their work.
By contrast, in a permissioned blockchain, the people adding data fol-
low the rules not because they are getting paid but because other peo-
ple in the network, who know their identities, hold them accountable.
Removing miners also improves the speed and data-storage capac-
ity of a blockchain. In a public network, a new version of the block-
chain is not considered final until it has spread and received the
approval of multiple peers. That limits how big new blocks can be,
because bigger blocks would take longer to | CO NTI N U E D O N PAG E 60

SPECTRUM.IEEE.ORG | NORTH AMERICAN | OCT 2017 |  39


DO YOU NEED A
BLOCKCHAIN?
CO NTI N U E D F RO M PAG E 39
get around. As of July, Bitcoin can han-
dle a maximum of 7 transactions per
second. E ­ thereum tops out at around
20 transactions per second.
When blocks are added by fewer,
known entities, they can hold more data
without slowing things down or threat-
ening the security of the blockchain.
Greenspan­ of Coin Sciences claims
that MultiChain, one of his company’s
permissioned blockchain products, is
capable of processing 1,000 transac-
tions per second. But even this pales in
comparison with the peak throughput
of credit card transactions handled by
Visa—an amount The Washington Post
reports as being 10 times that number.
As the name perhaps suggests, permis-
sioned ledgers also enable more privacy
than public blockchains. The software
restricts who can access a permissioned
blockchain, and therefore who can see
it. It’s not a perfect solution; you’re still
revealing your data to those within the
network. You wouldn’t, for example, want
to run a permissioned blockchain with
your competitors and use it to track infor-
mation that gives away trade secrets. But
permissioned blockchains may enable
applications where data needs to be
shielded only from the public at large.
“If you are willing for the activity on the
ledger to be visible to the participants but
not to the outside world, then your pri-
vacy problem is solved,” says Greenspan.
Finally, using a permissioned block-
chain solves the problem of governance.
Bitcoin is a perfect demonstration of the
risks that come with building on top of
an open-source blockchain project. For
two years, the developers and miners
in Bitcoin have waged a political battle
over how to scale up the system. This
summer, the sparring went so far that
one faction split off to form its own ver-
sion of Bitcoin. The fight demonstrated
that it’s impossible to say with any cer-
tainty what Bitcoin will look like in the
next month, year, or decade—or even
who will decide that. And the same goes
for every public blockchain.
With permissioned ledgers, you know
who’s in charge. The people who update
the blockchain are the same people who
update the code. How those updates are
made depends on what governance struc-
ture the participants in the blockchain
collectively agree to.
Public blockchains are a tremendous
improvement on traditional databases
if the things you worry most about are
censorship and universal access. Under
those circumstances, it might just be
worth it to build on a technology that sac-
rifices cost, speed, privacy, and predict-
ability. And if that sacrifice isn’t worth
it, a more limited version of Satoshi
­Nakamoto’s original blockchain may
balance out your needs. But you should
also consider the possibility that you
don’t need a blockchain at all. n
↗ POST YOUR COMMENTS at http://spectrum.ieee.org/
needablockchain1017

CPMT Society Has a Name Change!

Dear Society Members, We are happy to announce that the
CPMT Society name change to Electronics Packaging Society
has been approved by the IEEE Board of Directors!
We need your support to realize the intended benefits:

Improved Society Branding The IEEE Electronics Packaging Society is an

■ Shorter, simpler name
■ Growing Industry recognition that packaging
is strategic in all areas of electronics
More inclusive and better representation
of the broad FoI of our society
■ Simple name helps to not exclude topics: Eg.
“Manufacturing” in our name could imply exclusion
of “Research” focus which is also part of our FoI.
■ Makes it clear that our focus is every niche and
aspect of packaging and interconnection of ICs
Improved clarity will result in increased
collaboration with other IEEE societies
■ Packaging topics showing up more in other
societies’ conferences and workshops
■ Our society wants to be a source of expertise to
work with other societies to make this successful
international technical community of scientists
and engineers engaged in the research, design
and development of revolutionary advances in
microsystems packaging and manufacturing.
EPS promotes close cooperation and exchange
of technical information among its members and
others through its technical conferences and
workshops worldwide, peer-reviewed publications,
technology webinars and online educational
materials, and local networking via Chapter activities
and collaboration with other organizations.
We invite you to visit our website (http://eps.ieee.
org) for details on how EPS can help support
your technical and professional growth. You’ll
find conference listings, technical presentations,
Chapter locations and contacts, opportunities
for professional recognition through EPS and
the IEEE Awards Program, including IEEE Senior
member and Fellow grades; and much more.

60  | OCT 2017 | NORTH AMERICAN | SPECTRUM.IEEE.ORG