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@chb0github
Last active Jul 14, 2017
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Blockchain breakdown
Filecoin
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This is a pretty cool idea because it has a profit mechanism built in and you essentially have a distributed file system (through replication) with the assurances of a blockchain. The upside is you get absolute data integrity and assurance. But, the price of storage in the cloud is nearly free. That price is good enough for small businesses. They just want to store their data and they put incredible confidence in AWS from a security perspective even though the tine-foil-hat crowd knows better.
Technically, the nature of the block chain is to keep ALL history for verification purposes. But, consider the heavily accessed nature of files. Although this paper doesn't mention how to deal with RUD operations on files, I can only assume they would be represented as incremental transactions in this block chain. A block chain of this design would become colossally large very quickly by simply recording what typically occurs on a file. Then, this also doesn't obviate the hording of the network nodes to wherever computation/storage is cheapest. This continues to be China which is a problem for a lot of people for any number of reasons.
Chainpoint
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Now this does have some potential for small businesses. Being able to prove (compactly) that something existed at a specific time but without revealing what it was to anyone but the intended parties gives the parties essentially secrecy and non-repudiation. As long as there are no hiccups (a.k.a lawsuit) then the nature of the transaction need not be revealed. This can apply for trademarks, where the business in question may not want to tip it's hand as to what it's planning, or the sale of assets between parties that might be materially important in a stock offering. It also means that using a blockchain for escrow is more likely which can be used to offset one of the limitations to smart contracts.
Smart Contracts
These have obvious benefits for small business at a casual glance. Upon closer inspection the benefits are still readily visible but caveats abound. One of the articles points out the inherent contradictions/ambiguities of any contract and how a contract is as much a social decree as a logical instrument.
Smart contracts assume absoluteness of execution; for which there are a whole host of transactions where this applies (limit order stock sales, for example). Many though (take for example, the sale of a house) are predicated on the subjective assessment of the property by any number of 3rd parties who may or may not have an interest in swaying the outcome.
Even if all parties affirm the transaction, evidence may later come that requires the reversal of the transaction or adjudication. However, I see this as easily mitigated with the use of escrow. Imagine the above house sale scenario: As part of the "smart contract", part of the execution upon completion is to create another multi-party transaction that completely reverses the one just executed. This reversal transaction includes an escrow and all original participants. The original participants all affirm the reversal transaction with only the affirmation of the escrow blocking the reversal. In the event of a dispute, the escrow may be engaged who can reverse the transaction when the dispute is finally resolved.
For smart contracts to succeed, the must all include full or partial reversal transactions as an outcome to the original.
Blockstack
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Blockstack seems to self-contradict: "[sic] ... no passwords, no massive data silos to breach" and then 2 paragraphs later: "Data storage is simple and reliable and uses existing cloud infrastructure. Users connect with their Dropbox, Google Drive, etc and data is synced from their local device up to the cloud." Not to point out the obvious: But cloud providers are definitely data silos as witnessed by the recent outage of s3 and as evidenced by the sheer difficulty of migrating data from one cloud provider to the next.
However, there are real benefits to what blockstack is offering (theoretically): Distributed and verified DNS (Witness Turkey's recent hijacking of Google's DNS entries) and distributed PKI (DigiNotar compromise comes to mind) can essentially eliminate 2 major systemic vulnerabilities on the internet. Distributed PKI could also dovetail nicely with a web-of-trust.
I don't see a small business benefit to Blockstack (not in the short term). However, if the distributed PKI and DNS can ever be realized (which is questionable given the need to migrate from the existing systems) then everyone can win; big and small.
Single use seal:
When I read this the first thing I thought of was how the entire swaps/derivatives market couldn't even exist in this scheme. Ok, maybe that's a stretch, but the LIBOR scandal was essentially reporting false consensus data for profit.
The most obvious way this can assist a small business, besides finances, is verification that suppliers are not over-sold. But, for this to work the "currency" for the blockchain would either need to be transaction definable or convertible to the currency of the blockchain. Or, the buyer needs to be participating in the blockchain network of all his suppliers.
In the real world, being "over sold" is typical and accepted. Banks only exist because they don't have enough cash on hand to cover their existing obligations because they have loaned it out. The real question really is: "If I asked you for all of it at time T, could you deliver?" And this is unknowable.
Outside of the digital currency space, I struggle to see how this could really impact the bottom line of a small business.
Conclusion:
Where I really think blockchains need significant research is in scalability. The very security of the blockchain is directly proportional to it's size which can only grow as that is how it's designed. New entrants to the network must download and verify the entire chain to trust it; the ability to verify the chain in a distributed fashion while also not having the entire chain quite yet local will be essential.
In addition, networks, by their very nature, form monopolies; a blockchain network is no exception. Identifying monopoly mitigation strategies is a must. Even if the participants in the network are trustworthy (which is definitely not true), a technical vulnerability could bring large scale commerce to a halt.
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