Kendall Jessiman, President, chaired the meeting and gave the invocation.

 

• Joan Posivy let everyone know that her latest podcast on her series, Side Hustle Hero features one of our newest members, Brittany Ford. CLICK HERE to access all episodes, including Brittany's, Pivot to Content Creator.

 

Because you are listening to this presentation, as compared to reading or rereading it at your leisure, I should make some things clear from the beginning;

1.Blockchain Technology is a method of Data Storage and Retrieval which purports to offer certain unique advantages to other Data Storage and Retrieval systems.

2. Cryptocurrencies can not presently exist without Blockchain technology; Blockchain can certainly exist and be useable without cryptocurrencies.

3. I have chosen to illuminate how we misunderstand Blockchain by analyzing the meanings and usages of two commonly used words in a specific   blockchain context:

immutable and centralize.

 

I ask you to imagine going to your bank and going  through all the identification and verification steps to allow you access to your safety deposit box including the unlocking, accessing and relocking of the safety deposit box using both your key and the bank's key. Everything is safe and secure--now imagine safety deposit boxes linked together as far as the eye can see, this is a good visual sense of the blockchain ledger system. Each of the deposit boxes is called a ledger in Blockchain lingo. Now also imagine that you want to access your safety deposit box but you don't have to go to the bank. You can do it from the comfort of your internet connection and all the security is handled by an algorithm and your material remains safe and only accessible to you.

 

Blockchain promises to solve existing computer problems of identification, verification and security.

 

Alas this promise of safe storage of your boxes/ledgers is not reliable--people from the comfort of their  internet connections can break into your box and steal your asset, or  break in and view and  make a copy of your asset, thereby denying you exclusive knowledge and use of your asset  or they can break into your box and alter  your material--this is of great concern to internet archives and of course medical or commercial  records.

And yet this storage capacity is continuously  described as being "immutable"; this piece of jargon is identified in the crucial US Department of Commerce 2018 publication “Blockchain Technology Overview"  on page 34 :" Most publications on blockchain technology describe blockchain ledgers as being immutable. This is not strictly true. They are tamper evident and tamper resistant which is a reason they are trusted for financial transactions. They cannot be considered completely immutable..."

 

So when members of the digital world use the word immutable with each other they understand it differently than you might when they are talking to you.

By the way, immutable has continuously meant "unchangeable" or "not susceptible to change" since its first recorded use in English in 1412, until this piece of linguistic disruption. 

 

While Blockchain may not have yet achieved the commercial breakthroughs promoted by IBM or Hyperledger, Blockchain is not really a failure at storing data, and it has great potential for being the keeper and transmitter of trustworthy data.

 

It is as the transmitter of data, in which I include the act of confirming and finalizing transactions, where it  presently shines. 

 

When I first researched blockchain I learned that it functioned by establishing a distributed ledger transaction system, known as DLT. The original language about this was that you didn't have to go through a central ledger to end up with verifiable reliable trusted data of a transaction that could be, if desired, seamlessly incorporated  into a central ledger system.

 

Let’s travel back to 2008 when an anonymous paper was published: "Bitcoin; A Peer to Peer Electronic Cash System" The first line of the Abstract is:

"A purely peer to peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution".

Therefore you would no longer need a financial institution described as “ a trusted third party" to process payments because the  necessary trust provided by the financial institution third party is replaced by  “cryptographic proof”.

 

Thus, immediate payments are made around the world without using banks. You couldn't imagine or concoct a better scheme if you wanted to move untraceable money from any enterprise that needed money laundering. This methodology quickly became popular and has remained a payment mechanism of choice for criminals around the world.

But not just criminals, and now we get to cryptocurrencies.

 

These blockchain transactions all require cryptographic proof --the question arises as to who is going to pay for all the electricity required to power all these computer transactions. The answer was the obvious one--use other people's money, well actually and most importantly, use other people's resources. So, you provide in one way or another, the resources to power these transactions and you receive something of value to you--in this instance bitcoin, which is a cryptocurrency.

 

The logic and economy behind each and every cryptocurrency is different, but what they share in common is being of value to the recipient. They are used for far more purposes than powering blockchain transactions. There are two basic types of blockchain enterprises, that is public access (known as permission-less) and private access (known as permissioned). The public access enterprises, such as  the using and buying and selling  of the cryptocurrencies, can consume huge amounts of energy  because the  market is worldwide and nonstop and the amount of energy  required grows and grows to  enable access to, use of  and maintenance of the blockchain . All quite amazing, and aspirationally uncontrollable. Private access blockchains need not use so much power, and certainly need not depend on the supply and valuation vagaries of the crypto currency market, so theoretically at least these private blockchains can be budgeted for like any other expense. 

 

In the outline for this presentation I wrote that I would spend as little time as possible on cryptocurrencies and that is what I just did. I don't mean to sound glib about such an all-consuming topic, but I must move on.

 

Now that we are back to blockchain I will focus on the word "centralize”.

I had earlier described blockchain transactions as being Distributed Ledger transactions--this is different from a decentralized transaction system or the process of decentralization. Basically, in a centralized system all the participants can only communicate with each other through the central point, using its rules.   For this and many other reasons decentralization is also a goal for the blockchain world. 

 

I will briefly give some examples so you may make sense of the language of centralization.

Imagine a distributed ledger system that need not be accessible to a central ledger system because the central ledger system itself has become unnecessary.

 

One  issue of control of blockchain is that no one is in control, or at least accountable as long as you ignore the fact that code writers can rewrite the code as it may suit them--sometimes with actual authority to do so. 

 

One  issue for computer  people is to make the  process run smoothly without any friction or interference  which would include approval or consent from  an intermediary--so there is an impetus to get rid of what are deemed to be needless intermediaries. This could include rules and regulations not needed for efficiency even though they might be needed for other reasons.

 

I was recently on a webinar with a well known blockchain academic who spoke of "centralized intermediary" as a description of someone doing a job the academic thought was unnecessary or useless.

  

This notion that centralization means rules that are simply unnecessary played out during the Truckers' Convoy to Ottawa earlier this year. At the end of January, GoFundMe determined it had to return millions of dollars  to  its donors because it was not prepared to break its own rules to forward these  donated funds to the truckers. There was a move to another online donor-based funder known as GiveSendGo because according to a Truckers spokesman from Vancouver GoFundMe was centralized and GiveSendGo wasn't--which meant one had rules and the other really didn't.

 

Please do not think that this notion of decentralization as freedom from rules  is universally agreed to in the  blockchain world--that isn't close to being  true, but you will hear it a lot. Aside from that, the largest blockchain experiment in the world is taking place right now in China, a country whose whole legal and governance system is based on centralized control and power. 

 

Before I get to that I will provide another very important view of centralization. We have been looking at centralization as an impediment for the consumer or user of blockchain such as some form of stupid speed bump along the way, but it also refers to the control over the actual process of running a blockchain. In June 2022 certain DARPA research was published under the title: " Are Blockchains Decentralized? Unintended Centralities in Distributed Ledgers". The authors refer to "Immutability" as a goal and on page 4 write as follows:

"This report gives examples about how that immutability can be broken NOT by exploiting cryptographic vulnerabilities but instead subverting the properties of a blockchain's implementations, networking and consensus protocol. We show that a subset of participants can garner excessive centralized control over the entire system".

They give 6 large categories of different sources of centralization that can give any participant "excessive control" over an entire blockchain system. There is such inherent power over control over these systems that this question is fundamental to the norms and usages of blockchain.    

 

Norms and usages is a good   introduction to China. I have been watching China's positions and actions on Blockchain since early 2017 I refer to a well researched astute article " China's Blockchain and Cryptocurrency Ambitions. The first mover advantage" published in June 2021 by the European Institute for Strategic Studies. It outlines China's considered and precise strategy whereby the whole government has been ordered to use blockchain technology for every possible  purpose from banking to military to municipal planning to human resources etc and of course to currency.  As for currency I quote from page 4:

"Hence China's digital currency will substantially increase control over the population, whose financial dealings will be easily trackable by the central authorities. They will no longer need to obtain customer information from payment companies to monitor citizens' transactions".

 

This may not be the type of freedom from intermediary centralizers we have just heard about 5 minutes ago. Theoretically technology is neutral but it can be used as both a sword and a shield.

 

I also quote from page 2:

"The Chinese government is reshaping Blockchain to such an extent that some may still wonder if this technology can still be called blockchain.

Beijing insists on using this term which is already generating confusion and misunderstanding"

But there is more; there are thousands of computer scientists , engineers and programmers  worldwide working on blockchain, but because of the tens and tens of thousands of scientists , engineers and programmers  working on this  focused Blockchain implementation in China, almost certainly some of  the practical solutions to make blockchain more useful to commerce will come from China. If so, these practical solutions will possibly be available through an enterprise called Blockchain Service Networks (BSN). This is directed by the government and aims to set up its own interoperable cloud computing system using its platforms and its rules and norms. However it is that these products get to the market, these products will reflect the Chinese government's desire to control blockchain usage and reportedly the structure of the internet itself.

 

The words immutable and centralize will be even more difficult to navigate, as confusion will be even more manipulated then now. My presentation is about misinformation and I do not want to let any of you believe that the only followers of Blockchain logic are members of the Truckers Convoy--far far from it. Please trust me on this. I am replete with examples and quotes to show the breadth and depth  of how blockchain concepts  and beliefs  have entered our common discourse,  but I have chosen to rather allow  more time for questions. I thank you for your patience and I hope my idiosyncratic choices, revisionist history and inevitable unnuanced generalizations did not do a disservice.

 

© Copyright Mark Dwor, Vancouver 2022

 

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