Overcoming the Blockchain Growing Pains

The article recently published by McKinsey & Company “Blockchain’s Occam Problem” scores as the most popular in their site.

The article presents a very good analysis of the blockchain technology. The main question among market analysts today is: Why, after ten years, this revolution in business technology has not yet seen widespread application at scale?

The answer is two-fold:

  1. The blockchain concept and its advantages can be easily understood. Distributed applications can rely on local replicated data (e.g. a ledger) that can be guaranteed to be exactly the same as in any other system. Furthermore, if someone modifies the data in one system, it can be proven that the data is invalid. In public networks, subject to faults and malicious attacks, this resilience by design is a unique achievement: In the last four decades of networking technology, complete fault tolerance has not been part of the design of public networks, and security solutions have been delegated to higher levels of software and company security structures. The concept of secure data replication among multiple systems prevents an attacker from targeting a central database. For this and other reasons, corporations plagued for many years by attacks to their databases readily understood the advantages of this technology. Thousands of companies have proposed applications that purport to use “the blockchain”.
  2. On the other hand, the practical development of a public network implementing the blockchain concept has been extremely difficult, when the objective is to provide a service without intermediaries and not controlled by a private entity. The original Bitcoin implementation seemed to qualify as a peer-to-peer network where all nodes participated in guaranteeing the security and replication of the data, even if the data was limited to simple transactions. However, it soon became clear that the network had inherent problems. It had a tendency to centralization, it was difficulty to scale, and it had a high cost of operation. Such problems are shared in a large measure by all current public networks evolved from Bitcoin. While many solutions to these problems are under study, these are not applied to the basic network design and do not seem to satisfy the Occam and KISS principles. Hence blockchain technology has difficulty progressing from the pioneering phase.

Why the Difficulty?

Most of the difficulty derives from the well studied theoretical problem of data replication in a faulty environment. The only known limited solutions are centralized, using leader-based consensus mechanisms.

When practical solutions were developed, starting with Bitcoin, they inherited the baggage of the leader-based design. Although the leader was randomly chosen, the tendency towards centralization remained and the dream of a distributed network with no intermediaries soon vanished: Some Bitcoin nodes became special miner nodes and today the network depends on a handful of miner pools.

Because of the tendency to centralization introduced by their common leader-based design, other blockchain public networks followed: Ethereum is using miners and will move to use selected verifiers, EOS uses a limited number of block producers, and so on.

Once a network requires intermediate nodes performing specific tasks for the network, these nodes need to be rewarded, implying a network operation cost. Furthermore, the leader-based design requires these nodes to verify and distribute blocks of transactions to all other nodes, creating a scalability problem.

The Stochastic Network Design

However, there is a solution on the horizon. Spearheaded by Gorbyte, a new generation stochastic network (GNodes) has a radically simple design that avoids intermediary nodes by distributing the responsibility for data replication, verification and security to all nodes. This solution is not leader-based, does not suffer from centralization tendencies and fulfills the original Bitcoin dream: Peer-to-peer transactions without intermediaries. See: https://www.researchgate.net/publication/329041243_After_a_Decade_of_Bitcoin_the_Next_Wave_Stochastic_Crypto-networks

In addition to achieving network scalability, the design of GNodes also provides a distributed operating environment for blockchain applications. It includes those fundamental blocks that allow applications to securely exchange large amounts of data without a load on the blockchain. This achieves ultimate scalability of applications.

This design will make it possible for many applications waiting for a scalable public blockchain to finally be realized.

Stochastic, fully-distributed networks will soon revitalize the blockchain industry, disrupt mining industries, reduce energy utilization, provide an alternative to current networks and effectively revolutionize the distributed application world.