Blockchain and Mumbo Jumbo
When thermodynamics provides security
According to many IT experts, Blockchain is a load of mumbo jumbo. They are right 99.95 percent of the time. There is just one exception, one among 2000 cases — the original, Bitcoin. You may call it mumbo jumbo but it is worth 56 billion Euros and it keeps growing at a rate of 2 billion Euros per year. Just to put that in perspective, the market capitalization of ENI — Italian largest company — amounts to 53.7 billion Euros.
Bitcoin is a Blockchain designed to decentralize and digitalize information, similarly to the TCP/IP protocol that bootstrapped the Internet. The TCP/IP digital transformation involved services and media such as mail, news, encyclopedias, music and movies. Bitcoin specialises in economic transactions. Its task is to decentralize and digitalize this particular activity. This is the reason why it creates diffidence among those who are looking for profit and to concentrate economic power as well as those who love making the rules in centralized legal systems.
Repeating the same mistake over and over again is a sign of shortsightedness. It happened in the past when they tried to hamper Internet growth in order to centralize and control information by creating private intranet, extranet (MSN, Compuserve) and other protocols such as ISO/OSI, Token Ring, IPX and AppleTalk. Extraordinary business opportunities and new rules are about to emerge anyway, you have to know how to deal with them. If you don’t, the consequences could be dire because what we are facing now is a change of paradigm.
Right now a secondary but not unimportant use of the blockchain deserves our attention. On 7 February 2019 the Italian Parliament adopted a new law which states that storing data on the blockchain will be a valid way to prove the existence of this data starting from that particular date. In Italy this is equivalent to the registration of a printed document provided by a notary or by the Inland Revenue Office.
This law obviously makes sense only if the shared register (blockchain) is safe and there is no way for it to be violated. Today there is only one blockchain whose reliability, in terms of security, has been proven undefeatable — Bitcoin. Its level of security is based on thermodynamics, the fact that miners spend approximately 49.5 TWh every year (2 billion Euros) to produce new blocks (pages in its registry).
Few people are aware of the fact that Italy has been a leader in Europe and worldwide in the past 20 years in the introduction of certified electronic signatures for the legal authentication of documents. We have been forerunners in this crucial transition set by the eIDAS regulation in 2016, which allowed the European market to become more innovative in the digitalization of business processes.
If our aim is to welcome the challenge and to keep pursuing it, we need to be careful. The solution provided by Bitcoin’s thermodynamic security is inescapable. It is pure genius in the sense that it was designed with the specific purpose to build consensus in an open and distributed network such as the Internet. However, many other blockchains do not apply these principles as rigorously as they should. They are mainly nothing more than mere forgeries.
We can’t expect every institution to suddenly embrace Bitcoin. However, validating its use in order to have a certified date on our documents is a great opportunity to be ahead in the game in one of the most innovative technologies in recent years — and to confirm the prestigious role that Italy has had so far in this field in the international digital community.
