Proof of Existence
Proving the ownership and origin of physical assets has never been easy. Who can say for certain that a professed artist really created a piece of art? For physical assets sometimes the best we can do is determine a physical “chain of custody” — who had the asset last, where they got it from, who had it before that, and so on.
Digital assets create an additional complexity. Because digital assets can be copied and transmitted so easily, it is often virtually impossible to prove their origin or provenance. Luckily, blockchain technology is now providing a practical method of proving the existence, origin and complete derivation of digital assets.
You may have seen a movie or heard a story about a kidnap victim whose family asks for a “proof of life”. The proof is typically a photograph of the victim posed with a current newspaper. The photo proves the person was alive and in the possession of the kidnappers on a certain date.
Blockchain technology is now allowing us to provide similar proofs for the existence of digital assets. The immutable nature of the blockchain — the fact that it is impossible to overwrite time-stamped blockchain ledger entries — allows us to create “proof of existence” entries for digital assets.
Simplistically, such a system works by inserting a cryptographic hash into the blockchain ledger. A cryptographic hash can be thought of as a digital fingerprint for a document. The chance of documents having the same hash is infinitesimally small — there are more possible hash values in a 256-bit hash than there are nanoseconds since the Big Bang! So by placing a cryptographic hash of a document on the blockchain, we have definitive proof that the document existed at the time of the blockchain entry.
Cryptographic proofs are all very well for mathematicians and computer scientists, but would they hold up in a court of law? At the moment, the situation resembles the early days of DNA profiling. Very few people understand the molecular structure of DNA, and similarly, only a relatively small subsection of the community have a deep understanding of cryptographic hashing. Nevertheless, just as the solid scientific basis for DNA profiling eventually led to acceptance of its legal validity, there are early signs that blockchain proofs will one day be accepted as legal proofs. For instance, a Chinese court recently ruled that blockchain proofs could be used in intellectual property disputes, and legislation in Arizona and Vermont provides recognition for blockchain signatures and records.
The first proof of existence projects placed a hash for a single document within a single Bitcoin transaction. This implementation is neither cost-effective nor scalable. The cost of Bitcoin transactions becomes unattractive when proving large numbers of documents and the total number of Bitcoin transactions that can be supported is limited by the blockchain block size. A mainstream implementation requires a different approach.
It would be possible to use an alternative blockchain with lower fees and latency — such as the recently launched EOS blockchain. However, although alternative blockchains may offer better scalability and economics, they cannot offer the strong levels of proof provided by established public blockchains. The robustness of the Bitcoin blockchain is without peer, and it is likely that Bitcoin blockchain proofs will gain wider legal acceptance than those stored on secondary blockchains.
Luckily, there is a technological solution to this dilemma. The Chainpoint protocol allows document proofs to be aggregated using a hash structure known as a Merkle tree. A Merkle tree consists of a hierarchical tree of hashes. The top of the tree — the “Merkle root hash” — can be placed on the blockchain and effectively used to prove the existence of all the hashes within the tree. In this way, a Merkle tree root hash can effectively prove the existence of tens or hundreds of thousands of documents.
We believe that blockchain proofs will eventually become as widely accepted in law as DNA profiles or fingerprints. The ability to prove the provenance of digital assets has wide-ranging implications for systems that maintain legal, intellectual property, financial, or regulatory information. Database systems and applications will increasingly integrate blockchain proofs. It’s even possible that blockchain proofs will become the killer app for the public blockchains.
At ProvenDB we are integrating blockchain proofs with mainstream database technology. Look forward to hearing more from us in March 2019!
