A proposal of National Blockchain Design
Here we are, 10 years into this blockchain era. Should we celebrate, or should we panic? Is blockchain really a thing? And at the end of this infinite tunnel, is the heaven light or grave arch waiting for us? Let’s take a step back and really think about how the past decade went, and how the next one will be. I work primarily in the adoption of blockchain in enterprise and government use cases and would love to share my thought on how our blockchain-for-enterprise will evolve in the next few years, hopefully, can draw the cloudy curtain so that we can all stare at the facts and think about the future lying ahead.
Old stories, new interpretations
The idea of applying blockchain technology into enterprise applications is not new, we have discussed it for years. Ripple has been working with banks since 2016, Hyperledger already researched and prototyped since 2015, and some of their projects are very close to commercial launch, and most recently Cointelegraph also launched its own Enterprise Consulting Service. At the TomoChain office, we also developed our own use cases based on both our public chain and private chain and something in between those two. Check it out in our enterprise webpage.
However, let’s be honest with the fact that the most notable applications so far are financial tools, but not much of any other fields. 5 years is a long time for new technology to have its first mass application. I think the barriers that stopped our pioneers from achieving their goal is one of the following, or all of them:
1. Limitation in data storage of the public chains
2. Centralization of private chains makes them not significantly better than traditional centralization cloud database.
3. Too deep technology results in a high cost in deployment
4. Most critical question: whether a trustless system is a real demand in our world?
Mitigating any of these barriers is hard, not to mention all of them. It is difficult. But why do people keep trying? Isn’t it because there are some undeniable benefits of blockchain that everyone can see, but not yet can touch? The more I work with our clients, talk to our partners, and learn more about new technological approaches from the community, the more I am convinced that it is the case. Those advantages that allured our community include the followings:
1. Connect separated distributed databases without actually sharing data across the network with very high cryptographic security
2. Temper-proof records and traceable pieces of evidence
3. A transparent timestamp of the data record
4. Real-time operations of smart contracts
So, what we need to do is lowering the mentioned entry barriers, then enabling enterprises and governments to enjoy the benefits above.
In light of those facts and hypothesis, I came up with a proposal for blockchain architecture that power applications that can deal with some of the problems that existing technologies are incapable of solving. But first, let’s talk about Libra.
Libra.
One of the most exciting news for the blockchain community in 2019 was Facebook’s announcement of triggering Libra project alongside with over 20 other large enterprises. Ok, it is Facebook, so it must be something big and clever. Or is it? It turns out, the game Facebook is playing is more of a business strategy rather than technical innovation.
Technically, Libra is a decentralized network that maintains the same ledger across different servers. There is no “block” producing along with the operation, so it is inappropriate to call Libra a “blockchain”, but people do so anyway, the same way they call Ripple a blockchain. In essence, after a number of Libra coins are generated based on the collateral assets deposited and verified, a giant spreadsheet is maintained across the network that records all the transactions of the coins among wallets. I would not go into details of Libra’s structure and its token economics since you can read about that in their whitepaper and technical paper.
To me, it is especially notable that the system is maintained by a group of large enterprises that can guarantee sufficient decentralization with high credibility, and it can be verified by the governments or any interested parties. Furthermore, those large enterprises own data, but they cannot manipulate it, and if we apply cryptography strong enough, they do not understand it either. This principle drew my interest and I think a similar mechanism can be applied to a different scale.
The National Blockchain Initiative
Many clients who work with me have the same concern about the gap between their requirements and the performance of the public chain. They want to store data, images, records with a much larger size than what the public chain can handle. In the end, many blockchain applications decided to go with private chains rather than public ones. However, a private chain comes with a different set of problems. It is complicated to set up at first, and it also difficult to maintain and operate after deployment. In theory, we typically consult that each unit in the network (e.g. each school, hospital, institution, etc.) would run a node, which maintains an identical copy of the network data. That would cost time and effort from them since they need time to set up everything and build a development team, which leads to a high fixed cost to execute and maintain. Sometimes that complexity exceeds the benefits they can potentially gain from a decentralized system, and they discard the idea.
On the other hand, many countries now have their own regulations about data protection. Some of them mandate that personal data has to be processed and stored inside their geographic territory (check the case of a Facebook data center in the EU). EU’s General Data Protection Regulation (EUGDPR) officially became enforceable in 2018 and it leads the global trends of protecting personal data.
In light of these, I believe a blockchain that operates inside a country (or continent) would be beneficial for that particular entity. They can deploy applications that solve the data interoperability of the existing system effectively. More careful research needs to be conducted, but I would propose some highlights of such a network:
National permissioned chain
1. A number of large companies/government committees set up a consortium and run a permissioned blockchain that serves problems concerning national interests yet requiring high data privacy.
2. Each company/government committee runs a node of the network.
3. Each node stores an identical ledger with consensus applied across the network.
3. The profile of all the parties is transparent and verifiable by any users.
4. The network is open for any parties to deploy decentralized applications with a fee mechanism applied.
What this system can be used for?
(I will follow up with detailed articles for some applications in the list below, please come back later for more reads)
- National cryptocurrency
- National certification system (university degrees, professional certificates, certificate of skills, volunteerism, etc.)
- National health records
- Records of ownership (for lands, assets, personal identity)
Why this system is better than the current existing blockchain?
- It can store more data than the public chain while maintaining sufficient decentralization.
- It can be easily regulated by the governments, therefore can be adopted to the already regulated industries.
- It can be specifically designed to focus on the focused purpose of the country/continent it serves.
- It can achieve very high privacy for citizens.
In summary, I think the problem with blockchain technology at this stage is that it is a fundamental technology, and requires many outer layers to make it more accessible to the users. In essence, it is just a new way of organizing data, but the implications behind that change are tremendous. We need a robust toolset of protocols, frameworks, and applications to make the ecosystem usable. That is a challenging task. Think of how long did it take us to bring internet to the world, and how many protocols and applications we built so that everyone can access it comfortably. I would not be surprised if it takes us another few years to the point blockchain technology (or its next evolution forms) can serve us in our daily life.
