The hardware enabling blockchain

Blockchain promises to be the stack behind web 3.0 – the distributed web. However, it’s not going to get there all by itself. Much like the internet itself needed mobile technology to integrate itself into our everyday lives, blockchain too needs advances in hardware technology to enable a fully distributed web. Luckily those advances are in the pipeline, driven by two massive forces:

  • The Internet of Things (IoT)
    Current estimates peg the number of internet-connected devices at ten billion. The drive to put sensors and communication everywhere will ensure the number of connected computing devices could be in the trillions . This would provide sufficient nodes to guarantee a robust physical network for the Web 3.0, while ensuring access to all.
  • Remote Artificial Intelligence (AI)
    Today, powerful AI physically resides in centralized servers, because only they have the power to support the computations. But for AI to be a viable presence in our lives, those computations will have to take place at the node (e.g., your car, phone, thermostat, etc.). As a result, there is now a big push by hardware manufacturers to boost storage (i.e., raw computing power) in chips intended for devices that will be connected through the Internet of Things in order to enable AI in a decentralized setting (I recommend an illuminating a16z podcast on the topic)

Together, advances in IoT and AI will allow blockchain protocols to fulfill their promise as the protocol behind a decentralized, fair and empowering Web 3.0.

Two flavors of Blockchain: Permissioned vs. Permission-less

There exist two philosophies in the world of blockchain – permissioned and permission-less. What’s the difference?

A permission-less blockchain is one that anyone can join. Thus anyone, anywhere can validate transactions, create smart contracts, and gain access to data that may be stored in a distributed file system such as IPFS. Obvious examples are Bitcoin and Ethereum, but also include experiments such as Golem. There are six characteristics of a permission-less blockchain:

  • It must be open to anyone
  • It must be borderless
  • It must not permit third parties
  • It is neutral, on account of consensus rules
  • It is censorship resistant because the chain cannot be altered
  • The blockchain history is open to anyone

Permission-less blockchains describe the essence of the decentralized internet (Web 3.0). They are “trustless” in that the computer code decides what is valid or not. Power shifts from a centralized authority to decentralized nodes.

A permissioned blockchain, on the other hand, is one that restricts the participants. Only authorized parties can validate transactions, create smart contracts and gain access to data. Platforms designed for permissioned blockchains include Azure or Hyperledger (both open-source projects). A permissioned blockchain has the following characteristics (some in clear contrasts to a permission-less one):

  • Participation is restricted to approved parties
  • It should account for differences in national laws
  • It does not permit third parties
  • It is neutral, on account of consensus rules
  • Access to data on the chain can be restricted, even for approved participants

Permissioned blockchains are designed for today’s enterprises. They require a level of trust to approve parties in the first place. However, third party authority is eliminated as transactions are adjudicated by the consensus mechanism and agreed-upon business rules. One clear advantage is it allows integration between multiple parties without having to share sensitive information. Supply chain management is where the most exciting permissioned blockchain developments are happening right now (see e.g., Maersk’s initiative).

The difference between permissioned and permission-less blockchains has been compared to the difference between the internet and the intranet. One is an open tool that has truly revolutionized the way we live. The other is much less exciting, but still necessary to the smooth, daily operation of a business. Both have their place in today’s world, and it will be interesting to see how the permission-less philosophy evolves with the decentralized web.

 

Internet, 1995 vs. Blockchain, 2017

Some parallels between the Internet, 1995 and Blockchain, 2017:

  • Geeks are excited about contributing to and playing with the architecture of a globally distributed, interconnected communications system.
  • Pundits are saying this technology will change EVERYTHING!!!
  • Investors throw money at any project/idea that mentions this technology, inflating their value on real markets.
  • Those industries most likely to be affected by the technology downplay the potential impact as nothing more than a passing fad.
  • Pundits are saying this technology is not that big a deal!!!
  • The key application resulting in widespread public adoption is not ubiquitous – yet.
  • The key hardware developments that will make this a backbone of society are not there – yet.
  • It is still too early for many of the inevitable, world-changing applications to bring real value.