The world was once swept up in a technology craze, with capital pouring into customized hardware, touted as a revolutionary breakthrough set to subvert industry norms. This wasn't AI; it was blockchain, even more popular than AI a decade ago. Looking back, I, as a former heavy participant, feel no nostalgia for the now-dormant blockchain.
The Sole Successful Application: Electronic Currency
All so-called successful blockchain applications remain within the realm of electronic currency. Decentralization is the cornerstone of blockchain's value, and electronic currency is its most fitting application. This decentralization allows encrypted currencies and their derivatives, like NFTs, to operate outside the constraints of government, law, and social order.
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Decentralization is crucial for currencies to be accepted internationally by different governments and financial institutions.
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This is exemplified by the digital RMB's use of blockchain technology.
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Blockchain has genuinely broken through technological barriers and addressed unique needs in currency trading.
The Limits of Decentralization
Unfortunately, electronic currency is arguably the only valuable blockchain application. Decentralized technology breakthroughs aren't universally valuable. Most of us aren't institutions controlling national currencies or involved in cross-border illicit activities. We need efficiency, scalability, and flexibility, not necessarily decentralization.
The Pitfalls of Proof-of-Work
The Proof-of-Work consensus mechanism, intended to maximize decentralization, can be detrimental. While many believe the risk threshold lies at 50% of the profit, the reality is closer to 33% due to human selfishness and greed. Mining teams can potentially control the consensus of Bitcoin if they unite. Companies prioritize risk avoidance, leading them to favor joint chains over public chains when exploring blockchain solutions.
Joint Chains vs. Public Chains
The key difference lies in the entry threshold. Joint chains require authorization for network nodes and data access, granting greater design freedom for consensus mechanisms.
The Evolution of Joint Chains: The Hyperledger Example
The Hyperledger project, featuring giants like IBM and Intel, developed the Fabric framework.
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Fabric 1.0: Used Kafka as the consensus mechanism, prioritizing speed over accuracy.
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Fabric 2.0: Replaced Kafka with the RAFT protocol, addressing node failure but sacrificing speed.
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Fabric 3.0: Adopted BFT, considering deliberate node disruption by hackers.
This evolution illustrates the constant struggle to balance flexibility, speed, and efficiency, a balance point that remains elusive.
The Core Problem: Complexity
The Fabric framework is incredibly complex. Building a simple "Hello World" system requires deploying over 20 services. Mastering blockchain projects requires becoming a blockchain expert across design, development, testing, maintenance, and operation. This high barrier to entry contributes to many projects being abandoned mid-development.
Inefficiency Compared to Classic Architectures
Blockchain inherently cannot surpass classic architectures in speed. The need for verification and node checks consumes resources, regardless of the consensus algorithm. Classic architectures, particularly in master-slave configurations, facilitate simple, efficient, and scalable data communication.
Digital RMB: A Hybrid Approach
The digital RMB strategically separates the issuance layer (using blockchain) from the transaction layer (using a classic centralized architecture). The high frequency of daily transactions necessitates the speed and efficiency of the classic architecture.
The Blockchain Bubble and Its Legacy
During the blockchain craze, the industry ignored technical shortcomings, focusing solely on inflating its value. The example of Singapore Energy's blockchain-based green certificate trading center illustrates this. Despite promises of ease, safety, and efficiency, the exchange was quietly abandoned after its launch.
Security: Not Necessarily Superior
Blockchain's security isn't inherently better than classic architecture. Both rely on encryption methods that are equally vulnerable. Classic architecture may even have a better chance of adapting and surviving in case of a major security breach, because algorithms can be changed. Blockchain's immutable core mechanism makes it inflexible.
The Harsh Reality
The blockchain can't solve problems that existing technology can't, and it doesn't provide better solutions for problems that existing technology can solve. For most entities, blockchain offers little practical benefit.
A Legacy of "Chicken Feathers"
Unlike big data, which left behind a rich technical foundation, blockchain's legacy is less impressive, a breeding ground for scams and deception. This is a great irony for computer science, network security and cryptography experts. The idealists who envisioned its potential would likely be disappointed by its current state.
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