Volume 33 Number 3
Chain of Demand
By Michael Desmond | March 2018
I’ve been alive long enough to enjoy a good, irrational market run-up. The stratospheric rise of Bitcoin could rank up there with the Dutch tulip mania of the 1630s, the dot-com bubble of the 1990s and Florida real estate circa 2007. All of which proves that people have an amazing ability to crave a thing, especially if they don’t understand it.
Yet the hype and chicanery around cryptocurrencies can obscure the exciting technology that enables them: blockchains. As Jonathan Waldman explains in this month’s lead feature, “Blockchain Fundamentals,” the distributed technology rooted in cryptography and consensus algorithms has the potential to redefine transactional processes by making them secure, tamper-proof, permanent and even public.
“While still in their infancy, blockchain technologies are being used to power logistics and asset-tracking systems,” Waldman explains over e-mail, before ticking off a list of scenarios that includes distributed cloud storage services, political voting systems, personal identification systems, digital notary services, and management of sensitive health care data. And blockchains can be used to document the provenance and thus authenticity of valuable goods. Waldman offers the example of digital IDs being laser-etched into diamonds by jewelers and into wine bottles by vintners.
Waldman says blockchain implementations have solved a fundamental challenge, by creating a “disintermediated digital infrastructure on which a digital asset can be openly and reliably transferred, rather than copied and shared.” He describes blockchains as a data structure that tracks any asset of value or interest as it is transferred from owner to owner.
While blockchains are built on well-known concepts like hashing, cryptography and decentralized peer-based relationships, the number and diversity of blockchain solutions pose a challenge to developers. Blockchain implementations are often poorly documented beyond the source code, Waldman says, which can complicate decision making.
“One misconception I see is that blockchain technologies require ‘no trust,’” says Waldman. “While a traditional, human-staffed, centralized trust authority isn’t necessary, the technologies and algorithms that power blockchains must in fact be trusted. Due to the complexity and number of current blockchain implementations, it remains unclear which ones are truly trustworthy.”
Waldman urges developers to consider a number of factors when deciding to adopt a blockchain implementation, including who’s behind it, whether it’s public or private, and the quality of its technical documentation and end-user apps. He also tells developers when vetting a particular blockchain to look into the kind of data it records, its age and adoption rate, and the number of discovered vulnerabilities. Ultimately, says Waldman, “the blockchain becomes the trust agent.”
The best way to get up to speed, he says, is to pick an existing blockchain implementation and pore over its technical documentation. He also urges developers to explore the Microsoft Azure-hosted blockchain service at azure.microsoft.com/solutions/blockchain.
“I think that establishing trust is imperative if blockchain is going to become a widely deployed and effective tool,” Waldman says. “I think it’s fair to say that disintermediating untrustworthy agents and middlemen and replacing them with rock-solid, time-tested blockchain technologies is a natural, prudent, and inevitable step in the evolution of our digital lives.”
Michael Desmond is the Editor-in-Chief of MSDN Magazine.