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Oct 24, 2019

Discerning the true from the false: the Blockchain dissected through 5 preconceived ideas

Blockchain continues to fuel the media buzz about digital transformation, talking either about the Fourth Industrial Revolution, the "trust machine", the "new Internet" when it is not perceived as THE holy grail to the widespread crisis of trust affecting our modern societies... while denying its "open" fundamentals. However, not all press articles on the subject are equal. Indeed, Philippe Dewost, former co-founder of the labchain, already pointed out in 2016 that "80% of what we can read in the press about blockchain is bullshit". No wonder all this confusion leads to a certain disenchantment in view of the high expectations on its supposed profits.

In the era of fake, the obsession with "story proving" and other injunctions to transparency on provenance and authenticity, we deconstruct here for you 5 cultural bias too often heard against the technology in order to allow you to build a truly enlightened opinion on the subject.

Preconceived idea n°1 : crypto-currencies are useless

The shortcut that "blockchain = bitcoin" and would therefore only be of interest for exclusively financial use and speculative purposes is no longer necessary... Yet this digital currency not indexed to the price of gold or conventional currencies is not regulated by a centralizing body or financial institutions, it can therefore constitute a safe haven in the event of inflation (as in Venezuela or Argentina) or stock market crashes. Crypto-currency is also the corollary of its own security and independence because the actors who work for its security are only motivated by the remuneration they receive from its value, without any speculative objective. Without crypto-currency, there is no security or independence.

Preconceived idea n°2 : blockchain is a database

This is perhaps the most often heard statement and even the (bad) reason most often given when it comes to using blockchain. Let us say it once and for all: blockchain is better than a simple database. To describe this new space of trust, there are many allegories: "digital ledger", "transaction database",... It is indeed a distributed registry that allows value to be transferred in a secure way. It allows information, property titles or financial transactions to be recorded in encrypted form.

Preconceived idea n°3 : all consensus systems are worthy

The original blockchain, the one of 2009 and Satoshi Nakamoto (his fathers programmers), was an open one. Here, members, such as miners who can obtain a bonus, validate the data entered in it, which allows the self-regulated registry to be secure. The open blockchain (also described as "public") is distributed without restrictions among all actors and participants. Its data validation protocol must therefore be powerful enough to make it theoretically unforgeable, as opposed to a centralized system (controlled by one or more actors). The closed/permitted system of private blockchains means that only one actor has discretionary power over the data inserted in them. Less reliable, it can, if it were to fall into the wrong hands, generate real conflicts of interest because of the monopolistic situation created.

In addition, the open blockchain has 3 qualities specific to its decentralized architecture:

it is certifying: only an open blockchain can generate irrevocable evidence in the event of a dispute.
it is unforgeable: the information is deemed unforgeable, which means that the information cannot be modified at any time. Thus even a "51% attack", possible on smaller open blockchains, could not allow the attacker to modify only his own transactions.
it is immutable.

Preconceived idea n°4: blockchain is able to guarantee authenticated data

Here again, there is a misconception: the inscription of a data on a blockchain of any kind is in no way a guarantee of certified true information. First of all because the data having been entered by humans, an error quickly occured...

On the other hand, blockchain guarantees data integrity. This means that once written on a block, the information can no longer be modified. Thus blockchain makes it possible to visualize with certainty all transactions related to a valuable asset, whether physical or virtual, throughout its life cycle. Certifying the entire product journey, it can highlight any alteration of the product, or change of ownership and thus make it possible to trace back to the people responsible for any hazard.

Preconceived idea n°5: blockchain always rhymes with "innovation"

Blockchain is not in itself a revolution, but its consensus mechanism is.

If technology has emerged, it is first and foremost because it is based on the individual interests of each individual in a totally open environment and these individual interests contribute to its security.

In the context of an asset transfer
, as soon as a transaction is created, it is placed in a basket of transactions awaiting validation. Minors will pick from this basket to complete the block containing thousands of transactions and validate it. To validate it, miners must perform calculations with unpredictable results and repeat their attempt until an expected result is achieved. When, by chance, they succeed, they can add their validated block to the register (the blockchain or block chain). Minors then receive a reward (the creation of cryptocurrency) as well as the sum of all transaction fees for the transactions included in the block. Their individual interest is therefore to have more computing power to have a better chance of success. However, the higher the computing power, the more immutable the blocks are.

Secondly, because implementing a policy of innovation and digital transformation does not necessarily have to go with blockchain. Indeed, the use of blockchain must be justified by the company's objectives and must be part of a certain context. It is therefore surprising to see the appearance of new blockchains as soon as it is necessary to ensure the traceability of any product. Why would a blockchain be more suitable for salmon and another for tuna? And what about the control of information that is entered by humans? As we have already said, just because the information is immutable in a blockchain does not necessarily mean that it is right at the beginning.

is a protocol whose use in different professions, whether in finance, logistics, law, etc., already has important repercussions, but it is essential not to mix everything up and extrapolate uses for which it is not required. Lovers of technology for its only database function, so go your way.

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