Sunday, 28 August 2016

Block Chains: a contrasting position on decentralization

Fact and Fiction - love the contrast

My brother once quoted Winston Churchill:
If you're not a liberal when you're 25, you have no heart. If you're not a conservative by the time you're 35, you have no brain.
An interesting muse for the mind, however, upon  research, one discovers that Churchill is not attributed with this saying.
  1. What was my brother trying to do? Convince me of his position.
  2. My response - why does the heart and brain have to be at odds with one another?

"Time is the hand, that writes the truth, on the wall of experience"

One often holds a belief in youth, that matures with age. Ideally the heart and mind work in unison. Think of the heart and emotions as the fuel in your vehicle. The head is the steering wheel. Both are needed for the journey.

Who doesn't wish there were no rules, speed limits, or fences when bouncing around with enthusiasm and reckless abandon, in one's youth? An yet, as the currents of time demonstrate the lessons that are too hard to embrace in childhood, one's appreciation for 'responsible freedoms' and 'conscientious authorities' evolves into a maturity of mind and heart.
I often joke that "the world would be perfect if everyone were like me". This sentiment is behind those that seek chaos, or the absence of authority; where there are no bullies, thieves, or "big kids on the block" that would certainly "take without asking" or "do without caring".

Block Chains and decentralization

Block Chains are beautiful - mathematically and technologically. They are robust and redundant. One might be capable of burning a $20 bill, but don't expect to 'burn' a bitcoin!

Wait, that just happened, didn't it?

  1. A hacker stole $64 M of ether (bitcoin alternative) from an investment firm.
  2. There was a time delay during which the hacker could not claim the funds - they sat there without the true owners being empowered to retrieve them.
  3. Ethereum reset their system (burned the ether currency for the past day) to a backup that existed previously.
  4. While this eradicated the transactions that occurred during the past day, and thus, the theft of the "investors' money", it also resulted in a 'fork' in which some users choose to stay with the original, pre-fork currency, and others choose the new, post-fork currency.
What does this mean? Consider the following analogy to simplify the concept:

Imagine that someone compromised a corporate 'MasterCard' and used it to steal a large amount of money. MasterCard cannot deal with a 'single transaction' (Block Chains), so it decides to reset the system to 1 day ago, resulting in the deletion of 'all transactions' that have occurred, and the issuing of a second set of 'cards' and 'processing machines' for all card holders and merchants. 
  1. All transactions since this reset are gone.
  2. An entirely new set of cards (for all clients) and machines (for all merchants) are issued.
  3. Those who don't want the new cards may keep using the old cards. Those merchants that don't want the new machines may continue to use the old machines. There are now effectively '2 forks', 2 sets of MasterCards; remember there isn't a central authority that can insist that everyone uses the new cards and machines.
In all fairness, this isn't limited to Ethereum. In August of this year $94M of Bitcoins was stolen in a hack of the Bitfinex exchange. While Bitcoin did not 'reset the system' as cited above, these is an interesting story about a proposed fork that dates back to early this year: Bitcoin feud over expansion threatens to destabilize currency .

Bottom line:
  1. Forks can be produced resulting in multiple "online currencies". Without  a central authority, there is no limit to how many different forks, and online currencies might result as time marches forward.
  2. Mike Hearn (one time advocate and developer for Bitcoin) states in the article cited above, and on his blog, 'What was meant to be a new, decentralised form of money that lacked “systemically important institutions” and “too big to fail” has become something even worse:  "a system completely controlled by just a handful of people".'

A Centralized system

Block Chains may be great for online currency, however, for data security we do need a centralized methodology that allows the owners of the data to control it, and if necessary, shut it down. 

In the ideal world, in which everyone, equally, respects one another, and lives by the same rules and guidelines, there would be no need for security and built in controls. 
This is a great direction and beautiful dream. I am confident that quality education will eventually empower this evolved society.
While the journey remains ahead of us, and is marvelous in many ways, we have yet to arrive at this destination.

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