...by Daniel Szego
"On a long enough timeline we will all become Satoshi Nakamoto.."
Daniel Szego

Sunday, July 17, 2016

Blockchain and the technology limits

Considering the Blockchain Hype that will be being evolved in the next couple of years, one of the most important questions, where are the limits of the Blockchain technology. In other words, for which Business scenarios does the technology make sense and which are the tipcial examples where rather traditional client server models should be used.

- Decentralized database: blockchain is actually a database that is stored with all the past changes in all of the full nodes of the network. In this sense it is critical that the size of the data that is actually stored in the blockchain is limited. Perhaps there will be in the future for efficient mixed blockchain - off-chain storage possibilities, however until that point blobkchain should be regarded as an extreme expensive storage, in which only a limited amount of highly sensitive data should be stored.  

- Transactions: The state of the database is modified or even read out by several transactions by different actors.

- Trust: Central use case of the blockchain is to guarantee a trust of several different agents, so that normally these agents would not trust each other. From the system perspective both trust of the state of the central database and the validity and order of the transactions should be guaranteed.

As a conclusion, in examples where a lot of data have to be stored, there are no many actors that are cooperating, there is trust outside the system as well or transactions do not really play  a relevant  role, rather classical client server models should be evaluated.