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Blockchain: distributed transactions that will radically change the world


By Ben van Lier, Centric.




Ben van Lier
Ben van Lier
The American mathematician and A.M. Turing Award winner Leslie Lamport is one of the founding fathers of distributed computing and distributed algorithms. Back in 1978, he defined distributed computing thus: “A distributed system consists of a collection of distinct processes which are spatially separated, and which communicate with each other by exchanging messages. A network of interconnected computers such as the ARPANET is a distributed system.” [1] In an age when there were no such things as the internet, the Internet of Things or advanced manufacturing, he worked on distributed algorithms that have helped make these developments possible. Without the trailblazing by this founding father of distributed computing, today's blockchain technology hype would have been unthinkable.

Distributed computing

A key requirement in the development of distributed computing is that a system made up of distributed processes has to be able to keep functioning, even when one or several of its components have ceased to (reliably) contribute to the functioning of the system as a whole. When it comes to reliability, Lamport is unequivocal when he says that a distributed system can only function reliably by using time as a fundamental part of its reliability [2].

As a whole, the system can only function reliably on a permanent basis when the majority of separate components of the system maintain consensus with respect to the functioning of the system as a whole. It is therefore key for a distributed system that all components involved keep a ledger of how and with whom they have performed transactions by exchanging and sharing data and information. All components must have access to information about transactions logged in the distributed ledgers, which are intended to provide an overall view of all approved transactions. In Lamport's age, generating consensus between the various components of a system was a new and complex issue. In 1982, he addressed this consensus problem in an article he co-wrote with Robert Shostak and Marshall Pease, coining it the Byzantine Generals’ Problem [3]. In their article, Lamport, Shostak and Pease develop an algorithm that lays the foundation for reliable consensus between systems that are separated in terms of time and space. The essential idea in the solution they come up with is that to establish consensus there have to be at least three plus one components and mutual exchange of qualified messages between them. In 1998, Lamport added a protocol to this consensus principle that regulates the voting that is needed to achieve consensus between the various components within a system. This latter protocol, which is also known as the Paxos algorithm [4], addresses things such as how to handle the voting between the various components, how to record the results of the voting between the components in central and decentralised ledgers, and how to guarantee the consistency of recorded information.

Blockchain technology

Without Lamport et al.'s pioneering work in the field of distributed computing and distributed algorithms, we would not be contemplating the possibilities offered by blockchain technology today. The most widely known application of this technology so far is attributed to Satoshi Nakamoto [5]: Bitcoin. Blockchain's boom as an application for things such as value calculation, currency exchange, data storage in the cloud, or contracts, has received widespread attention in subsequent years. Blockchain technology's potential in developments such as the Internet of Things, (mobile) health care and advanced manufacturing has only been attracting increasing interest in the past two years.

A recent Deloitte publication [6] described blockchain technology as: “a new solution to a more challenging version of the Byzantine Generals problem that includes the ability to add participants over time. A blockchain is a digital distributed transaction ledger, with identical copies maintained on multiple computer systems controlled by different entities”. Melanie Swan [7] sees blockchain technology as a key innovation in the development of new architectures for transactions between interconnected and distributed systems: “The blockchain allows the disintermediation and decentralization of all transactions of any type between all parties on a global basis”. To Swan, decentralised ledgers that enable a transparent structure of recorded transactions are the essence of the blockchain: “the database that is shared by all network nodes, updated by miners, monitored by everyone and owned and controlled by no one”. Physical nodes in a network, such as computers, smartphones, sensors and devices such as smart TVs, fridges and cars can thus be interconnected through software and distributed algorithms that ensure consensus in transactions between these nodes. In Swan's words, the blocks that make up the blockchain consist of: “groups of transactions posted sequentially to the ledger - that is, added to the chain. Blockchain ledgers can be inspected publicly with block explorers, internet sites where you can see a transactions stream by entering a blockchain address (a user’s public-key address)”.

Distributed computing, Blockchain and the IoT

Many agree that Bitcoin is but a first step towards numerous more applications in a wide range of sectors. A Goldman Sachs publication cited by Williams-Grut [8] claims that: “While the Bitcoin hype cycle has gone quiet, Silicon Valley and Wall Street are betting that the underlying technology behind it, the Blockchain, can change... well everything”. Silicon Valley's role in developing and shaping blockchain technology is considerable. Insights such as the Byzantine Generals’ Problem and the Paxos algorithm have played a major part in the development of solutions such as cloud computing and cloud-based data storage. It is therefore no surprise that Google, Microsoft and Amazon stand to gain a great deal from further development of the concept of distributed computing. Philips Healthcare has recently also announced that it is to research the potential uses of blockchain technology in exchanging and sharing data and information between medical applications. Working closely together with parties such as Samsung, IBM is investing considerable time and money into making a blockchain possible for the Internet of Things. In IBM's view, the basis of today's information revolution lies in: “the very humble work of transaction processing. From phone calls to electricity metering to airline reservations, each is a transaction to be processed” [9]. IBM expects the current growth of automated transactions to snowball on the back of the development of the Internet of Things and advanced manufacturing. According to IBM, the exponential growth of the number of objects that are connected to the internet and share information through that connection calls for new paradigms such as the blockchain of distributed computing. In the further development of a decentralised Internet of Things, IBM sees the blockchain as: “the framework facilitating transaction processing and coordination among interacting devices. Each manages its own roles and behavior, resulting in an Internet of Decentralized, Autonomous Things - and thus the democratization of the digital world”.

Summed up

In the words of Melanie Swan: “Perhaps most centrally, the blockchain is an information technology”. The development of the theory behind this information technology has been ongoing for decades. Despite fundamental breakthroughs and the first advances in this field, the area of distributed computing and distributed algorithms is still one with numerous practical and theoretical issues. Before we can start using this form of information technology globally in developments such as the Internet of Things, (mobile) health care and advanced manufacturing, we need better understanding of the possible development of such a new and technology-based ecosystem over time.

1 Lamport L. (1978) Time, Clocks, and the ordering of events in a distributed system. Communications of the ACM. July 1978 Volume 21, number 7, pp. 558-565
2 Wensley J. H., Lamport L., Goldberg J., et al. (1978) SIFT: Design and analysis of a fault tolerant computer for aircraft control. Proceedings of the IEEE, vol. 66, no.10 October 1978, 1240-1255
3 Lamport L., Shostak R. and Pease M. (1982) The Byzantine Generals Problem
4 Lamport L. (1998) The Part-Time Parliament. This article appeared in ACM Transactions on Computer Systems 16, 2 May 1998), pp. 133-169. Minor corrections were made on 29 August 2000.
5 Nakomoto S. (2008) Bitcoin: A Peer-to-Peer Electronic Cash System. https://bitcoin.org/bitcoin.pdf
6 Schatsky D. and Muraskin C. (2015) Beyond Bitcoin. Blockchain is coming to disrupt your industry. Deloitte University Press.
7 Swan M. (2015) Blockchain. Blueprint for a new economy. Sebastopol, CA, USA, O’Reilly Media ISBN 978141920497
8 Williams-Grut O. (2015) Goldman Sachs: ‘The blockchain can change… well everything’. Business Insider UK. 2 December 2015
9 IBM Institute for Business Value Executive Report (2015) Device Democracy. Saving the future of the Internet of Things

Ben van Lier works at Centric as an account director and, in that function, is involved in research and analysis of developments in the areas of overlap between organisation and technology within the various market segments.
http://www.centric.eu/NL/Default/Themas/Experts/Ben-van-Lier

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