Working With the blockchain
- Blockchain: An elegant concept but its possibilities and potential require careful research.
- Treating it as a solution for all is promoting Techno-determinism.
Blockchain and Current Take
- It is a fascinating data structure.
- It draws a great curiosity in computer science, social and political sciences, and public policy.
- A lot of hype about its concept and its adoption.
- But its promises are faith-based, driven by unsubstantiated vendor and consultant claims.
- This is risky and stems from an inadequate understanding of the blockchain properties.
- A blockchain is a sequential append.
- It is a public bulletin board of transaction records.
- It has two main functional properties:
- What can get added is reconciled by multiple participating peers.
- The bulletin board is immutable, once a record is added, it is cryptographically ensured.
- Permissioned” or private blockchain: Only with pre-identified participating peers.
- Collusion is possible and integrity can only be ensured through regulations.
- Without political decentralization, safety is scarce and difficult.
- Blockchain structure does nothing for the notion of privacy & secrecy aspects.
Consensus and Applicability
- A decentralized consensus is required.
- Current issues with safety concern and privacy is not an ensuing property of a blockchain.
- Consensus is inapplicable when there is only one authority.
- The claims of security based on blockchain are unpromising.
RBI and Cryptocurrency
- The role of blockchain in RBI’s digital currency proposal is doubtful.
- A convincing method independent of consensus needs to be developed.
Cryptocurrencies and Blockchain Tech use
- Cryptocurrencies make valid use cases for blockchains.
- But political decentralization of involved participants is questionable.
- The question is whether cryptocurrencies are consistent with traditional means of transactions and larger macroeconomic implications of cryptocurrencies.
- Only a limited set of commodities are traded with crypto assets.
- But their price determinations with fiat currencies are uncertain.
- Also their potential to increase inequality is also considerable.
Physical aspects of Cryptocurrency
- Mining in cryptocurrencies is achieved by spinning the CPUs.
- Carbon footprint is equivalent to few megacities, it is ungainly, energy-inefficient and unsustainable.
- This requires regulation and taxation, especially for the potential environmental impacts.
- It is amazing that cryptocurrency research and deployment has not been adequately addressed.
- This raises concerns to develop sound theories for their regulation.