Blockchain Technology: The Wrong Expectations
It is no secret that crypto prices experienced a massive nosedive in 2018, and the consequences of the downward movement will likely not be corrected for months, maybe even years to come. However, despite the fact that many have lost their faith in crypto, the same has not happened to blockchain technology. People still see it as a solution to some of the greatest social issues of the world, and companies continue to claim that they can use blockchain to bring forth such solutions.
This is where things tend to get tricky, mostly due to the fact that blockchain cannot solve the world’s issues in a way that most people believe it can. While it certainly has a potential to change a lot of things, these are not the changes that you might expect.
For example, people tend to believe that blockchain will eliminate our dependence on trust. If blockchain were to go mainstream, we would not have to trust our governments, companies, agreements, or anything else ever again. Blockchain would ensure that everything promised to us comes true. This is the part where that is misunderstood and misleading.
What Is The Truth?
The truth is that blockchain technology has a lot of power, potential, and the ability to change things. However, it is also true that its power is limited to the digital part of the modern world.
In other words, blockchain can impact the amount of trust needed for intermediaries for assets that are native to the digital world, such as digital currencies. If you own a certain amount of cryptocurrency, that money belongs to you, as no one else has access to it. However, this does not impact the real world assets in the same way.
A good example of this is ownership of any physical property. Simply put, if you possess a private key, you are an official owner of any and all assets at the public address of a certain blockchain where details about the asset are stored at. However, if you lose the private key, or someone steals it from you, the ownership of that asset is lost, or rather — transferred. This is one of the problems when it comes to the use of blockchain technology.
So, while actual blockchain entries may define the existence and ownership of digitally-native assets, and no other databases are necessary to decide these things, the situation with real-world assets is different, and not everything the blockchain says is necessarily true.
What Is The problem?
Just for the sake of argument, let’s say that this actually happens. If your country does decide that all properties should be moved to a blockchain — without getting into detail regarding which blockchain, who runs the nodes, develops software, and other things — and the entire situation occurs, what would it mean if someone lost their private key? Would that person lose all ownership of their things? Their house?
Some have proposed the existence of a centralized authority that would allow them to reclaim their “lost” property. However, this goes against pretty much everything that blockchain stands for. Remember, blockchain brings decentralization, which means that no one has the power to change such things. If someone could do it, the decentralization would not be real. Also, let’s not forget that if someone did have the power to decide who owns what, there would be nothing to prevent a corrupt individual or group from taking your assets and giving them to someone else.
Another example where blockchain would not solve the problem would be the invasion of your property. If someone were to move in on the land you own, they would not care what the blockchain says. You possessing a private key will not repel them off your property. You would only have two choices at this point. The first one is to convince them to leave or chase them away by other means. The other one is to ask for someone else to do it.
In other words, you would need a government, or some sort of centralized authority to protect your rights and ownership. However, in order for them to know who is the real owner of the land, they need to have a database with that information. Can you trust them with running such a database?
The next problem lies in the hard fork. We already experienced what devastating consequences a hard fork can have on crypto. It happened only two months ago when Bitcoin Cash hard fork brought another market crash. Now imagine if your property was stored on the blockchain, and it splits into two chains, with two legitimate coins, with your property being in the middle of it all.
In this scenario, the conflict would be inevitable, unless there is a third party (like a central authority with its own database) that can decide how such a situation can be resolved. Once again, this would mean that there is no true decentralization.
Obviously, there are a lot of unanswered questions regarding the possibility of moving the ownership of the real world assets onto the blockchain. Several countries around the world even decided to try and actually do it, only to run into unanswerable questions and problems without clear solutions.
Blockchain Cannot Completely Eliminate Trust
At this point in time, blockchain technology cannot deliver on its promise to get rid of trust. There is, and will likely always be, a need for some form of trusted authority that would have the ability to impact certain events, like the ones from earlier examples. Alternatively, people will start losing everything they have.
While blockchain technology may be the only database that the crypto world needs, the situation is different for the real world. In fact, there is a large possibility that we are not even completely aware of all the problems that would come with full blockchain implementation. Many of the known problems are also not entirely explored, and they certainly do not have proper solutions yet.
The promise of blockchain is a big one, and people are unlikely to give it up because of these issues. Because of that, we can likely expect more research, development, and maybe even some progress in 2019 and beyond. If the technology changes, evolves into something new, the promises that are made today may become a reality. However, with this technology in its current state, this would be a very impractical solution.