In his talk at the 3rd Global Blockchain Summit entitled “Blockchain Consensus”, Blockstream executive and chief strategy officer Samson Mow discussed developments in the blockchain industry, and the future of the bitcoin network as a scalable technology and digital currency.
Over the past few years, Blockstream has operated independently of the Bitcoin Core development team. The organization plays an important role in the provision of efficient and essential services to the bitcoin market. Despite having raised $80 million as a startup, Blockstream has always been an avid supporter of open-source development and technology. For example, their Element open source project, allows large-scale enterprises to build blockchain-based applications using the bitcoin public blockchain. More recently, the Blockstream development team launched an ambitious new venture called Blockstream Satellite. The network will use leased satellites to broadcast the bitcoin blockchain from space in real-time. It can be used by bitcoin users in regions with poor internet infrastructure, to settle bitcoin transactions without the need of an internet connection.
“Every month bitcoin blockchain will increase by 4 to 5GB and it will continue like this, and if the country you are in has a slow speed, expensive data, then you can use this service [Blockstream Satellite] and 5GB data are free of charge.”
At this stage, where the market cap of bitcoin is still at $73 billion and the bitcoin network is yet to reach 100 million users, the Blockstream Satellite technology is unlikely to achieve large-scale commercialization. In the future, as bitcoin evolves into a major financial network, Blockstream Satellite could become an important service for users in regions such as Venezuela with substandard internet infrastructures.
“Because every month bitcoin blockchain will increase by 4 to 5GB and it will continue like this, and if the country you are in has a slow speed, expensive data, then you can use this service and 5GB data are all free of charge. And we hope to enable more people to use digital currency and blockchain… Through our platform you can broadcast your blocks,” said Mow.
Additionally, the Blockstream team was behind the development of Liquid, an open-source sidechain project that enables traders to exchange bitcoin and cryptocurrencies without the need of intermediaries and mediators.
The Challenge of Reaching a Consensus
Open-source development is critical for the health of bitcoin as a decentralized and peer-to-peer financial network. The development of scaling solutions is particularly challenging for decentralized blockchain networks like bitcoin, and the process of integrating them into the public blockchain is even more so. A notable example being the integration of Segregated Witness (SegWit), which took over 12 months to finalize.
Blockstream is an important organization for the bitcoin industry and community. Their primary focus is the development of products that will facilitate the long-term growth of bitcoin and, as such, are not necessarily profit-driven. For years, Blockstream has developed technologies that other startups and organizations have not even considered due to the lack of incentives.
Many analysts and investors within the bitcoin community consider the difficulty in updating protocols and reaching a consensus to be a merit of the bitcoin blockchain. It means that it is incredibly difficult for potential bad actors to manipulate the network and create unwanted alterations.
“Consensus is not decided by a majority of people. Consensus is reached by everybody, so reaching a consensus is very difficult because it requires everybody to agree. If it is not the case, then you need to leave.”
It is particularly challenging to update the protocol because, contrary to popular belief, in order for a solution to be activated, virtually every participant in the network must agree. All users, miners, developers and node operators must accept the proposed changes and ensure that the proposal is technically competent, necessary, and practical.
“Consensus is not decided by a majority of people. Consensus is reached by everybody, so reaching a consensus is very difficult because it requires everybody to agree. If it is not the case, then you need to leave. And consensus is not a vote, many people think you have to vote. For example, we have ten strangers and we give everybody the vote to make this decision. No, consensus requires all people to make a decision. If you follow the consensus you can create your own cryptocoins or other coins. There are many examples like this,” explained Mow.
The Complexity of Bitcoin Development
Other factors that contribute to the complexity of bitcoin development are - security and safety. Bitcoin is not the most private, scalable, or flexible blockchain network; Monero is more private than bitcoin and Ethereum is more flexible.
However, bitcoin is the most secure and robust blockchain network in the market; the valuation of bitcoin is due, in part, to its security. Hence, for the past eight years, Bitcoin Core developers have consistently put an emphasis on security whilst pursuing various proposals and bitcoin development.
“Blockchain is immutable, if some people make a loss, you can never return the money to them. There is only one way to recover loss, and that is a hard fork but they usually lead to failure. Because blockchain is decentralised, the risk is higher. So you need to be very careful about security when writing codes or developing clients. The best way is to compare bitcoin’s safety critical engineering process to precision engineering that goes into aerospace engineering - if you rush the engineering of a rocket booster it can explode during the launch”, Mow noted.
It is for this reason that the development of SegWit required two years of development and testing. Since 2015, the BItcoin Core development team has been testing SegWit and improving the software in order to better scale and elevate the bitcoin protocol.
Not every consensus protocol is perfect. Ethereum co-founder Vitalik Buterin has been consistently shared his roadmap to the implementation of proof-of-stake consensus protocol into Ethereum. This will enable the Ethereum blockchain to handle more transactions and smart contracts per second. Nonetheless, proof-of-work and majority consensus have been fundamental in enabling bitcoin to become the most secure and valuable blockchain network.
“In summary, consensus is about a vote or a majority opinion. If a majority can reach this opinion, if 6 out of 10 people in a room say that ‘your money is ours’, they can take your money away. So you have the responsibility to participate in this network because if it is decentralised, you need to run a node, run a code so you need to take up your responsibility. You can’t just sit there and listen to others, otherwise in this way you don’t need a blockchain, you have a say in consensus because consensus is a network, blockchain is a network,” added Mow.
Well, blockchain may be immutable but that doesn't mean it's immune to human carelessness: a painful lesson learned by a poor fellow named James Howells. Howells accidentally threw away his hard drive which contained the private key to his bitcoin, losing 7500 bitcoins which are now worth over $49 million. If anyone’s in the mood for a treasure hunt - this pot of gold is buried somewhere under four feet of rubbish in the Docksway landfill site near Newport, Wales.
To contact the editor responsible for this story:
Margarita Khartanovich at [email protected]
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