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Decentralized or Nothing: Song Slams IBM Over Blockchain Hype at SXSW

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More or less decentralized? For Jimmy Song, there’s no in between.

An author and partner at venture firm Blockchain Capital, Song made that point repeatedly in a debatewith IBM engineer and Hyperledger Fabric co-lead Chris Ferris at SXSW Thursday, where he told the crowd at the Hilton Austin in no uncertain terms: “You either have control over your stuff or you don’t. It’s a zero or a one.”

The debate pitted permissioned blockchains – the private networks being pitched to big business – against permissionless blockchains – the technology undergirding bitcoin and other open-source networks. Billed as a “deathmatch” on the festival agenda, Song was determined to give the audience what they came for.

“Why do you need permission if it’s supposed to be decentralized?” he asked. “There has to be an entity that’s giving you permission, and that’s by definition centralized.”

While Song took the binary view of decentralization, Ferris argued that blockchains can exist on a spectrum. Sure, permissioned blockchains are less decentralized, Ferris said, but their added trust mechanisms mitigate perceived risk.

“Permissionless blockchains do not necessarily solve the problem of trust,” he added.

Song wasn’t having it. To illustrate the degree to which he was willing to extend his point, Song used the example of the ethereum fork following the infamous hack of The DAO, when the project’s developers and users agreed to introduce a code update aimed at rolling back the stolen funds.

“I think Ethereum is a permissioned blockchain,” Song said, adding:

“When Vitalik says, ‘These particular transactions aren’t particularly good for the ecosystem so we’re going to roll them back,’ that, to me, is a permissioned blockchain.”

On stage and in conversation with CoinDesk beforehand, Song argued that every application of blockchain to anything but bitcoin is a waste. “Blockchain is really useful for bitcoin,” he said during the debate. “Everything else has a central point of failure.”

Prior to the debate, Ferris told CoinDesk that he hoped he could make the point that there’s just different use cases for different kinds of blockchains, and those use cases should determine what level of decentralization should be called for.

“Certainly part of the conversation will be that bitcoin doesn’t solve the same problems we are trying to solve in an enterprise context,” Ferris told CoinDesk.

IBM, he explained, is primarily building products that allow large enterprise partners to share information rather than exchange money. For example, today Big Blue announced a deal to record information about businesses’ legal status across France. Trying to find some common ground, Ferris argued there’s space for the approaches of both sides.

“I think there are a ton of use cases where permissioned blockchains make a ton of sense,” Ferris said. “I also think there’s a ton of use cases where a permissioned blockchain doesn’t make any sense.”

But Song didn’t come to accept concessions. He said all the blockchains besides bitcoin’s might as well just run on a faster, cheaper centralized database.

“A permissioned blockchain is an oxymoron because it’s a centralized database that’s masquerading as something decentralized,” Song said.

The exchange case

The QuadrigaCX exchange debacle captured the difference between the two positions better than any other part of the debate.

The Canadian exchange’s owner died and lost $190 million worth of cryptocurrency when it turned out he was the only person with access to the system’s private keys. Both Song and Ferris saw a disaster and yet came to very different conclusions about it.

Ferris brought up Quadriga late in the debate by first saying, “The whole point of permissioned blockchain, enterprise blockchain, is reducing risk,” he said.

It’s a system where every major user of the protocol knows everyone else. “We can put a governance model over that and legal framework around that says: ‘If you do something to disrupt the system, we’ll sue the pants off you and you’ll regret that,’” Ferris said.

Song saw that as precisely the problem. If it’s possible for a governing body to step in and punish the operators of a platform, then to Song that defeats the fundamental point of decentralization.

Ferris saw Quadriga as an illustration of the fundamental user experience problem of permissionless systems because it illuminates dramatically how bitcoin doesn’t have a fallback if private keys are lost.

But Song saw that as its virtue:

“You are either self-sovereign or you or are not.”

Bitcoin Core

Bitcoin does have its powerful authorities, though, a point that was argued by the debate’s mediating presence, Angela Walch, a professor at St. Mary’s University School of Law.

“I am struggling with how bitcoin doesn’t have similar centralization of power with the core developers,” she said.

Walch used the example of the inflation bug disclosed in September 2018, in which developers originally minimized its true implications prior to pushing the fix.

“They list a total of 11 people who knew about this. Those people made a decision about how they were going to fix this,” Walch said. “They told a few select miners at the beginning. That miner was given privileged knowledge.”

She used the point to argue that bitcoin’s core developers have outsize power in the network. Users had to trust, for example, that none of those leaders who knew wouldn’t short bitcoin in advance of the ultimate disclosure. “I’m arguing those people were exercising centralized power,” she said.

Song countered by saying that Bitcoin Core is not the only bitcoin software and it’s open source, run under an MIT license that warns everyone to use it at their own risk. If something is wrong with the bitcoin software, users should be able to find that and report it.

“If the goal is to get mass adoption, for hyper-bitcoinization,” Walch said, “Ninety percent of the people are not going to understand how the code works, so just saying it’s open source is not an out.”

Ferris took this point further and pointed out that there is a very small number of people who are maintainers of bitcoin code, alleging that if something happened to all of them it would yield chaos.

Ultimately, the debate circled back at that point to another round on sovereignty. Should users be made collectively responsible for making sure core maintainers aren’t malicious or should they use the state as a fallback?

“You are speaking about regulation and governance frameworks as if it’s a bad thing,” Ferris began.

Song cut him off, saying, “A lot of the time it is.”

 

Source:coindesk.

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World Wire is based on standards developed by SWIFT, says IBM’s Head of Blockchain Solutions

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Jesse Lund, the Head of Blockchain Solutions and Digital Assets at IBM, spoke about whether there were concerns regarding the functions of World Wire, and the safety of its transactions, in an interview with CNBC. He also spoke about the impact World Wire would have on financial service systems like SWIFT.

Earlier this week, IBM announced the launch of World Wire in collaboration with Stellar. World Wire is a payment system that utilizes the benefits of blockchain technology, the Stellar Network in particular, and cryptocurrency, to settle cross-border payments in real-time. The US Dollar and Stellar Lumens [XLM] would be the currencies used to kick-start the payment network.

In the interview, Lund was asked about the implications Bitcoin would have on their network, considering the recent turn of events associated with the coin. He was also asked whether there were concerns and questions pertaining to the functions of World Wire and the safety of transactions. He said,“[…] Bitcoin kind of started the momentum of all of this blockchain. And what IBM has been doing, […], is adding security and confidence to the system. So we are building on new idea, which is the ability to store monetary value electronically and to be able to move that value around the world in real-time.”

He further spoke about what made World Wire different, in light of the presence of Western Union and MoneyGram in the same field. He stated that the current cross-border payments system had issues, adding that there were inefficiencies in the way banks communicate and that World Wire was separate from the network.

“[…] Those things are distinct and they require a lot of co-ordination and reconciliation after the fact, that adds, who would call friction, that adds, you know, time complexity, and cost. And so, by having a digital store of value that can move with the payment data, we make the whole process a lot more seamless and a lot more point to point.”

This was followed by Lund speaking about the existing financial systems such as SWIFT. He stated that SWIFT “was a messaging platform”, while what IBM provided “was messaging like SWIFT”. He said,“We’re based on standards that SWIFT has ultimately developed. Standards that have come out of SWIFT, you know, are inherently part of the platform itself. So, yeah, we’re trying to help banks optimize the way that they service their customers and its becoming more and more global, so money moving cross-broader needs to move more efficiently.”

Further, he was questioned on whether they faced any pushback from banks or whether they were viewed as a threat. Lund strongly disagreed, stating that IBM’s role in Word Wire was “as the network operator” and an infrastructure provider. He said,

“We’re trying to build the foundation on which banks can continue to enhance their businesses and to build new applications that will ultimately affect their customers. So, we’re just trying to make it easier for them to pass along improvements and better user experience for flocks like us.”

Source. ambcrypto.

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Permissioned Blockchains Will Dominate the Public Ones

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Undermining the principles of openness and trustless-ness, the EU Blockchain Observatory and Forum recently has suggested that permissioned blockchains with specific use-cases will lead the adoption of blockchain in the first wave.

The EU working group is assigned with producing thematic reports relating to blockchains and this recent report is titled “Scalability, Interoperability and Sustainability of Blockchains”. The group is also expected to present another report by the second half of 2019 related to other issues of blockchain such as privacy and confidentiality.

A blockchain is essentially a distributed database maintained by decentralized nodes present in the network instead of just a single party. Within the domain of a blockchain, it can either be public, private or permissioned.

In a public blockchain, anyone can enter the network and act as a node. It is fully open in nature and the data is visible to everyone in the network.

In a private blockchain, the nodes in the network are added by a single controlling party. For example, a bank can select the nodes to run a blockchain network itself. One can think of a private blockchain network as a centralized-decentralized framework where a decentralized network is controlled by a centralized party.

In a permissioned blockchain, although anyone can join the network, the amount of data visible to a node is controlled by its role in the network. This is the kind of blockchain structure that makes the most sense for businesses and industries. For example, a node in the supply-chain department only needs to access the data related to it and does not need to get involved in what’s going with the logistics.

Permissioned blockchains have an access control layer built directly on top of a node which filters the amount of data visible to a node and this feature of permissioned chains will drive the adoption of blockchain as the role of every node in the network can be designated for a specific purpose, which is desirable by almost every network in the world.

Although private and permissioned blockchains go against the main principle of decentralization and transparency, this is something that is desirable by many businesses and companies that do not want their processes to be visible to anyone outside of a trusted network.

READ ALSO: A Blockchain Cosmos Finally Comes Alive

As stated by Ian Kane, the founder and chief operating officer of Ternio, a scalable blockchain platform capable of performing 1 million transactions per second:

“Private or permissioned blockchains have their place specifically in an enterprise environment. Companies will not want to put sensitive data on a public blockchain, because of competitive intelligence issues. I think the future of blockchain will be a combination of both public and permissioned blockchains that have interoperability.”

Within a private system of operations, it does not make sense to make use of public blockchains. Public blockchains can expose internal mechanisms and processes of a company or a corporation to the competitors in the game. But for a specific company, a specialized blockchain that holds data relevant to that entity only, internal frameworks can be more transparent and efficient. This is the reason why the usage of permissioned blockchains is expected to drive adoption in the corporate sector.

READ ALSO: Apple Teams Up With Blockchain Technology To Make Their Products More Ethical

Permissioned blockchains are dedicated to specific purposes. If a blockchain is dedicated to the logistics of a hospital, there is no need for the entire world to see what is happening in the hospital. Only the relevant parties need to see the local proceedings. This makes public blockchains of little use in such scenarios as not everyone wants their activity to be visible to the entire world.

Despite the potential to drive the wave of blockchain adoption, permissioned blockchains still face a lot of issues, one of them being interoperability. Public blockchains make everything visible but with private blockchains, transfer of information from one native ecosystem to another is an issue.

Permissioned blockchains make their own little ecosystems and when there is a need to transfer from one blockchain to another, there is no protocol defined yet to do that. What framework is going to be used for cross-chain communication and how much information is going to be shared in order to maintain the validity, are some of the questions that need to be answered. This area needs to be explored and these questions need to be tackled before the adoption can be made widespread.

READ ALSO: JPM Coin is the Evidence of Trust in Blockchain Technology

Even though the EU report threatens the principles of openness put forward by public blockchains, such as that of bitcoin and ethereum, it might just show the way to making blockchain adoption more widespread.

 

source :blockpublisher.

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Facebook Prepares For Blockchain Adoption, Posts Job For Legal Blockchain Counsel

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Facebook is making strides in the blockchain industry with new hires as they prepare to launch their US dollar-backed stablecoin, which will purportedly launch in the first half of 2019.

According to Facebook’s career center where the company posts job openings and upcoming positions, a job description detailing the need for a senior lawyer with experience in both blockchain and payments was recently posted.

Facebook Prepares for Rollout of New Cryptocurrency

As previously reported by IIB, Facebook is said to be developing a stablecoin cryptocurrency that will enable users to transfer money across the social media giant’s popular messaging app, WhatsApp. It’s rumored that Facebook will eventually integrate their cryptocurrency across all of their social media platforms.

This not something to be taken lightly as the rollout of “Facebook Coin” will attract a lot of attention from the mainstream, as well as lawmakers and regulators around the world. Therefore, Facebook is now seeking a Lead Commercial Counsel to guide the rollout of this new blockchain technology.

Per the job posting, Facebook detailed the responsibility of this new position, stating that the person hired will be required to present Facebook’s blockchain initiatives and products in a legal and strategic way to clients and businesses on an international basis.

The posting reads:

“You will be responsible for drafting and negotiating a wide variety of contracts related to our blockchain initiatives, including partnerships needed to launch new products and expand such products internationally. You will also advise clients on the various legal risks, business strategies and other issues related to commercial transactions and general operations.”

All in all, this job posting simply goes to show that Facebook is gearing up to launch its “Facebook Coin,” as well as other possible blockchain-related products and initiatives.

Furthermore, IIB previously reported that Facebook was growing their blockchain team with a slew of new hires including software engineers specializing in blockchain technology, among other positions back in December 2018.

 

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