{"id":41,"date":"2017-04-22T15:02:27","date_gmt":"2017-04-22T15:02:27","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?page_id=41"},"modified":"2018-02-01T11:43:50","modified_gmt":"2018-02-01T11:43:50","slug":"business-bafflegab-but-on-the-blockchain","status":"publish","type":"page","link":"https:\/\/davidgerard.co.uk\/blockchain\/business-bafflegab-but-on-the-blockchain\/","title":{"rendered":"Business bafflegab, but on the Blockchain"},"content":{"rendered":"

Excerpt from chapter 11<\/a> of Attack of the 50 Foot Blockchain<\/a> by David Gerard<\/i><\/p>\n

If you\u2019re a business guy you could look at the current construct versus the new construct and say \u2018aren\u2019t you just building a big database?\u2019<\/p>\n

\u2013 Charley Cooper, R3 Blockchain Consortium<\/p>\n<\/blockquote>\n

You can replace the term \u201cdistributed ledgers\u201d with \u201cshared Excel sheets\u201d in about 90 percent of talk about blockchain and finance.<\/p>\n

\u2013 Tracy Alloway1<\/sup><\/a><\/p>\n<\/blockquote>\n

As Bitcoin became more famous, its dubious nature became increasingly obvious to mainstream observers. So the buzzword of choice shifted from \u201cBitcoin\u201d to \u201cthe blockchain\u201d, or just \u201cBlockchain\u201d.<\/p>\n

This really<\/i> meant the Bitcoin blockchain, as the goal was to get interest up and the price with it. This particularly picked up around late 2014,2<\/sup><\/a> when the Bitcoin price had cratered. The value proposition was that Bitcoin was the most secure chain as it had the most hashing power, so everyone wanting a blockchain should use that one. However, the limit of 7 transactions per second worldwide, blocks often being full anyway so transactions can\u2019t get through, and that your Internet of Things light bulb was profoundly unlikely to add enough flash memory for 120 gigabytes of SatoshiDice gambling spam were all a bit too obvious to the prospective suckers.<\/p>\n

But by late 2015, \u201cBlockchain\u201d hype had taken on a life of its own as a business buzzword. If in a manner somewhat uncomfortable with its Bitcoin origins.<\/p>\n

In the real world, nobody outside the cryptocurrency subculture uses blockchains proper, because they are ridiculously impractical and the most prominent one uses as much electricity as all of Ireland. This means their fantasy life is rich indeed.<\/p>\n

Repeat to yourself: if it sounds too good to be true, it almost certainly is.<\/p>\n

What can Blockchain do for me?<\/b><\/p>\n

The key problem with blockchain proposals for business are:<\/p>\n

    \n
  1. Decentralisation is very expensive and doesn\u2019t get you much, at the loss of efficiency and control. Recentralising immediately makes the system much more efficient.<\/li>\n
  2. Your problem is pretty much always sorting out your data and formats, and blockchains won\u2019t clean up your data for you.<\/li>\n<\/ol>\n

    If you start with \u201c\u2026 but with Blockchain!\u201d, then putting lots of different words before \u201cbut\u201d isn\u2019t likely to result in something that\u2019s actually useful and practical.<\/p>\n

    Transaction ledgers in tamper-evident chains and trees of hashes are a good idea, and businesses are about to discover how to use them for tamper-evident ledgers. These will likely be branded \u201cBlockchain,\u201d whether or not the product has anything else to do with blockchains.<\/p>\n

    If you have programmers, they probably save their code in Git, which is the closest I can think of to a useful blockchain-like technology: it saves individual code edits as transactions in Merkle trees with tamper-evident hashes, and developers routinely copy entire Git repositories around, identifying them by hash. It\u2019s a distributed ledger, but for computer programs rather than money. What it doesn\u2019t have is the blockchain consensus mechanism \u2013 you take or leave the version of the repository you\u2019re offered. (I have had one \u201cdistributed ledger technology\u201d developer admit his product was basically a simplified version of Git.)<\/p>\n

    Git was released in 2005 and was based on work going back to the late 1990s; Merkle trees were invented in 1979. The good bits of blockchain are not original, and the original bits of blockchain turn out not to be much good. But if you use Git, you can tell your management \u201coh yes, we\u2019ve been using blockchain-related technologies<\/em> for years now \u2026\u201d<\/p>\n

    Business Blockchain marketing claims are rarely this grounded, however. They\u2019re largely divorced from tawdry considerations of technical or economic feasibility, mathematical coherency or logical consistency. Normal people hear these nigh-magical claims, see obvious uses for them in their own business and are left with the impression \u201cBlockchain\u201d can get them these things.<\/p>\n

    Some of the claims are sort of true in some sense, but most are completely fanciful. Many start from a hypothetical use case \u2013 often lifted directly from the wildest Bitcoin advocacy \u2013 then tout the hypothetical as if it were an existing and practical technology. This includes claims made for \u201cdistributed ledger technology,\u201d which also mostly originate in Bitcoin advocacy.3<\/sup><\/a><\/p>\n

    IBM\u2019s promotional e-book Making Blockchain Ready for Business<\/em>4<\/sup><\/a> is a good example. It sells vague and implied future potential \u2013 \u201cdiscover what new business models could emerge if trust & manual processes are eliminated\u201d; \u201chow might a faster, more secure, standardized, and operationally efficient transaction model create new opportunities for your business?\u201d Almost every solid-looking \u201cis\u201d statement concerning blockchains \u2013 \u201can enterprise-class, cross-industry open standard for distributed ledgers that can transform the way business transactions are conducted globally\u201d; \u201chighly secure blockchain services and frameworks that address regulatory compliance across financial services, government, and healthcare\u201d \u2013 is really a \u201cmight\u201d or \u201ccould\u201d; no blockchain has all the claimed abilities in the present day, and certainly not Hyperledger, the basis of IBM Blockchain.<\/p>\n

    I sat in on one presentation by a Big Four accounting firm on the Blockchain in health care: three blokes (one with a tie, two without) talking about the hypothetical possibilities<\/em> a blockchain might offer health care in the future, all of which was generic extruded blockchain hype, and much of it Bitcoin hype with the buzzword changed. When an audience member, tiring of this foggy talk, asked if there was anything concrete<\/em> that blockchains could offer the NHS, they responded that asking for practical uses of Blockchain was \u201clike trying to predict Facebook in 1993.\u201d The main takeaway for the health care sector people I was with was swearing never to use said accounting firm for anything whatsoever that wasn\u2019t accounting.<\/p>\n

    A sure tell of a reality-free writeup, completely detached from earthly considerations, is when a writer talks about \u201cBlockchain\u201d, capital B, no \u201cthe\u201d.5<\/sup><\/a> You should try mentally replacing the word \u201cBlockchain\u201d with \u201cCloud\u201d and see if the article seems eerily familiar. Also try the previous business technology buzzwords \u201cbig data\u201d, \u201cNoSQL\u201d, \u201cSaaS\u201d and \u201cWeb 2.0\u201d and see how it works with those.<\/p>\n

    \n
    \n

    1<\/a> Tracy Alloway. \u201cAn experiment\u201d<\/a>. 19 January 2017.<\/small><\/p>\n<\/div>\n

    \n

    2<\/a> Richard Waters. \u201cBitcoin 2.0 gives the dreamers focus \u2014 but only without the hype\u201d<\/a>. Financial Times, 4 December 2014.<\/small><\/p>\n<\/div>\n

    \n

    3<\/a> Earliest sighting I\u2019ve found: JP Koning. \u201cWhy the Fed is more likely to adopt bitcoin technology than kill it off\u201d<\/a>. 14 April 2013.<\/small><\/p>\n<\/div>\n

    \n

    4<\/a> Jeremy Cuomo. \u201cMaking Blockchain Ready for Business: Increase trust, accountability, and transparency across your business networks\u201d<\/a>. IBM, 2016. The author link in the text is to a deleted Wikipedia article<\/a>.<\/small><\/p>\n<\/div>\n

    \n

    5<\/a> I commend to you \u201cIgnoring Blockchain Is Corporate Suicide: Why Blockchain is the biggest single threat to all CEOs for destroying corporate value\u201d<\/a> by Nick Ayton, in analyst newsletter Innovation Enterprise<\/i> (7 July 2016) (archive<\/a>). In the several years I\u2019ve been following Bitcoin and blockchains, this is the single worst and most incoherent piece of \u201cBlockchain\u201d hype I\u2019ve seen; you definitely need to read it, to inoculate yourself against the worst excesses of this foolishness.<\/small><\/p>\n

    Ayton spends the first third of the article repeating how devastating Blockchain will be to business, the second third making technically garbled or meaningless unsubstantiated claims about the future and the last third on a list of predictions, many of which have already been shown unfeasible and three or four of which are literally out of \u201980s cyberpunk science fiction, as if he read too much William Gibson as a lad and thinks Blockchain will make Mona Lisa Overdrive<\/i> real \u2013 \u201caugmented reality using VR and holographic systems will feed off sensory layers that will sit on the Ledger of Things connecting the world\u201d, presumably visible to your new Zeiss-Ikon eyeballs.<\/small><\/p>\n

    \u201cSomeone asked me what Ethereum was\u2026 My response: \u2018Imagine giving the Internet a dose of Viagra and increasing the dose each day\u2019\u2026 The Blockchain Age is here!\u201d<\/small><\/p>\n

    I know of one case where a non-technical manager inadvertently sent this link around their company; they quickly realised how relentlessly terrible everything about blockchains actually is \u2013 anyone who\u2019s survived in business where sales people exist doesn\u2019t need to be a techie to notice there\u2019s something deeply wrong and lacking in blockchain hype \u2013 but the article had by then caught the attention of upper management. The manager found themselves in the position of designated expert and having to quell this idea, mostly by a process of translating why none of this could ever work into sober and considered business speak from the original profanity-laced screaming.<\/small><\/p>\n<\/div>\n

     <\/p>\n

    \"Become<\/a>

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    How to protect yourself and your workplace from fans of “Blockchain” the buzzword<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"inline_featured_image":false,"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-41","page","type-page","status-publish","hentry"],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/pages\/41","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/comments?post=41"}],"version-history":[{"count":16,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/pages\/41\/revisions"}],"predecessor-version":[{"id":4653,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/pages\/41\/revisions\/4653"}],"wp:attachment":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/media?parent=41"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}