FOMO has become a huge driver of greater and faster embrace of things that in the past would find their niche and that was that. Or go away quickly. Now, however, there are vast armies of people with little actual knowledge of a technology (and quite a number who should) pushing visions of things that don’t exist or have shortcomings that seriously limit or exclude their applicability.
This is the case of the Merkle Tree. You know, the blockchain. After Ralph Merkle published and patented his work in 1979, it was largely of interest for a small and specialized set of use cases and research. With its application to Bitcoin, all that changed.
As the song says, money changes everything. And FOMO and money keep changing everything, except the fundamental shortcomings of the Merkle Tree.
Distributed ledger technology (DLT) is another thing. Merkle trees are one way to implement a DLT. Merkle trees are a hugely attractive way to implement a DLT because they use largely process-intensive hashing as a consensus method and a relatively straightforward way to create an immutable data store, a software version of WORM, write-once-read-many.
The downsides of the blockchain are, however, intimately tied to the upsides. A single flat data structure like Bitcoin’s and Ethereum’s can never scale. The compute resources required to generate the hashes to build the blocks where “data” is stored or referenced are extraordinary and the compute resources to update and navigate the chain are as well, although permit some degree of optimization for navigation. As is well known by now, the mining alone of hashes for Bitcoin requires the same amount of electrical power as is consumed by the entire country of Denmark.
It is important to note that the various strategies for getting around the limitations of blockchains have one or another implication for the base model of uncorruptible creation of data (consensus algorithm) and immutability of that data. Almost all of these are significantly more complex than basic blockchains and the decentralized ones still require the dodgy economics to encourage providers of compute resources for chain nodes.
The major attraction of blockchains for almost all the undertakings mentioned is their trust-worthy immutability, WORM. In short, no need for specialized hardware such as EMC/Dell DD990s. Instead, any enterprise can spin up their blockchain variant on the cloud and everyone knows what magic blockchain is! Except…it’s not.
Alas, there is very likely no cure for what ails blockchain as a technology. As many like to point out, some of the brightest minds are working on speeding up blockchains. Actually, that’s not true. Some of the brightest minds are trying to come up with new consensus algorithms and all attempts to improve on or eliminate the shortcomings of Merkle Tree based DLTs have achieved only workarounds that are technically questionable and/or expose them to other vulnerabilities.
Another canard that is often repeated is the comparison to one or another past technical innovation and how it changed the world. Those of us techies who have been around for a while know better, but analogies like this are what keep the hordes coming and the money flowing. So…
We are almost 30 years into the age of Merkle Tree technology and 10 years into the first and only businesses (crypto-currency speculation and money-laundering) to date that actually makes money from it. (We can debate Ripple later.) That is, apart from just making money from selling marketing, advice and the prospects of the technology.
Since a blockchain is only a software version of WORM data storage, a close analogy would be the development of relational databases (RDBs):
1970- E.F. Codd publishes paper
1974- IBM’s first commercial paying customer for SystemR
1976- IBM’s QBE
1979- Larry Ellison, et al. sells first version of Oracle
1981- IBM’s SQL/DS
1983- IBM’s DB2
…and on and on. Four years from paper to settled debate. There were no questions about where and how this could be used 30 years later. And when you consider that it would be another 9 years before Richard Stallman founded the GNU project and open source software emerged, blockchain really does look like a questionable technology. There has never been such a slow start to a significant software technology that I can think of.
The future seems similarly modest. Perhaps the only likely successful outcome of the swarms of people and money into the “sector” is some new and yet-to-be-found approach to WORM-in-software that is fast and scalable. After that, I’m afraid, the cliff for many of the lemmings.
