by Bjørn Bjercke

February 2017

The hype word «blockchain» has been explained all over the Internet and in news articles all over the world. «The Economist» called blockchain «The trust machine» and they explain that the blockchain is a distributed database that holds trust, but they did not explain how. A blockchain is a type of database. In its simplest form, it is many sets of data, called blocks, connected by cryptography to form a chain. It records data to a ledger that in most cases is distributed. Many people believe that trust magically appears from the security derived of cryptography. It does not. In this article, I will explain what ultimately gives a blockchain its trust property. I wrote this article for people that rely on trust to do business.

Unconditional trust is binary, either you trust or you do not trust. In other words: 99% trust is not trust. If you want a computer system, a blockchain database, to deliver unconditional trust, the blockchain must be 100% trustworthy on the entire scale. This type of trust cannot be affected or shaken by business interests, geographic boundaries, political agendas, traditional values, religious views or even technological advances. The person that must trust the information from the blockchain should be able to check the 100% trustworthiness at any time.

Let’s say that a CEO of a company wants to implement a blockchain for his company because he wants the customers to trust the supply chain of goods which make up the company’s brand. On the surface, it might look like a blockchain can satisfy this demand. This is because the blockchain software has distributed the data over several servers, and they might even be geographically separated. Can the customers trust this company because the company is running a blockchain? No, they cannot. The blockchain only inherits the trustworthiness of the polices, political and traditional views and/or values of the company. In fact, what the company built, was a slow distributed database backup and not a trust of any valuable scale. So, what about a consortium of companies where the blockchain is distributed globally? Can the most paranoid customers trust this blockchain unconditionally? No, they cannot. Even though the different companies are validating each other’s data, the companies have the same inherent business interests and probably global polices and political regulation they need to adhere by. What about distributing the blockchain to the customer, thus making them a part of the blockchain. This would enable the customer to review and verify the information quietly in their sofas at home. But how would you accomplish that? What would motivate the customer to download huge amounts of data and fill their personal computers with this consortium’s ledger?

In comes the black swan event: Bitcoin. Bitcoin is not run by a company, government or an organization. Bitcoin is run by anyone that wants to opt-in. Anyone can check the 100% trustworthiness at any time through many different websites. You could make your own site or program if your tech-savvy. The Bitcoin Blockchain is a protocol, like e-mail or http, and has several software components that are compatible with each other. Just like different browsers on the web. The different software components are run in almost every country in the world, by people with different religious views and different traditional values. The only business interests they have in common is that Bitcoin continues to be resilient and decentralized. This is a major contributor to its trust because the people running the Bitcoin Blockchain software components do not agree on everything or anything.

When two opposing views and values share a common interest, trust is created for the 3rd party. The Bitcoin Blockchain is immutable by strength of a proof of work algorithm. This algorithm requires many users to contribute their computing power to do the work. The work that the computers do is guessing the right solution to a complex combination lock. At the time of writing this article, the computing power contributing to the strength of the network is 3.438 ExaHash per second. That’s 3 870 843 879 724 940 guesses per second and climbing. This contribution is the strength of the Bitcoin Blockchain against disruption by hackers and sudden technological advances.

But how does the Bitcoin Blockchain motivate users to put computers to work and downloading huge amounts of data? One gets paid of course, in Bitcoin. By verifying transactions, you get rewarded from the transaction fees and the inflation that creates a set number of new bitcoins from thin air. The Bitcoin Blockchain became a black swan event because it grew when no one believed trust on this scale was possible. A lot of users were thought to be wasting their time and resources on this experiment, but now this seems to be very successful. By the time it was realized by the masses, it was already too late to stop it. Short of the Internet completely collapsing globally, a massive solar flare that takes out all the power stations on the planet or a meteor hitting the earth, the Bitcoin Blockchain will continue to be resilient. The chances of a blockchain system like this happening again are slim.

Trust needs to be verifiable by anyone. Ultimately decentralization on a massive scale is what gives a blockchain its trust property. As I highlighted in this article, the beliefs that the trust and security of a blockchain comes from cryptography algorithms simply is not the case. The cryptography algorithm, proof of work, is just the tool, but the strength comes from motivating decentralization of all the aspects of the blockchain. There are many aspects but I only mentioned a few like business interests, geographic boundaries, political agendas, traditional values, religious views or even technological advances.

The trust in a blockchain is like tightening a bolt in a bridge structure. This bolt is holding the entire bridge in place. To keep this scenario viable the security of that bolt staying tightened is like tightening a bolt with 100% of your power, you would only need 50% of your power to loosen it.

OK, so say that you have the power to tighten the bolt with your full strength, let’s call that 100 power units. You now need only 50 power units to loosen the bolt, which is half of your full strength. In effect, the trust of the bolt staying tightened is equal to the trust in you. This would be the same as one company or organization having a private blockchain. The blockchain trust has the equal amount of trust that we have in this company or organization that they do not let the bridge collapse.

You and your two friends tighten the bolt together with 100 power units each. Now the bolt is tightened with 300 power units. This means that you alone cannot loosen the bolt as it takes 150 power units to do so. However, they are you friends with common interests, so it is not unthinkable that you might be able to convince one or both to un-tighten the bolt, thus causing the bridge to collapse. The strength of this blockchain is now reliant on the relationship to your friends. This would be the same as a consortium of companies or organizations having a blockchain. That blockchain trust has the equal amount of trust as the consortium relationships.

You and several hundred thousand of persons are tightening the bolt because you all have a benefit from this, like you all need that bridge to stay reliable. Anyone can join and more and more people are tightening the bolt every day, each with their own full strength to maximize the strength of the bridge. You and anyone can see by how many power units the bolt is tightened, and anyone can see how much each of the persons have contributed. Now if none of the persons have half of the power of what it takes to loosen the bolt, the bridge is safe. This is like the Bitcoin Blockchain and that is why it is reliable and trustworthy.

For this example, pools are comparable to consortiums:

Link source:

The trust machine – The Economist

Proof of work algorithm

Andreas Antonopoulos: What should NOT go on a blockchain?