Can novel uses of blockchain technology in the chemical and process industries justify its cost?
BLOCKCHAINS. They’re all the rage. Blockchain technology has been touted as the magic bullet for everything from money to medicine to political regime change.
Blockchain (with a capital B) is often conflated with the technologies behind Bitcoin, the digital currency.
In fact, a blockchain (small b) is just one of the four fundamental technologies that makes Bitcoin revolutionary.
Very briefly, Bitcoin makes use of digital signatures to prove ownership, a public distributed database to provide accountability, a linked list of ledger entries (or blockchain) to offer tamper resistance, and it obtains corruption resistance via an exercise called proof-of-work (see boxout for the basics).
blockchain (small b : a database wherein each entry contains a summary of the previous entry. The entries thereby form a chain making it impossible to edit any historical entry without also changing each subsequent entry.
Blockchain (capital B): a term used in mainstream media to describe the technology behind Bitcoin and distributed public ledgers in general. Block chains (small b) are actually just one of four key technologies underlying Bitcoin.
Bitcoin: Digital gold. A finite, scarce, digital resource that is unforgeable and uncensorable thanks to cryptography, a distributed public block chain, and secured through the second law of thermodynamics.
At some level, Bitcoin is little more than a very slow, extremely expensive spreadsheet. The Bitcoin network uses as much electricity as a small country. There is nothing intrinsically superior about a blockchain-based database compared to a traditional SQL database per se. Yet we continue to run this database despite its cost. This is because the net benefits of Bitcoin – uncensorable, self-sovereign money – outweigh the costs, as Venezuelans and Cypriots might attest. Figure 1 shows how the four fundamental features of Bitcoin combine to provide these emergent benefits.
Do other uses that have been posited for Blockchain justify the cost? Let’s consider two cases that have some relevance to the chemical process industry – supply chain management, and public research.