Hard-forks and governance on the Bitcoin blockchain

By Jeffery Atik

The recent experience of forks and potential forks in response to the various Segregated Witness and blocksize increase proposals highlights the nature of governance on the Bitcoin blockchain. The result of the SegWit / blocksize controversies has been a so-called hard fork on the Bitcoin blockchain, producing two varieties of Bitcoin with a common history but now distinct technical characteristics: Bitcoin and Bitcoin Cash.

The Bitcoin blockchain marks a novel form of social organization. There is no central node in the network, no center of authority directing or coordinating internal or external action. Rather, the constituent autonomous nodes operate the Bitcoin blockchain following a downloaded open-source protocol that Bitcoin’s mysterious founders initially developed and which is quite resistant to change. When change does come to the Bitcoin blockchain, it emerges from loose and informal constellations of various stakeholders. Bitcoin users and the sponsors of the Bitcoin network nodes (known as ‘miners’) are formal stakeholders. Indirect stakeholders include Bitcoin developers and businesses that service the Bitcoin ecosystem (systems operators and equipment manufacturers, as well as Bitcoin exchanges). Still we can draw a black box around the Bitcoin blockchain and examine it as a finite social space, an organization set apart from surrounding players and institutions.

The Bitcoin blockchain resorts to “Nakamoto consensus” as its ultimate form of governance. Nakamoto consensus is an emergent and diffuse consensus arising among the active Bitcoin miners, each pursuing its own advantage while collectively engaged in maintaining, verifying and expanding the blockchain. Nakamoto consensus is the ultimate source, and hence authority, as to the canonical state of the Bitcoin blockchain; this consensus is the Truth as far as the Bitcoin blockchain is concerned, and once reached, it cannot readily be disturbed. More considered consensus engages on those occasions when the Bitcoin blockchain community makes a constitutional decision as to changes to its basic rules.

Innovation and keeping old ways on the blockchain: ChromaWay's Swedish Land Registry project - Part 2

By Jeffery Atik

In the development of blockchain applications, we now find ourselves in an exhilarating rush of proofs of concept, of mock-ups and test-beds. Real implementation of major applications on the blockchain (beyond the bitcoin) remain some distance away. And so it is with the Swedish Land Registry project, which is spearheaded by Stockholm's blockchain house ChromaWay.

The Swedish Land Registry project takes the basic 'small house' purchase transaction and proposes placing it on the blockchain. The various parties - the buyer, the seller, the real estate agent, the respective banks and the Land Registry - continue to play the same roles they held in the conventional transactional pattern. No new party is introduced, nor are any parties eliminated. The obvious candidate for elimination in an eventual blockchain-based land conveyancing system would have been the Land Registry itself - which is the chief sponsor of this project. For an agency to contemplate its own demise reflects admirable public spirit. But worry not: the Land Registry will continue to authenticate Swedish land titles. The blockchain merely records (albeit in a permanent and tamper-proof way) the title determinations of the Land Registry. The Land Registry project is a thoughtful inquiry into the blockchain’s potential; it is also a case study of incrementalist innovation, where the general outlines of the familiar are retained.

Trust on the Blockchain: ChromaWay's Swedish Land Registry project - Part 1

ChromaWay is a major innovator in blockchain technology, headquartered in Stockholm. ChromaWay is developing - together with other collaborators - a blockchain-based solution for the Swedish Land Registry. ChromaWay recently completed the second phase of this project (which it calls a "testbed") and has now published a report. Last week I spoke with ChromaWay’s Henrik Hjelte and Ludvig Öberg about the Land Registry project.

The blockchain has been called the "trust machine." In the blockchain’s original application, supporting bitcoin transactions and accounts, there is (it is asserted) no need for counterparties to trust each other. Indeed, counterparties know nothing of each other’s identities beyond their encrypted keys. Nor need they trust the accuracy of the records located on the blockchain; the distributed nature of the blockchain as well as the incentives provided the various nodes assure that tamper-proof records are identically preserved at each node. The blockchain itself is the ultimate reality of bitcoin; bitcoins exist no place else, and one securely owns the quantity of bitcoins the blockchain records. Where there is no need for trust, parties can deal directly and need not rely on intermediaries. The role of trust in more complex applications is more nuanced. While the character of required trust may be altered on the blockchain, the need to trust may not be entirely eliminated.