An important step forwards for performance and scalability

After two months of intensive development and testing, we’re proud to release the latest alpha of MultiChain, with a completely rewritten in-node wallet. This new wallet transforms the performance and scalability of creating, receiving and storing transactions in MultiChain.

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The tragic combination of inevitable bugs and immutable code

Last week witnessed a catastrophic event in the Ethereum ecosystem, when The DAO, a smart contract less than two months old, began rapidly leaking funds to an unknown party. Looking at the current set of Ethereum contracts, filled with casinos and self-declared Ponzi schemes, this might not seem like a big deal. That is, until you learn that over 12 million units of ether, the Ethereum cryptocurrency, had been invested in The DAO by almost 20,000 people. That’s around 15% of all the ether in existence, valued at over $250 million on June 17th.

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Where shared ledgers add real value in enterprise IT

Almost a year after first releasing MultiChain, we’ve learnt a huge amount about how blockchains, in a private and non-cryptocurrency sense, can and cannot be applied to real-world problems. Allow me to share what we know so far.

To begin with, the first idea that we (and many others) started with, appears to be wrong. This idea, inspired by bitcoin directly, was that private blockchains (or “shared ledgers”) could be used to directly settle the majority of payment and exchange transactions in the finance sector, using on-chain tokens to represent cash, stocks, bonds and more.

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The three most common smart contract misconceptions

As the developers of a popular blockchain platform, we sometimes get asked whether Ethereum-like smart contracts are on the MultiChain roadmap. The answer I always give is: no, or at least not yet.

But in the hype-filled world of blockchains, smart contracts are all the rage, so why ever not? Well, the problem is, while we now know of three strong use cases for permissioned Bitcoin-style blockchains (provenance, inter-company records and lightweight finance), we’re yet to find the equivalent for Ethereum-style smart contracts.

It’s not that people lack ideas of what they want smart contracts to do. Rather, it’s that so many of these ideas are simply impossible. You see, when smart people hear the term “smart contracts”, their imaginations tend to run wild. They conjure up dreams of autonomous intelligent software, going off into the world, taking its data along for the ride.

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Four key differences between blockchains and regular databases

If you’ve been reading my previous posts, you will know by now that blockchains are simply a new type of database. That is, a database which can be directly shared, in a write sense, by a group of non-trusting parties, without requiring a central administrator. This contrasts with traditional (SQL or NoSQL) databases that are controlled by a single entity, even if some kind of distributed architecture is used within its walls.

I recently gave a talk about blockchains from the perspective of information security, in which I concluded that blockchains are more secure than regular databases in some ways, and less secure in others. Considering the leading role that centralized databases play in today’s technology stack, this got me thinking more broadly about the trade-offs between these two technologies. Indeed, whenever someone asks me if MultiChain can be used for a particular purpose, my first response is always: “Could you do that with a regular database?” In more cases than you might think, the answer is yes, for the following simple reason:

If trust and robustness aren’t an issue, there’s nothing a blockchain can do that a regular database cannot.

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An update from the MultiChain factory floor

As a change from blog posts about blockchains in general, I’d like to provide an update on MultiChain, both in terms of recent enhancements and our roadmap for 2016.

First, I’d like to thank the many thousands of you who have downloaded and built on MultiChain, asked questions and sent us feedback. In the eight months since the first public release, our stats have shown consistent organic growth in traffic and downloads, and I hope this means we’re hitting the spot. Indeed, without naming names, we know that MultiChain has been successfully used for long-running blockchain pilots in some of the largest banks, consulting firms, financial technology and IT companies on the planet.

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What we gain in flexibility by losing proof of work

When it comes to using blockchains for inter-enterprise coordination, there’s an elephant-sized problem in the room. In my view, nobody’s talking about this issue enough, whether due to denial or the need to keep the hype going. The problem, in a nutshell, is confidentiality.

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How to determine if you’ve found a real blockchain use case

Blockchains are overhyped. There, I said it. From Sibos to Money20/20 to cover stories of The Economist and Euromoney, everyone seems to be climbing aboard the blockchain wagon. And no doubt like others in the space, we’re seeing a rapidly increasing number of companies building proofs of concept on our platform and/or asking for our help.

As a young startup, you’d think we’d be over the moon. Surely now is the time to raise a ton of money and build that high performance next generation blockchain platform we’ve already designed. What on earth are we waiting for?

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Why private blockchains should not be eager to run code

I’m not a fan of the term “smart contracts”. For a start, it has been used by so many people for so many different things, that we should probably just ban it completely. For example, the first known reference is from 1997, when Nick Szabo used it to describe physical objects that change their behavior based on some data. More recently, the term has been used for the exact opposite: to describe computation on a blockchain which is influenced by external events such as the weather. For now let’s put both of these meanings aside.

I want to focus here on “smart contracts” in the sense of general purpose computation that takes place on a blockchain. This meaning was popularized by Ethereum, whose white paper is subtitled “A Next-Generation Smart Contract and Decentralized Application Platform”. As a result of the attention that Ethereum has received, this meaning has become the dominant one, with banks (and others) working away on smart contract proofs-of-concept. Of course, since we’re talking about regulated financial institutions, this is mostly in the context of private or permissioned blockchains, which have a limited set of identified participants. For reasons that are now well understood, public blockchains, for all of their genius, are not yet suited for enterprise purposes.

So is the future bright for smart contracts in private blockchains? Well, kind of, but not really. You see, the problem is:

In private blockchains, smart contracts combine four good ideas with one bad one.

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Why blockchain detractors are missing the point

And so it goes on. From popular posts to contemptuous tweets to predictions about the future, the world and its mother are lining up to throw tomatoes at private blockchains, before even understanding what they are.

Saying that a private blockchain is just a shared database is like saying that HTML and HTTP are “just” distributed hypertext. It’s wrong in two ways. First, the semantic one: private blockchains are a technology that enables shared databases, like pens enable writing and HTML/HTTP enable distributed hypertext. The bitcoin blockchain and its primary application cannot be meaningfully separated, because one could not exist without the other. But this equivalence does not apply to private blockchains at all.

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