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Blockchains Are The Most Inefficient Databases Ever Conceived and Cryptocurrencies Are Illegal Lotteries
January 26, 2018 | By Thierry Van de Velde @ Nokia Networks (thierry.van_de_velde@nokia.com)
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We are pleased to share with you all an interesting article contributed by Thierry Van de Velde who is technology specialist in Mobile Internet networks, architecture and solutions.

 
 

Thierry Van de Velde​ 

Consulting Technology Specialist at Nokia, IP & Optical Networking

 

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Now that most of us read that the #Bitcoin network is consuming more power than Ireland, namely 30 TWh per year (3.4 GW) for only 4 TPS (transactions per second), time has come to reflect on the desirability and economic viability of #blockchain technology.  Each bitcoin transaction consumes 235 KWh : driving from Brussels to Barcelona in a Tesla Model S...

 

By comparison a Nokia Cloud Mobile Gateway (ePDG) which Mobile Network Operators use to admit Wi-Fi callers on their core networks runs on a single server (two Intel 12-core CPUs) and consumes around 1.75 MWh per year (200 W) to deliver 70K TPS (IKE, GTP or Diameter) : 25 Wh per transaction or driving that Tesla for... 150m. OK we need 8 transactions to establish a connection between your smartphone and the network : 1.2 km. Even that is 1000 times more efficient than spending a Bitcoin.

 

A blockchain addresses the problem of lack of a central trusted party safeguarding access to a central transaction ledger - a bank, insurance company, social security agency, utility or telecom operator. A blockchain removes the need for any central organization to verify your personal ID card (US : driving license) prior to allocating a bank account number, insurance contract number, social security account, electric connection number or phone number in their database (respectively).

 

To join a blockchain anyone can pick a random keypair as his/her private and public identity, then declare creating assets (16 Bitcoins in this case), but the terrible price to pay for that privilege is to solve a very difficult computational problem, namely to find a random key for which the SHA-256 signature of the transaction block has at least 40 leading zeroes. A problem requiring so many unsuccessful attempts that the reward for solving it is constantly increasing (currently a quarter million €). A riddle so difficult that 3.4 GW worth of FPGA/ASIC compute power only yields 16 Bitcoins every 10 minutes.

 

Now imagine a bank or telco making the following proposal : pick any 64-digit (256-bit) "bank account" or "phone number" and if the SHA-256 signature has 10 leading digits "0" we'll credit your account with 256K€... People would start mining for such 64-digit number, but would you call this a "game", "contest", "marketing campaign", "sweepstake" or "illegal lottery"? Perhaps the latter, on the basis that bank accounts and phone numbers do not consist of 64 digits?

 

By common legal standards Satoshi Nakamoto is the criminal organizer of an illegal lottery disguised as a distributed database - an extremely inefficient one. So is Vitalik Buterin of #Ethereum, Charles Lee of #Litecoin and Chris Larsen of #Ripple : they could stand trial one day. Also of course for organizing a Ponzi scheme, for counterfeiting € and $.

 

Yes, blockchains have interesting properties such as immutability, privacy and erasing old transactions. But a well-administered Oracle database holding account or phone numbers is also immutable for me, as long as only my bank or telco has write permissions into it. My bank or telco are legally bound to respect my privacy, not to reveal my home address for example. And I'm sure their DB admins must have written a script to erase my old transactions and calls I did years ago.

 

Mobile Network Operators are in high need of a better identification and authentication scheme than the SIM, characterized by its 15- or 16-digit E.212 International Mobile Subscriber Identity (IMSI) and secret private key Ki. NB-IoT is e.g. hampered by that mandatory SIM. We thought that #3GPP would remove the burden and open up for #SIMless authentication in #5G, as 3GPP SA1 had specified, but in the end the SIM card lobby successfully kept it out of Release 15, only permitting EAP-AKA' and EAP-5G for the #SUPI (Subscriber Public Identity). Probably claiming that "SoftSIMs" would be there soon, as they have done for the past 15 years.

 

There's thus an enormous opportunity for #IoT manufacturers and users to conceive their own object identities as fulfilling a difficulty condition, but whether 6000 blockchain nodes would need to check that condition... hum... I don't think we can afford that. As soon as a more efficient, truly forward-looking Standards Development Organization or Object Manufacturer will fix the difficulty condition, it will be sufficient for any IPSec Security Gateway, ePDG or TLS server in the world to verify it before admitting the Connected Object to the core network. Forget 3GPP, the GSM Association or the NGMN Alliance... IPSec and TLS are over-the-top and access-agnostic.

 

Declaration : I do not own #BTC, #ETH, #LTC, #XRP nor other cryptocurrencies (but I have an 11-digit mobile phone number, 15-digit IMSI and some 16-character bank accounts :-)

 
     
Username123 2018-01-28 08:55:16

Thierry Van de Velde​ is a luddite who cannot accept the new reality of blockchain. It is coming Thierry, regardless of your opinion :-)

sheikhumer786 2018-01-30 14:01:04

Before the crypto, the governments are making people fool as the paper money is nothing more than a blank paper with no true backing of any commodity, now we have entered into an new era of slavery where crypto are playing the major role a computing power to gernerate currencies. people with no computing power can not generate any block of crypto so paying a much higer price may be 1000 times more to generate a single bit of a coin. Only true way to save people from this mess to return on basics like gold or silver 

fahadi84 2018-01-30 16:51:40

great article rational and to the point

Jerry @ Lightpath via LinkedIn 2018-02-05 11:49:17

Nice article/view. Here is another view of Blockchain Technology..
https://www.nytimes.com/2018/01/16/magazine/beyond-the-bitcoin-bubble.html

John @ Banyan Fund via LinkedIn 2018-02-05 11:50:42

The inefficiency argument is both correct and irrelevant. Modern computers are *FAR* less efficient in use of data than, say, the computers used by NASA spacecraft in the 1970s. They wrote in binary / machine language. We *waste* computing resources because we can, it's economical to do so, and we achieve enormous benefits from the inefficiencies. The question is not whether blockchain is less efficient, but in what cases are the consequent inefficiencies acceptable because of other benefits?

Mayur @ ReportsWeb Fund via LinkedIn 2018-02-05 11:51:55

As South Korea cracks down on bitcoin, countries including Singapore and Malaysia are backing the technology behind it to drive technological change in areas as far afield as electoral rolls and health care records

Mauro @ Comptel via LinkedIn 2018-02-05 11:52:45

Blockchain today is not a green technology. While it solves one specific problem (centralized trust) it solve it in a way that is not environmental sustainable. I expect something to happen to address this specific problem, otherwise it will not fly

Ebenezer @ Groupe Nduom via LinkedIn 2018-02-05 11:53:35

Brilliant to the point article only time would tell. The world like to jump ahead and then stop and think. Thats our problem as millennials to solve.

 

Keep the analysis coming . Thierry Bravoo

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