Blockchain is Not the Real Innovation

Blockchain is a small piece of the puzzle. Without open source decentralized nodes, brilliantly implemented by the original Bitcoin wallet software, “blockchain” would still be some obscure storage technology. If you simply distribute nodes (data backups) geographically, yes that’s more secure than a basic backup onsite, but then adding blockchain to your strategy doesn’t get you much more secure beyond that. Instead, you could use something more simple like Git, a free decentralized hashing system. Similar to Git, blockchain hashes authenticate your information wasn’t tampered with. Which is great. Unless your entire network was compromised by a hacker or disgruntled employee. Then the extra hashing steps were mostly pointless.

If you ever watched the show Nikita, the evil mastermind kept multiple copies of encrypted blackmail material guarded by supersoldiers. That’s essentially how Git works, with multiple backups (server nodes) and each of them is guarded by passwords, hashes, cages, biometrics, etc. In real life that works OK if there’s no collusion between the nodes, and if nobody can coerce management to reveal the location of all the nodes. But those are real risks.

When stakes are higher, as in creating the foundation for a global digital economy, strong security is not good enough. You want perfect security. With just a blockchain, nodes can be hunted down (again, a subplot of Nikita) or the management can be coerced to give up the locations. What makes Bitcoin vastly more secure than a blockchain, there’s no way to hunt down and destroy or tamper with all the nodes, because anyone can make a copy of the BTC blockchain, and anyone can create a node without permission. In other words, with Bitcoin there are too many copies to hunt down, and the individual copies (nodes) don’t all know each other. That’s the world-changing innovation. Not blockchain by itself.

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