Well the bitcoin fervor seems to have already peaked and we’ve moved on to the blockchain (the underpinning tech that makes bitcoin work) as the new investor de rigueur. It’s like that moment when your favorite unknown band goes from obscurity to superstardom and suddenly everyone is telling you how much they’ve always loved them. Everyone loves the blockchain. In fact when it comes to solving the many issues facing the music industry, there is a massive rush of interest in using blockchain technology to solve them all, citing the ridiculously bandied about word of the moment, “transparency”.

What currently concerns me with the goldrush to fund or participate in blockchain projects is of course the fact that when investors jump into nascent tech, it often gets convoluted from its original intent to something often unrecognizable. What made bitcoin and blockchain so attractive to many developers and users was that it wasn’t part of “the system”, nor built around the idea of being part of the establishment. And yet, that is exactly what is happening.

As someone who actually has a technology platform that works with blockchain, let’s look at it with some critical objectivity.

What is the blockchain?
Without providing a deep and detailed explanation of how “ blocks” become the “blockchain,” or talking about miners mining bitcoin, and other concepts that will cause your eyes to roll into the back of your head, just think of the blockchain as an immutable decentralized (no one owns it) public ledger or record of transactional data. That data is distributed around the world to multiple servers that allow this transactional data to be written into a permanent record. Each copy of this data is designed to contain the same data as the others. Essentially, you can trust that if you write a transaction into the blockchain, they all have the exact same transactional information. To boil it down to a very basic level, if you put something in it, it is there permanently, impossible to tamper or change.

Right now there are newly funded companies trying to use the blockchain to validate/record stock trades, artwork, music, copyright, diamonds, and other tangible/intangible assets. Even banks and governments are looking into how they might utilize the blockchain for documentation of important information. Many within the music industry feel that by writing practically everything into a blockchain they will solve all the issues and we’ll suddenly be returned to a time of unicorns and rainbows, with more money than ever before falling from the sky. And maybe it can.

It is in fact quite a brilliant bit of kit and as of late, other people have started to see that having such a mechanism could be very valuable for other types of transactions. And so we’ve got other companies and organizations creating not only their own cryptocurrencies, but their own versions of blockchain technology. In fact, what could be the version of the blockchain that is recognized as “official,” is currently in the process of experiencing a fork in the road. Sparing you the politics behind what’s going on, there are certain limitations inherent on the blockchain that a group of developers want to re-engineer to solve, and so they are in the process of what is called “forking” or splitting off the blockchain to run a new version of it.

Confused yet? Welcome to my world, and I’m using it every day.

The blockchain, in theory, shows some promise as an immutable public ledger that provides some needed transparency when it comes to important transactions, whether they be purely financial or a public statement of fact. However, if it is going to get past the point where it is being funded for the sake of finding the next big thing (beyond bitcoin), to actually being the next big thing, it has to solve five main issues, Authority, Immutability, Scalability, Legacy, and Privacy.

Authority

“Def: the confidence resulting from personal expertise: he hit the ball with authority.• a person with extensive or specialized knowledge about a subject; an expert: she was an authority on the stock market.• a book or other source able to supply reliable information or evidence, typically to settle a dispute: the court cited a series of authorities supporting their decision.”

Humans tend to trust people and institutions because they place within them authority. If one institution fails us, we often have recourse to go to another to find satisfaction. We hire experts in certain fields or use certain organizations to perform certain tasks, because of the authority invested in them. Authority doesn’t inherently exist, but is something that has to be recognized and accepted by humans, because data (good or bad) is just data. Regardless of how many times technologists want to convince us that AI and technology can do certain things better than humans, almost every person prefers to have a direct connection to another person when resolving issues.

The blockchain does not possess cognitive empathy and does not understand nuance, therefore sometimes the only way to solve a problem is with a person to person dialogue. Blockchain is not an authority unless given that state by humans. It has to be recognized as such. However, blockchain also belongs to no one, and it in fact is simply a public ledger or record of information pertaining to a transaction or asset, and it can in fact be polluted by humans (garbage in/garbage out). It cannot be accountable because it has no one to be accountable to, and no one is truly responsible for it. Since it is designed to exist in a decentralized format, (meaning it lives out in the ether of the Internet and has no owner), the perceived value is that anyone can write to a blockchain and by making it public, almost anyone can use it to validate a transaction.

However…

It hasn’t been tested in a court of law. While I like the idea behind decentralized transaction ledgers, I see some serious issues specifically surrounding authority. There is no centralized authority responsible for blockchain, and therefore you can’t really hold anyone accountable for the data. Certainly for many, this means there are pluses and minuses, yet while a record may be a record, generally in court you have an authority which can validate the authenticity of that record going in and coming out.
If you have a land dispute, for example, you may have to call in not just surveyors, but also government officials who have the original land deeds or registered documents on file to testify to the validity of said data. They always possessed the data and it was recorded at that location, so they can testify to its validity. When it comes to copyright, in order to sue for a valid copyright infringement case, you have to have (in the US) registered your work with the Library of Congress, not simply throw something into the blockchain. There has to be someone accountable.

You also have to in fact be able to 100% trust who is entering that transactional data, and they have to be accountable. If that trust is being put into the hands of a private technology company, and you are relying on that data and that company, you have to understand there are risks. That company could in fact be acquired or go out of business. While some of your data might safely tucked into the blockchain, that doesn’t mean you are 100% protected and free of risk.

While we may or may not like it, having authorities (institutions/people of repute) that we generally trust, has always been critical to society, and it is not just information that backs that up, but people. I know some will say that blockchain is impossible to “hack” or game, but I’ve yet to see any technology that hasn’t been exploitable on some level, so who will people turn to when they have disagreements or feel they have been taken advantage of? Sometimes data also doesn’t tell the whole story, which is why we don’t call computers to testify, we call humans.

Since anyone can essentially write anything into the blockchain, this is why having trusted institutions involved is so important, but to date, all the language I hear from blockchain disruptors is that they want to burn down the old legacies, yet they don’t yet have a trusted replacement for them yet.

Immutability
I think my biggest issue to date with those rushing to work with blockchain is the idea that you can and therefore should write any and all data into the blockchain. For example, several companies I’ve talked to (and some I’ve met) have thoughts of writing business logic into the blockchain, which could include metadata, ownership information, spits, rates, terms, and so on. The thought being that if everything is out there, it is easy to parse out, interpret (via people or machines), and deliver that always elusive “transparency.”

Besides the technical limitations on this, even if possible, it is a remarkably stupid idea.

Business logic is not always immutable. In fact, it isn’t even always that logical. All creative industries are in a constant state of flux. Rates, terms, use, and even ownership can change at any given moment. There are not simply market forces at play, but there are emotional forces at play. It is one of those ideas that on the surface sounds brilliant, but without any real thought as to what comes afterwards as far as resolution conflict and other complications that are products of people. The music industry is replete with battles and disagreements and misunderstandings. It also doesn’t take into consideration  the power of “oops.” Mistakes will inevitably be made.

Certainly, some data can and should be written into the blockchain, but the idea that there will be a magical wonderland of machine logic that will always know how to handle every given situation is laughable. Machines do not understand intent, and they do not understand abstractions like fair use, parody, or pastiche. Humans barely understand these ideas. On the scale that things like user-generated content are created, the idea that this can all be handled in this manner is illogical.

There is a better way to handle business logic, and that is using a method I call “immutable fluidity.” It is in creating a hybridization of static and motion. That’s another article.

Scalability – Size
Here’s some of the reason we’re seeing a fork of the current blockchain. When it comes to scalability of size (and speed), there are two camps on this. One is saying blockchain scalability is not an issue, and the other says that it is a major issue. Which is it? I think I can make an argument for why it may not be scalable. With the rush to build/fork blockchain into the “blockchain for x” and the “blockchain for y” are we not exacerbating the issues of scalability? We certainly are making it very difficult to pick a platform to back.

Let’s look out a bit into the near future and take into consideration all the possible uses for blockchain. We’re talking trillions of transactions/records every day. Massive amounts of data that, while not blob data (large files like video/music), is still data.

If we take the bitcoin wiki scalability targets they use by comparing bitcoin/blockchain to the Visa platform, then according to the wiki, Visa has a peak capacity of around 50k transactions per second. I know that’s “peak” (not average) but if we are looking at displacing other payment systems as well as other data recorded in blockchain, you have to build for the world you may have, which can include a future of trillions of micro transactions as well. From just a financial transactional aspect, you are talking roughly 4.5B transactions per day or 1.6T transactions a year. Now add to that the traffic and data requirements for blockchains that cover all sorts of transactions that may not have any financial aspect or may in fact have both financial and other data requirements that need to be recorded. Judging by some rough numbers, we could be looking at many terabytes a day and a few petabytes a year in data, likely more. All of this data has to move and be stored somewhere, and there is cost to that in financial and time factors as well.

Now I understand that not all nodes need to store the entire blockchain, but for many of the transactions people are talking about, they have to exist forever and there must always be a record of it somewhere. We know that systemically it is possible for things to fail and decentralizing data can help prevent from some critical aspects of this from occurring, but it is possible that at some point this data becomes untenable. Yes, I know that storage and bandwidth become cheaper all the time, but we’re talking about still needing to handle the traffic/storage of photos and video and music and whatnot (that we already do online), on top of blockchain data.

Scalability – Time
Over the past 2 years, the average round trip time for confirmation on a blockchain transaction has hovered in the 6-10 minute range, typically around 8 minutes. Two years, and transaction times have not decreased, but also not increased with the popularity of bitcoin. This isn’t necessarily a good or bad thing. However, many mission critical uses of blockchain will in fact require transaction times measured and confirmed in milliseconds.

Recently there’s been a lot of press written up around an announcement about how a music intelligence company is partnering up with blockchain/cryptocurrency company. From what I gather, they are taking a stab at creating yet another rights database, on top of the dozens of other attempts to do this around the world at the moment. In fact, another blockchain rights database project is also being developed on the competing blockchain platform. How many projects like this can we really have? At some point some serious decisions are going to have to be made.

Legacy
Many of the people I’ve met who are working to introduce blockchain solutions operate with the general idea that the old systems are broken and we need to simply burn it all down and start over. Hard to argue with that, considering it isn’t as if things are running like clockwork and there is a tremendous amount of wasted revenue that is eaten up by overhead and broken methodology. But whenever I hear anyone use the word “music industry” as a way to demonize a system that clearly has both positives and negatives, it harkens back to another time I heard those same words…

Sure, I’m a technologist, but I’m also a writer. I was told 15 years ago by the tech industry that this was our coming golden age. The walls are coming down and you’ll be able to self publish your work and make more money than ever before. In those intervening years I’ve seen peers go from making $1 a word to around $.01 a word, and as far as all the of walls coming down…the last time I checked with this great disruption and golden age, Amazon was on top controlling the methods of sales, distribution, and with devices…consumption. Not content with that, Amazon now is funding books, movies, tv shows, etc…not far from being the only game in town.

Great job technocrats!

Here’s my fear. First of all, with all of the differing approaches and variations of blockchain technology, combined with the undermining attitude of burn it all down, what that in fact might do is create the worst of all partnerships…big media and big tech united against a common enemy.
You see a lot of investors and money are in Spotify, Apple Music, Deezer, Rhapsody, Google Music, YouTube, Amazon, etc. A lot of rights owners of all kinds (majors and indies) have committed to moving past music sales and on to supporting streaming. And while they both desperately need each other to make this work, they are also not friends. There is an inherent distrust of tech from creative industries and vice versa. Right now this is actually a good thing as it keeps everyone on their toes and it is these issues that drives the discussions of making better solutions. But if you “disrupt” or threaten to “disrupt” these “legacy” platforms, you may just unite them against a common cause, positive progress. That battle will put big media and big tech together with big government and we’re talking about trillions of dollars and the ability to legislate you into oblivion. That means once again failed attempts of planning and strategy will have the opposite effect of your desired revolution.

I think it is critically important to instead work to build a bridge between legacy and the future if we want to see a future. I’d hate to get to the end of this and all we’ve done is further consolidated power in the hands of the old or the new, and failed to actually build a fair and equitable system. Again, these promises have been made before and the outcome not so good.

Privacy
One of the key and primary features inherent in blockchain is the ability to put data into a public ledger that has a level of privacy. However, there are many things that people do not want to ever enter into any blockchain. Some things should always remain private and some transactions should never be made public. In some cases, there are private sales of valuable assets whereby certain parties do not want entered into any public ledger, including things that are political or involve safety. Not only that, but there are issues surrounding just how private any transaction can be:

“Elliptic’s ability to track various participants in the bitcoin network should be an eye-opener for anyone who still thinks the digital money can be easily transferred in an anonymous manner. When asked about his thoughts on future privacy enhancements for bitcoin, Dr. Smith explained:

‘We welcome increased privacy features, and such new technology will inevitably change the way we have to detect crime, but increased privacy does not necessarily have to equate to more freedom for criminals.’”

A nice sentiment, protecting us all from criminals, but criminality is often an issue around territories and privacy isn’t always about criminal behavior. While you cannot defend any centralized technology company or online retailer as a bastion of security <cough>ashleymadison</cough>, at least some of those exposed transactional events are mitigated by being limited to specific platforms. But what about splaying everything out in the open? Also, privacy can not only be a positive aspect, it can also be a negative one. For example, there is the possibility that blockchain could be used for nefarious purposes such as distributing malware or child pornography:

“A loophole in the code that powers Bitcoin, which heretofore has mostly been used to post jokes, was discovered this week to contain repellent links to sex sites, including child porn, according to CNN Money.
The code was uncovered in Bitcoin’s blockchain, the distributed digital ledger that keeps track of all Bitcoin transactions.”

and

“Although the code modifications are not dangerous in terms of malware, they do pose a potential danger to anyone who owns Bitcoin. The problem with this rubbish—well, one of the many problems—is that these messages become part of the blockchain for the life of the ledger.
According to a statement from INTERPOL and researchers from cyber security research firm Kaspersky Labs, uploading malware to the blockchain would make it extremely hard to get rid of. Indeed, there are “no methods currently available to wipe this data,” according to the statement. Once a file is in the blockchain, and hence on every computer in the Bitcoin network, it’s there forever. For now, at least.”

In fairness, pretty much anything on the Internet is capable of being used for good or bad behavior, but this does go to my point of how important authority and trust will be with using blockchain.

In Closing
While there are certain benefits from the ideas behind blockchain and distributed databases, which citizens and entities can use as a way to validate that something happened, we already have database technologies and platforms that perform these exact tasks, and in many cases, the companies that back them up are not only already considered authorities, but have the financial and insurance backing to give them an added element of trust.

If there’s a violation of trust somewhere down the road occurring with a decentralized database that belongs to no one, who will we go to to get our recompense? In fact one could even argue that corporations could adopt decentralized blockchain transaction ledgers to indemnify themselves from risk, and when citizens want accountability, they just pull a “safe harbor” type of shrug and tell you you are out of luck. Sorry your money is gone but the blockchain doesn’t lie. So while there is great promise in the ideas of “why” blockchain, it may be time to evaluate the best ways to execute these ideas before we find ourselves too far down a road without truly thinking what the outcome will ultimately be. We certainly have seen enough negative disruption that has hurt many a career, and can creative industries really afford to take another hit? Maybe the rush to jump to funding or back every blockchain technology should be met with some added scrutiny, and I include myself in that.

———

P.S. My Personal View
I feel I’ve been critical enough with the above observations that I can now honestly tell you that regardless of the issues I’ve mentioned above, I actually do support blockchain technology and some of the ideas behind it. That didn’t happen overnight. For our own project, OCL, I simply looked at those issues and asked myself, how do we solve them?

My favorite quote is from Dieter Rams who said:

“Question everything generally thought to be obvious.”

We all sat down, did just that, and worked out solutions around those concerns. Once we got past that, I realized that yes, there is remarkable value and power in the ideas behind blockchain, but it will require more than just a bunch of clever ideas, it also will require a great deal of cooperation and a bit of hand holding, and some patience. But if we can get beyond all the media hype and hyperbole, there is something amazing here. The question to ask though, is whether it will truly benefit artists and the creative class or will we simply give birth to yet another techno-oligarchy.

Alan Graham is the co-founder of OCL http://n2one.us