Despite being an ever-growing industry with billions of dollars invested, there are still several common misconceptions about blockchain, its workings, and the need for regulation. This is particularly evident when looking at recent high-profile implosions such as the FTX scandal, where much of the focus seems to be on digital assets and not the technology itself.
Lawmakers need to understand the underlying technology that powers these digital commodities. As regulators explore the option for a crypto framework, we need to make sure that the importance of the underlying technology (like proof-of-work blockchains) is not being forgotten, says Bryan Daugherty, Co-Founder of Smartledger and Global Public Policy Director for the Bitcoin Association.
‘Blockchains like BSV blockchain are the engines which make cryptocurrencies possible in the first place. But they are ultimately just one small utility for the technology,’ he said.
The Bitcoin blockchain is a global distributed ledger consisting of data blocks sequentially linked in a chain. Each block contains information about the preceding block.
The data of blocks is copied and stored on different Bitcoin mining nodes without being bound to one specific server, making the substitution of records impossible. A permanently locked set of rules or ‘protocols’ governs the data flow through the distributed network of nodes.
Why blockchain is not DLT – and three facts you should know
‘Blockchain technology has often been used to incorrectly describe distributed ledger technology (DLT), federated databases or even databases located in multiple server locations,’ said Daugherty.
He added that there are several key facts about blockchain that people should know:
- A true blockchain should be kept in a distributed fashion and publicly verifiable. This helps, along with proof-of-work, to ensure record permanence.
- A true blockchain should record the time-ordered record of business events, such as payment or data transactions, and secure them cryptographically.
- There is no need to trade resilient security for a false sense of sustainability. Proof-of-work blockchains can globally scale, and the BSV blockchain can currently support close to 100,000 transactions a second.
BLOCKCHAIN IS ULTIMATELY ABOUT UTILITY
‘Blockchain is ultimately about utility. It can empower frameworks and standards by providing the foundation for connected systems, help us make better real-time decisions, increase energy efficiency usage, and improve the overall quality of life,’ Daugherty said.
‘For blockchain to fulfill this promise, it must be much more secure than today’s legacy infrastructure. It must be free from congestion, stable, sustainable and scalable. It must also be affordable, providing the ability to secure micropayments and data management.’
Daugherty noted that the BSV blockchain meets and exceeds the cornerstone requirements of information security. Namely, with a newer and more robust infrastructure which completely removes the reliance on third parties, he said.
CERTIHASH AND SENTINEL NODE SHOW A CLEAR USE CASE FOR THE TECHNOLOGY
Daugherty pointed to the use of Cerihash and Sentinel Node as an example of how the BSV blockchain is already being used to tackle difficult cybersecurity issues.
Built as part of a collaboration between Certihash and IBM consulting, Sentinel Node aims to leverage the power of the BSV blockchain to greatly reduce the time required to identify a data breach and therefore the total cost of cyber-attacks against enterprises.
Daugherty, who co-created Certihash, said that the time taken to detect cybersecurity breaches is one of the primary factors in the overall cost and severity of an attack. This is backed up by a recent study by IBM, which found that it requires an average of 212 days to identify a security breach and then a further 75 days to contain it.