It has been weeks since the Kingstons had a conversation on NFTs, Bitcoin and Blockchain based on the blog post written by Devin Finzer, co-founder of OpenSea the largest NFT marketplace in the world. Greg has been busy writing a research paper, and the rest of family had to mind their own business. But today is a good day as everyone feels the need to catch up where they left off last time.
Kimberly: I feel like we should talk more about blockchain. Last time we briefly touched on it, like how a blockchain keeps ownership of NFTs or transactions unique or “non-fungible.” But there must be more to blockchain, right?
Jason: Wait, what is a transaction that you guys keep talking about? Is it buying or selling something, like I paid my friend Lee $1 yesterday to buy two sweetest apples from his family trees?
Joy: Yeah, business transactions are the most obvious that involve at least two people and usually money changing hands. But not all transactions involve two people nor money. If your friend simply gave you an apple for free, that could still be called a transaction.
Emily: Some transactions do not involve different people, either. If I change my weekly budget to cut down food spending and increase book spending, those changes are recorded as transactions, too.
Greg: To answer Kimberly’s question, of course there are more, much more to blockchain. Last time we were mostly talking about NFTs, the stuff that Devin Finzer and OpenSea focus on. We can go deeper into blockchain today if you guys want.
Joy: Let’s do that. To start, I remember reading this interesting article from Investopedia with a flashy title of “Forget about Bitcoin: Blockchain is the future.” It basically calls Bitcoin a small side show and the blockchain the big drama.
Lily: I’ve seen that, too. Somehow I feel the article is exaggerating the case. Some people are only interested in Bitcoin and know little about blockchain, while others believe blockchain represents the future technology, or the greatest invention since the Internet.
Joy: I agree. we don’t have to forget about Bitcoin in order to remember blockchain. Historically, blockchain came to us much earlier than Bitcoin did, so in that sense blockchain is the “chicken” and Bitcoin the “egg.”
Kimberly: It is also true though that many people discovered or became aware of blockchain only because of Bitcoin. It’s almost like they ate the “egg” first to then realize the value of the “chicken.”
Emily: Yeah, like I did not know much about the Titanic ship tragedy until the other day when I watched the movie Titanic with Kate Winslet and Leonardo DiCaprio in it.
Jason: So you are saying the Titanic movie is your “chicken,” the real Titanic ship is your “egg?”
Emily: I’m saying it can go both ways. A “chicken” for someone can be the “egg” for someone else. We don’t have to settle down on one order and put that in stone.
Joy: You have a good point. If I were to write that Investopedia article, I would use a title like “Appreciate Bitcoin but Understand Blockchain.” People use flashy titles all the time to catch more eyes and ears, and I get that. But everything has a limit, we should not go too far on that.
Greg: I like the way Emily said it: putting something in stone. That old expression now may have a new way of saying it. Some people may stop saying “set in stone.” They’ll probably say, “set in blockchain!”
Kimberly: Interesting. I assume it is because blockchain makes everything in it immutable or, to put it in plain English, permanently unchangeable. But how exactly does blockchain do that?
Greg: First thing first, I don’t want you guys to think blockchains are absolutely immutable. Everything is immutable with the right amount of resources, like money and time.
Lily: Are you saying the stuff inside a blockchain is changeable? I have never heard anyone saying that before, everyone seems to be saying a blockchain is immutable database.
Greg: There are two kinds of thinkers in the world. Some just see further than the rest of us, not necessarily because they are smarter — they usually are — but more because they ask the right questions, assign themselves more challenging jobs and do not blindly follow others’ thinking trail just because it’s popular.
Joy: You are talking abstract. Any example please?
Greg: I’ll cite this article by Dr. Gideon Greenspan who works on private blockchains, and I believe it raises some excellent points. I’ve downloaded it to my phone.
Emily: Wait! What is a “private blockchain?” Are you talking about different ownerships of blockchain? So a private blockchain is privately owned by someone?
Joy: Public or private blockchains are not exactly about ownership. A private blockchain for example can be owned by governments just as likely as by private firms. I think it is better to call them “permissioned” or “membership” blockchains, meaning you need permission or membership to get into them, much like you need a valid username and password to enter your email accounts.
Greg: That’s right. Since Bitcoin started on a “permissionless” blockchain, most blockchains are in that category, meaning they are open for any strangers to see all the transactions inside. They are “open to public” but not necessarily owned by public.
Jason: Unlike the public library we visited last weekend that is open to public and is owned by the city government.
Joy: Correct. Speaking of “permissioned” blockchain, I’ve read something from Investopedia that says some banks claim they build blockchain but they’re not, because their blockchain is private or requires permission, which according to the author, has little to do with the innovation behind Bitcoin.
Greg: The voices against private blockchain are louder than that because, like Greenspan puts it: “immutability has become a quasi-religious doctrine – a core belief that must not be shaken or questioned.” Imagine the response when someone’s religious belief was challenged.
Lily: Interesting. I did not see immutability as a religious doctrine for blockchain but did take it for granted. So what does Greenspan say about blockchain immutability?
Greg: He challenges the common wisdom and calls the blockchain immutability a “myth.”
Joy: Is he trying to use a flashy title to make news?
Greg: I can’t read what’s on his mind, but he does make several convincing points. First and foremost, he answers the fundamental question by critics of private blockchain: What is the point of developing a blockchain if its contents can be changed or edited? Would anyone guess what his answer is?
Joy: I don’t know what he would say but I would argue that we humans want different things. Sometimes information security or immutability is the top priority, for that blockchain immutability serves us the best; but other times controllability is the king, meaning we want to keep the capability to change things as we see fit. At the end of day, no matter how powerful our computers are, we still want control them, not they control us.
Kimberly: I agree. For financial transactions it makes perfect sense to keep all the records straight and not to be modified or edited once they enter a blockchain. We also don’t want our passports, our driver’s licenses or our tax returns to be changed, especially not by anyone else.
Emily: I see what you mean. But mom is right, some records or transactions we do want to make changes from time to time to fix human errors, frauds. The law changes, too, which means legal contracts sometimes need to be updated.
Joy: That’s right, even smart contracts may need updates.
Lily: I think part of the problem is that blockchain was made popular by Bitcoin. Some people only see the Bitcoin side of the blockchain story. I don’t know if this is a good analogy but to me blockchain is like the gunpowder: We can use it to make fireworks for the Fourth of July, but the same gunpowder can be used to make weapons. A kid only knows the former, but a terrorist is only interested in the latter.
Emily: So to ask why anybody wants an “editable blockchain” is like a kid asking why anybody wants to use gunpowder for anything other than fireworks.
Lily: Something like that. But dad, you haven’t told us what the answer from Greenspan is.
Greg: Well, his answer is long and although I like the points he makes, he does sidetrack himself a bit and spends much time telling us why no immutability is perfect even with “permissionless” blockchain. His point is well taken there because it is true immutability depends on the tradeoff between what we want and what resource we have. So immutability is a relative thing, not an absolute one.
Lily: So he did not tell us why an “editable blockchain” is needed.
Greg: Not really. Your mom actually does a better job in answering that “why” question. There is also this webpage by Accenture called “Editing the Uneditable: Blockchain Needs to Adapt to an Imperfect World,” which essentially says the same thing as your mom did. Let me see if I can find the page.
Kimberly: The title seems to offer a clue to the answer: We need editable blockchain because the world is not perfect and static.
Greg: Yeah. I’ve found the page and here it says: “In most instances, immutability is an obvious benefit. But it’s also increasingly apparent that instances will arise where absolute immutability is a hurdle standing in the way of blockchain’s adoption.” Then it goes on to list areas where editability or mutability is good and needed, like in data storage, illegal actions, operational errors, permanent mischief and regulatory concerns.
Kimberly: I can understand why relative immutability is good and necessary, but I have a more basic question: Relative or absolute, how does blockchain ensure immutability?
Emily: I want to ask that question, too. How about you, Lily?
Lily: Same here.
Greg: I think this is a good place to stop for today. Why don’t we all do some homework on that and come back tomorrow to share our findings?
Everyone agrees and the talk comes to an end.