Emerging technologies can generate extravagant expectations. One of the latest developments promised to either save or destroy the world is the blockchain. The distributed ledger technology recently reached peak hype, according to The Gartner Hype Cycle, but remains five to 10 years away from mainstream adoption.

The potential for the blockchain is enormous, but advocates would be wise to understand the limits of the technology. Otherwise they risk repeating the mistake made by former US Postmaster General Arthur E. Summerfield in 1959.

blockchain
Image: iStock

“Before man reaches the moon your mail will be delivered within hours from New York to California, to England, to India or to Australia by guided missiles,” he said following a trial of the system. “We stand on the threshold of rocket mail.”

Here are some reasons to proceed with caution brought to you by representatives of the Open Data Institute (ODI), the Shoreditch-based non-profit that provides advice on using government data.

Energy

The blockchain has been heralded as a possible solution to global warming, by providing a transparent currency that isn’t based on consumption. But the distributed ledger technology leaves a massive carbon footprint of its own. The computing power required to processes bitcoin dwarfs that of the world's fastest 500 supercomputers combined.

“There are trade-offs in the size of these things,” says James Smith, head of labs programme at the ODI and co-author of a report titled 'Applying blockchain technology in global data infrastructure'.

Read next: Blockchain is set to take the tech world by storm - here's why

“The more machines you have running the network, the more secure it is…[but] maybe sometimes you only want some of the data. It would be better to have a smaller one for that. There’s a real trade-off between security and size”.

Interoperability

"One of the concerns around building standards for that network of data”, says Smith, “is how to make sure it's interoperable, and not just a bunch of stuff.”

The fragmented landscape of competing blockchains has failed to produce international standards for the technology. Greater interoperability is needed to make the blockchain compatible with the wider web and to integrate them into existing practices and processes.

Privacy

Data on the blockchain is inherently shared publicly between everybody on the system. That level of openness isn’t always a sufficiently secure approach to data storage.

“The Bitcoin database has every transaction that has been carried out in that database, and everybody has a copy,” says Smith. “Who would publish their bank statements online openly for everyone to see? That's effectively what you’re doing."

There have already been some unnerving applications of the blockchain. In May, the Department of Work and Pensions (DWP) launched a trial using the blockchain to track how welfare claimants spend their benefits.

“[A] bad use of public funds and a massive invasion of people's privacy” says Baroness Martha Lane Fox, a cofounder of lastminute.com and a board member of the ODI. “There still seems to me a long way between excitement over here and understanding and then potential actual citizen benefit."

Changing truths

The indelible nature of information in the blockchain implies that truth is eternal. Reality is often greyer than such absolutes. The right to be forgotten is enshrined in EU law, but difficult to apply to the immutable datastore of a public blockchain.

“There are various bits of legislation in the UK that say if you change your gender you have the right to retroactively apply that all the way back through history,” says Smith. “If your gender is stored inside a public blockchain of driving licenses or land registry, how do you do that?”

Illegal information

If illegal data is embedded into the blockchain that could hypothetically make the entire blockchain illegal and everyone on it guilty of breaking the law.

Smith decided to put this theory to the test by adding an illegal encryption key for HD DVD on the PlayStation to the blockchain. "Now it's on the blockchain and is on everyone's machine,” says Smith. “Nobody cares anymore, but the point remains.” 

Encryption

Encryption of blockchain data creates a number of issues. Anyone with the encryption key can read the encrypted data if the key is made public, while if the key to unlock the blockchain is lost you can never get it back.

Any encryption used will be broken eventually, whether through loopholes, backdoors, or new technologies. “You've got bits of government funding researching this stuff and researching into quantum computing at the same time,” says Smith.  

“One of those is going to scupper the other. So just saying ‘we can encrypt it, it'll be fine’ isn't going to work in the long run, as people keep finding out with various broken algorithms compromised.

“If you're looking at applications of blockchains It's really important to note that they do not solve privacy issues, they're only useful for confirming authenticity.

Finding information

Adding information to the blockchain is only the beginning. To use the data, there needs to be a reliable way to find it.

The blockchain can be indexed into searchable databases to, but to function reliably, every user will need to have that entire blockchain stored and also require a larger search index to be built from it.

“You can have one site that has a search index for the chain - that would be fine - but then I'm trusting that one site,” says Smith. “So how do we have distributed search indexes? Things like that start to become issues as well."

Focus on the user need

“Blockchains are one tool in the toolbox. Don't get overexcited by it. Think about the problem first."  says Smith. "We've seen a lot of old ideas come back with the blockchain attached to them, because now they get funded. It’s a kind of superficial veneer of futurism."

Read next: Blockchain has its benefits, but can it live up to the hype?

Currently companies tend to emphasise their technical visions for the blockchain over an actual problem it can solve and users that need it.

"Are blockchains useful?” asks Smith. “Yes, but not for everything. Start from the user case, always."

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