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Blockchain: towards a framework for privacy of the machine

Geschreven door Ben van Lier - 28 november 2017

Ben van Lier
According to Hanna Arendt [1], the adjective public “means, first, that everything that appears in public can be seen and heard by everybody and has the widest possible publicity” (1948:51).

In Arendt’s view, public refers primarily to the world itself, insofar as it constitutes the realm in which we all live. She distinguished the public from the private, which she defined as ‘the absence of other people.’ Arendt claimed that without these other people: “a human being living as a private person has no shape of its own, and it is therefore as if he did not exist” (1948:60). The concepts of public and private play a major role in the world of blockchain. Cryptocurrencies such as Bitcoin and Ethereum are defined as public blockchains. New technologies such as IBM’s Hyperledger and Microsoft’s Coco Framework are enabling companies to develop private blockchains together with other companies.

A recent study of blockchain technology published by the University of Cambridge [2] added to Arendt’s definition of public and private, making a distinction between open (public) and closed (private) blockchains. Open blockchains are referred to as ‘permissionless,’ meaning that they can, in theory, be accessed by anyone. Examples include the Bitcoin blockchain and the Ethereum blockchain (smart contracts), which rely on consensus algorithms that use principles such as ‘proof of work’ or ‘proof of stake’ to validate information transactions that have been performed. Such transactions are validated by what are known as miners, most of which are based in China. One specific consequence of using those consensus methods is that it leads to exponentially increasing power consumption by the Bitcoin blockchain, which already consumes power at the same rate as countries like Ecuador. At the same time, public blockchains have a low transaction rate, as shown by Ethereum’s 20 transactions per second. These public blockchains let any participant: “participate in the consensus process (in practice however often limited by resource requirements such as owning suitable hardware or cryptocurrency),” the University of Cambridge study concluded (2017:13). With a closed or permissioned’ blockchain: “only selected parties can make changes to the distributed ledger” (2017:13). According to Olfati [3] (2007), realising consensus between networked agents or dynamic systems means: “to reach an agreement regarding a certain quantity of interest that depends on the state of all agents. A consensus algorithm (or protocol) is an interaction rule that specifies the information exchange between an agent and all of its neighbors in the network”.

Consensus

Cachin and Vukolic [4] defined blockchains, i.e. distributed ledgers, as systems that are able to provide a reliable service to groups made up of random agents, nodes or parties that do not entirely trust each other. In general, this world considers a technology-based blockchain as a trustworthy solution for joint maintenance and management of a status shared between the parties, for mediation in mutual information transactions, and to ensure a secure IT environment. According to Cachin and Vukolic, a private or ‘permissioned’ blockchain: “is operated by known entities, such as in consortium blockchains, where a member of a consortium or stakeholders in a given business context operate a permissioned blockchain network.” Permissioned or private blockchains have all the technological resources at their disposal that are needed to enable identification of agents, nodes, or parties taking part in the consensus procedure when managing and editing the shared status between the nodes. And permissioned or private blockchains have the capability to determine which nodes are able and allowed to take part in which transactions. Cachin and Vukolic claimed that nodes communicate through networks, while simultaneously construing the blockchain in consensus through mutual communication. The blockchain consists of blocks containing the result of joint decisions by the nodes, whereby these nodes did not rely on any kind of central authority in making those decisions.

To make this jointly shaped service possible, nodes use: “a fault tolerant consensus protocol to ensure that they all agree on the order in which entries are appended to the blockchain,” Cachin and Vukolic explained. In their view, today's most influential and leading algorithms that are enabling communication and consensus between distributed nodes are the ones from a family of algorithms known as Paxos.

Hyperledger

Back in 2015, IBM and Samsung presented a proof of concept for a blockchain based on the development of the Internet of Things (IoT). They called this concept: Autonomous Decentralized Peer-to-Peer Telemetry (ADEPT). IBM and Samsung claimed that their proof of concept shows the future potential of a blockchain within the development of the IoT. It triggered the following response from Galleon [5]: “Ultimately, the technology puts digital security and transparency on a whole new level, one that we’ll need as we push further into a future of extreme connectivity.” With this trial, IBM ended up laying the foundation for the development of the Hyperledger project. Valenta and Sandner [6] wrote in an article that: “Hyperledger Fabric intends to provide a modular and extendable architecture that can be employed in various industries, from banking and healthcare over to supply chains”. Hyperledger includes a broader application of the concept of consensus, extending it to: “the whole transaction flow, starting from proposing a transaction to the network to committing it to the ledger.” The Hyperledger white paper [7] defines Hyperledger as a protocol for information transactions between business-to-business and business-to-customer applications. This protocol paves the way for a new approach to the traditional blockchain model. From its core, Hyperledger operates like a private blockchain, which enables it to regulate the admission of participants to the blockchain, or in the words of the aforementioned white paper: “validators during network setup can determine the level of permission that is required to transact.” This makes Hyperledger a clear example of a private or permissioned shared ledger that: “responds to the multitude of industrial case requirements by providing a secure, robust model for identity, audibility and privacy.” To achieve consensus between multiple participants on the execution of information transactions, Hyperledger uses the Practical Byzantine Fault Tolerance protocol, which is one of the consensus protocols from the Paxos family.

The Coco Framework [8]

In August 2017, Microsoft launched the Coco Framework. In the white paper accompanying the launch, Microsoft observed that: “Blockchain technology is poised to become the next transformational computing paradigm”. The Coco Framework is, as Microsoft pointed out, a consortium-first approach, which means that “member identities and nodes are known and controlled. Actors are often equally mature, with robust and highly controlled IT environments, security policies, and other enterprise characteristics”. These lines suggest that Microsoft is trying to harness their experiences with Ethereum on the one hand and with Corda on the other in a new blockchain approach that puts enterprises in the driving seat. The Coco Framework is an open-source system that enables enterprises to team up with partners in a consortium to develop powerful but confidential blockchain networks. Coco uses Trusted Execution Environments (TEEs), such as Intel’s SGX or Windows Virtual Secure Mode, to make the network as powerful and confidential as it is. TEEs enable construction of highly reliable networks made up of identified physical nodes that jointly enable the operation of a distributed ledger. The Coco white paper states that, within the network that is created, consensus is needed for all: “updates to the distributed store, including application transactions, smart contract state, and administrative transactions”. According to this white paper, consensus is a fundamental aspect of any distributed network, but when compared to public blockchain networks, the Coco network is unique in that each virtual node in this network can blindly trust all other virtual nodes in the network. The Coco white paper goes on to explain that although the framework will initially use Paxos consensus algorithms, it has been designed in such a way that any other consensus algorithm can also be integrated into it at a later stage.

Conclusion

The nature of the development of blockchain technology seems to be slowly but surely shifting from public and permissionless blockchains to private and permissioned blockchains that enable systems to engage in intercommunications and make decisions. Van Lier (2017) [9] worded it as follows: “The new technological phenomenon that is blockchain, is based on interconnections and intercommunication, interaction and decision-making between a diverse range of systems.” New systems based on a combination of hardware and software are often referred to as cyber-physical systems. Acatech [10] defined cyber-physical systems as software-based systems that are increasingly used in everyday items such as cars, smart TVs, drones, or heart monitoring equipment. By interconnecting these cyber-physical systems in networks: “in a variety of different ways and incorporating data and services from global networks, they have or are being transformed into integrated, comprehensive solutions that are increasingly pervading and connecting every area of our lives”. The functioning of these devices hinges on software, as the software enables interconnections between the physical domain - in which the cyber-physical system exists - and the virtual domain of algorithms and software, and the data and information in that domain. The combination of hardware and software and their interconnections enables self-organisation by these systems through the use of standard procedures. Self-organisation by cyber-physical systems has the potential, in Acatech’s view, to enable entire factories and their production resources to adapt autonomously and optimise the production and logistics process based on individual customers’ changing requirements to create more personalised products. In Acatech’s words: “Self-organization through goal-oriented negotiation of work-pieces, equipment and material flow systems results in these processes becoming significantly more flexible - whilst today they are based on a central planning approach, in the future will they be characterized by a decentralized optimization approach.” To make Acatech’s vision a reality, Swan and De Filippi (2017) [11] stated that new knowledge needs to be developed within a new context of a combined physical and virtual domain, where, according to Swan and De Filippi: “tightness of linkage of control relationships is unconfirmed, both initially and persistently. One of the challenges is the quality of correspondence between the domains given their different natures: the virtual world is quantitative (digital ones and zeros), and the physical world is qualitative (messy variable irrational). These are early days in the experimental process of the computational equivalents of human based qualities such as trust and truth” (2017:615). Hopefully, their call for the development of new and fundamental knowledge will be heard, and this knowledge will help us as human beings in developing, implementing, and using the new interconnected combinations of hardware, algorithms, and software. Only when we develop this kind of new knowledge will we be able to better analyse and understand the rapidly developing new and interconnected combinations of the physical realm and the virtual realm.

  • [1] Arendt, H. (1958/2015) The Human Condition. The University of Chicago (1958) Dutch edition. Translated by Houwaard, C. Amsterdam | Boom ISBN 9789085066781
  • [2] Hileman, G. and Rauchs, M. (2017) Global Blockchain Benchmarking Study. Cambridge Centre for Alternative Finance. University of Cambridge Judge Business School
  • [3] Olfati-Saber, R., Fax, A. J. and Murray, R. M. (2007) Consensus and Cooperation in Networked Multi-Agent Systems. Proceedings of the IEEE, vol. 95, no. 1, January 2007. Pp. 215-233
  • [4] Cachin, Chr. and Vukolic, M. (2017) Blockchain Consensus Protocols in the Wild. 31st International Symposium on Distributed Computing (DISC 2017) Editor Richa, A.W. Article no 1, pp. 1-16. Leibniz International Proceedings in Informatics.
  • [5] Galeon, D. (2017) https://futurism.com/ibm-just-launched-blockchain-beyond-currency/
  • [6] Valenta, M. and Sandner, P. (2017) Comparison of Ethereum, Hyperledger Fabric and Corda. FSBC Working Paper. Frankfurt School Blockchain Center, June 2017
  • [7] Hyperledger whitepaper. https://docs.google.com/document/d/1Z4M_qwILLRehPbVRUsJ3OF8Iir-gqS-ZYe7W-LE9gnE/edit#
  • [8] Microsoft. (2017) The Coco Framework. Technical Overview. Published 10 August 2017.
  • [9] Lier, B. van (2017) Can cyber-physical systems reliably collaborate within a blockchain? Metaphilosophy, vol. 48, no 5, October 2017, pp. 698-711
  • [10] Geisberger, E. and Broys, M. eds. (2015) Living in a Networked World. Integrated research agenda. Cyber-Physical Systems. Acatech Study, March 2015
  • [11] Swan, M. and De Filippi, P. (2017) Toward a Philosophy of Blockchain: A Symposium. Metaphilosophy, vol 48, no 5, October 2017, pp. 603-619.

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