Private blockchains are just a confusing name for shared databases

Editor's note: The original author Arvind Narayanan is a computer scientist. He is currently an assistant professor in the Department of Computer Science at Princeton University. Narayanan is well-known for his research on de-anonymized data.

Banks and financial institutions seem to be looking at blockchain technology. It seems that they have sided with the Bitcoin community, believing that the technology behind Bitcoin can provide an efficient platform for settlement and issuance of digital assets. However, strangely, they seem to be avoiding Bitcoin itself. Instead, they want something that is more controllable and inaccessible to the general public. In addition, there are too many reports related to Bitcoin that are related to theft, crime and sordid things, which are intolerable for serious and upright bankers. As a result, the hot topic in the financial industry is about " private blockchains blockchains".

In fact, these "private chains" are just a confusing alias for shared shared database .

The key to Bitcoin's security (and success) lies in its decentralization, which comes from the innovation of proof-of-work (POW) mining. However, if you want a blockchain in which only a few companies are allowed to participate, then proof-of-work becomes meaningless. You are left with a system in which some certain (rather than anonymous) units maintain a shared ledger and closely monitor each other, so that no single organization can control the database. What makes such a blockchain better than a regular database?

Supporters argue that blockchain encryption, including数字签名and哈希指针, is what distinguishes private blockchains from ordinary shared databases. Encryption makes the system more difficult to tamper with and easier to audit. But these aspects of the blockchain are not the fundamental innovation of Bitcoin! In fact, Satoshi Nakamoto only made slight adjustments to earlier research, which is cited in his white paper - research proposed by Haber and Stornetta dating back to 1991.

Here is my understanding of this matter:

1. Indeed, adding signatures and hash pointers makes the shared database more secure. However, from the perspective of security, irreversibility, and censorship resistance, the level of private chains and public chains is not on the same level.

2. The use of cryptography to build a tamper-proof database has been around for 25 years. Initially, this did not attract much attention from Wall Street, but gradually, by chance, some financial infrastructure began to evolve into an automated, cryptographically secure model.

3. For banks to go down this path, they have to understand the technology, get everyone to accept the setting, develop and set some standards. Blockchain easily solves these problems because the hype around it is already very hot. In my opinion, this is not a new blockchain technology, but a means of brainwashing Wall Street, and it serves as a contact point for standardization.

4. To build these private blockchains, banks started with the Bitcoin Core code and then ripped out the parts they didn’t need. It’s a bit like hitting a thumbtack with a hammer. If the hammer was already available, no one would tell you that there’s nothing wrong with using your hands to push the thumbtack.

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