I had the pleasure of participating on a live panel at NAB this year, along with futurist Steve Wong from Hewlett Packard Enterprise and Reza Rassool, CTO of Real Networks, for a lively, and honest, discussion of the potential role of blockchain to support video distribution and IoT applications.
Cryptocurrency is the one application that people are most familiar with that uses blockchain as the underlying technology. But few understand how it works, and more importantly how it can be leveraged for other applications. Here, we are talking about extending the core functionality of blockchain to enable a connected video marketplace, as well as an IoT certification ecosystem.
I wanted to expand upon a few of the key points from that panel discussion that make blockchain an interesting technology for connected ecosystems – like video content and IoT. And the progress that still needs to happen for blockchain to break out beyond cryptocurrencies and financial trading.
First, let’s review the main benefits of blockchain.
- It is resilient – the distributed and replicated nature of the peer-to-peer (P2P) network provides resiliency against a single point of failure and certain forms of DDoS attacks.
- It provides a high level of authenticity, integrity and immutability – cryptographically verified data records cannot be modified by a hacker or changed accidentally, and comes with an audit trail that can verify records several years old.
- It is a very decentralized system – since blockchain doesn’t require a central node where all transactions need to clear, it eliminates the need to select just one standard, one company or one governance body, which can be a failure point on broad industry initiatives.
Now let’s look at the limitations of blockchain, particularly as they relate to video and connected devices. The main limitation is that it is not very efficient.
- It is a very replicated system – which is wasteful and requires a lot of storage. All transactions are recorded and everyone on the network has a copy of it. Large amounts of data are difficult to move around and would easily overwhelm the system.
- It can be expensive – a proof of work algorithm, which closes a set of transactions or a “block,” may be necessary in some applications, but is very computationally expensive and thus costly.
- Low transaction throughput – blockchain is slow when it comes to processing a high volume of transactions.
- It is a very open system – yes, a double-edged sword. Bad actors can theoretically add information to a transaction that is unsavory at best or illegal at worst. Since this information resides on individual computers, the issue of culpability comes up. Think of copyrighted material where one does not have the rights to distribute it.
Therefore, blockchain, as any other technology, is not the right choice for every application. But architectures that take advantage of the blockchain benefits and avoid the pitfalls can be successful.
Where it gets interesting are the remediations that are happening to address these limitations. Let’s briefly break them down in order.
- Store only essential data on the P2P network.
For example in our IoT Compliance Blockchain ledger, only the necessary data about the device is stored – device model ID, when it was certified and by whom. Actual firmware update, images and other large pieces of data, can be stored in a secure cloud environment off-chain and retrieved when needed.
- Use a cost-effective consensus algorithm.
Although blockchain is an open source system, in applications with certain level of trust among the participating entities, a lighter consensus algorithm, such as proof of stake or proof of authority may be sufficient.
- Limit transaction frequency.
Using a faster consensus algorithm will naturally increase throughput, along with avoiding unnecessary information being recorded on the blockchain ledger (see number 1). In the proposed use cases, content publishing and content acquisition by a service operator are essential but not every view by every subscriber. In IoT applications, a device model certification must be recorded but not every flip of a light switch.
- Minimize risk of uncontrolled data with smart contracts.
A smart contract, like in the popular Ethereum blockchain, is essentially software that runs on top of the blockchain. It automatically validates a transaction and determines what information belongs on the ledger. Not only do they define the rules and data formats for a transaction, but also automatically enforce those obligations. It is a way to control the flow of transactions and data according to agreed-upon rules by all authorized members.
Clearly all of these areas remedies are just skimming the surface on everything that needs to be accomplished to overcome existing limitations on blockchain. But they provide a pathway to getting blockchain into shape to unlock the potential for other applications in the connected device space.
Check out the panel NAB Show Live panel discussion – and send me your thoughts on how to address blockchain limitations.
You can also check out the rest of our blog posts on blockchain for additional background and context, particularly on compliance ledgers
Stay tuned for more developments in this area!