Editing the Immutable: Here Comes "Editable Blockchain"

Gone are the days of “Wake me up when September ends”! September has been the month of disruption in the new millennium. September 2001 has changed the world in many aspects. So is going to do September 2016, when on 20th of the month Accenture made it public that it is filing a patent for a disruption within the already disruptive technology Blockchain – by making #Editable Blockchain! The whole blockchain community around the world is in the state of shock since. While Blockchain puritans have criticized this move saying this alters the very basics of the technology, major financial organisations seem to be welcoming the move. And for quite some time, internet is flooded over debate on this “necessary evil” move.

To understand why editing blockchain is of so much concern, let us go a little deep into the blockchain concept. One of the key feature of blockchain is every transaction can happen only when majority of nodes or miners authorize it through an activity known as mining. And this is the consensus mechanism which is supposed to protect from fraud transactions. And another key aspect of blockchain was its immutability, where one block of transactions once added to the Blockchain, would remain immutably linked to its previous and next block, so that hackers cannot gain access and alter the transaction. Pretty technical, huh? Let’s make it a little simple then!

Think of a scenario, I live in a flat with three other guys. We share the rent in a way that every day when we come back from office, each of us put a one rupee coin on table in a tower-like stack. So once the coin is put in coin tower, no way to take it back as other coins rest on it in a balance. Pretty immutable structure, right? And to ensure everyone is putting their share at the day end, whenever someone puts his coin on the stack, at least two of the other three flat mates have to authorize it by witnessing. So, we have our consensus mechanism in place. And thus runs our very own blockchain!

Everything looks fine, what’s the requirement of editing it then? Umm, not really. There always remains a chance of a wrong transaction, appearing to be right one for the time being, and thus getting added to the blockchain. Suppose one day I made a mistake of putting a 5 rupees coin as my share in the coin stack, and the other flat mates knowingly or unknowingly authorized the transaction. I realized my mistake two days after, but now the stack being immutable, I cannot take out the 5 rupees coin and replace with a one rupee coin! Here I am stuck at the immutability of the system. This is exactly what happened in the DAO debacle of Ethereum, where a hacker pulled out tokens worth about USD 53 million from DAO exchange and that transaction got added to blockchain as the transaction was apparently a right one to the miners. When the reality came into picture, it was all too late as the transaction was already added in the blockchain and there was no way to edit it. Stuck at the immutability of the concept, all Ethereum Foundation could do is putting a "soft-fork", which is similar to freezing an account so that no further transaction or remittance happens. So immutability is not always an advantage, it has its flip side too!

Was Blockchain always beyond any scope of editing? Well, partially. You can’t alter the transaction block in the chain, but you can always add a reverse transaction block in the chain, resulting neutralization of the transaction, right? This is the limited scope of editing Blockchain offered so far. It’s like me putting in a minus four rupees coin (let’s consider there is one) on the coin stack to correct my fault. Well, it solves our problem, why do we need an “Editable blockchain” then? Actually it doesn’t completely solve. To get the reverse transaction authorized, which acts just like any other transaction, again you have to go through the consensus mechanism of all the miners; just like I need two others flat mates to say okay to me on adding the minus four rupees coin in the stack. And what if they don’t give consensus, like what happened when Ethereum thought of reversing the fraudulent transaction? The whole thing gets stuck then. And even if the miners give consensus to add a reverse transaction block, it is a time consuming affair, increasing the risk in case of such frauds in future.

This is where the Editable blockchain comes into picture. It gives a “Chameleon hash” function, which enables very few selected parties or nodes to use their ‘private keys’ as ‘privilege keys’, giving them authority of edit the transaction block added in the chain using that key. It’s like an emergency stop button of a machine, to prevent an accident; or a veto power to stop an irregularity. The major financial organisations are welcoming it as it reduces the risk factor for them on migrating to this new technology, as keeping the privilege key opportunity to themselves, they will now always have a safety valve to protect their interests and overwrite blocks in case of any unethical or fraudulent activities. Like in my story, now one pre-selected honest person in our flat having the privilege key (and some special ‘X-men’ power maybe), will be able to replace my 5 rupees coin with a one rupee coin in the stack!

Editable blockchain increases trust factor among the financial communities, making it easier for them to migrate to blockchain technology. At the same time, it holds the risk of unauthorized access or misuse of this privilege and resulting debacles.

So far, it stays like atomic fission technology, which when used wisely, can solve problems like energy crisis for us, but without proper security to guard the technology, if it falls in wrong hands it can result in Atomic bombs! It is now to see how emerging regulations and compliance systems developing around blockchain technology can safeguard it to be used only for righteous causes. Till then, what we all can do is to keep our eyes and ears open!

Disclaimer: Views expressed here are those of the author and should not be considered as the views of employer.