There is something wrong with Blockchain

There is something fundamentally wrong with blockchain (and its best known application - BitCoins). According Don and Alex Tapscott in Blockchain Revolution ( or see this short talk ) blockchain is a revolution; a new era for the internet. There is no question that this is an extremely interesting "technology". But, there is something.... fundamentally WRONG with blockchain, and this is what I would like to discuss.

For unacquainted, one way to describe blockchain is a "system", a set of algorithms and servers, that produce a transparent, publicly accessible distributed ledger, that is trustworthy. It is trustworthy not because some bank or government or other organization guarantees it is, but simply because of the process by which it was created and is maintained. It can be mathematically proven(1), to be correct and thus trustworthy.

(1) Correction; one cannot prove with certainly that is is correct, but to a certain level of certainty, say 99.999999% certain. Perhaps this is not critical, but the mathematician inside me cannot let it go!

You can think of it as a spreadsheet, that lists all your, and everyone else's transactions of some good (say, bitcoin). That is, all transfers of bitcoins between everyone involved. And you can be as sure as you can be sure of anything, that it is correct and not tempered with. So you can figure out how many bitcoins everyone has, with confidence.

Sounds pretty cool! And it is.

But there is something fundamentally wrong with how this is achieved. If you are interested in technical details, I recommend this lecture on the topic, but, in a nutshell, the way this is achieved is by forcing anyone wishing to add a record to this spreadsheet, to expand ENORMOUS computational effort to do so (I am simplifying a bit intentionally). This means that a participant must run an incredibly powerful computer and thus consume incredible amounts of electricity to do so. It is estimated that bitcoin's "system" consumes more electricity than some small countries such as Ireland. And for what? to produce numbers.. yes, 64 character numbers.

My critics will say it actually produces "trust". And they are correct. The "system" produces a trustworthy spreadsheet/ledger. But it does so, by FORCING the system (the computers involved) to produce intentionally hard to calculate numbers and the ONLY reason the result is trustworthy, is because the would be attacker would need to consume even more energy to try to break the system; such much in fact, that it is simply not feasible.

My critics will argue, that this is no different, than a brick-and-mortar bank that builds a vault with thick enough walls, making is simply impractical for a thief to cut through - the amount of tools, energy and effort needed to break through, is higher than the possible loot inside.

On the surface this is a valid comparison. But here is where it breaks down - we strive for a society, where the vaults do not need to be too thick. Perhaps we don't build them in high crime areas, or keep little money inside. As a society, we'd try to minimize the amount of effort and energy that goes to vault production. With Bitcoins, the only method you have, is to force all participates, honest and thief, to CONTINUALLY consume enough (read - 'enormous amounts of') electricity, to make the heist unfeasible.

However inefficient, it "works". It DOES result in a trustworthy ledge without a middle man like a bank. But is that really the best we can do? And the same people hailing Bitcoins as the tool to break the chains of oppression from banks or governments, tie themselves to trees in parks to protect them. Well, every coin 'mined', takes down a few trees with the CO2 emissions from the computers crunching numbers. I know there are efforts like sub chains to lower the effort required but this is like improving fuel efficiency in internal combustion engine - good effort but not radical enough. Perhaps battery-powered blockchain will come, but not today.

While I can appreciate the power of blockchain and the trust and thus "value" it generates, I find something fundamentally wrong with the idea that this must be achieved by burning a heck of a lot of coal in china. It is like a brutal gang member initiation ritual - a new gang recruit must murder an innocent person. Somehow the cost of the value produced seems too high.

But it gets better ... or ... worse ...

Let's say Bitcoins take over the world; we do away with the big brother; no banks, credit cards etc. Well, bitcoin's theoretical maximum transaction per second is 27. Yes, 27. Not 27k, just 27. That would not even feed our Starbucks coffee addiction, which alone would need ~120 transactions per second! In contract, Visa does 1700 transactions per second, with a smaller appetite for energy.

I can appreciate the benefits, especially the theoretical benefits of blockchain that Don and Alex Tapscott outline in Blockchain Revolution. But it is sad that that's the best we can.

Am I off the rails or missing something? let me know!