Resolving the Blockchain Paradox: The DISC Hypothesis

Life exists in the 4 dimensions of space time continuum, so does everything that impacts life, including data. Change is the only constant in life.

If data reflects the reality of life, it has to adapt to the dynamics of life, and change accordingly. But in blockchain, the data stays frozen in time. Is it the lack of dynamism in blockchain that’s holding it from becoming the promised Trillion Dollar industry despite its unprecedented bull run in crypto markets?

We examine the paradox that real-life implementation of blockchain is encountering, and formulate a hypothesis to resolve the paradox.

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Image Credit: Pixabay

Blockchain technologies can be used to create “math-based money” and “unstoppable” smart contracts that are enforced with the impartiality of a machine. Among the fiercest critics of Blockchain is Professor Vili Lehdonvirta of Oxford Internet Institute, who contends that blockchain’s revolutionary potentials may be undermined by a fundamental paradox that has to do with the governance of the technology. As he claims, this paradox is basically born out of the conflict between the immutability of blockchain smart contracts and the change that governance entails:

“Blockchain technology may provide for completely impartial rule-enforcement, but that is of little comfort if the rules themselves are changed. This rule-making is what we refer to as governance.” — Professor Vili Lehdonvirta in The Blockchain Paradox.

Since the laws, or for that matter, most transactional milieus that humans engage in, are subject to change, developing a sustainable blockchain-based solution for anything beyond cryptocurrency is problematic. While global blockchain adoption stumbles, the paradox lives: “How do you change something which is ‘immutable’?”

Is Immutability Blockchain’s Nemesis?

Well, Prof Lehdonvirta is not alone in criticizing blockchain’s real world utility. There’s a growing breed of blockchain critics who question its value beyond the speculative crypto-trading. While there may be many shortcomings, some of which have been addressed by recent advances, but the so called blockchain paradox has been difficult to resolve. This is essentially because, if there’s one quality that holds blockchain’s integrity, it is IMMUTABILITY, and tampering with it will bring it down like a house of cards. It is clear that necessities of real world warrant dynamism, while blockchain offers uncompromising immutability. The two worlds are in conflict, and will remain in conflict until the paradox is resolved. Perhaps that’s indeed one of the main reasons, despite so much hype and capital investments poured into it, a real world application of blockchain is missing.

Trillion Dollar Market Has No Killer App Yet. Why?

No other technology in history has garnered so much hype as blockchain has. Born out of this revolutionary technology, cryptocurrency markets have seen two historically unprecedented bull runs in over a dozen years of its existence, recently surpassing the Trillion dollar market cap mark. Touted to change the world in so many different ways, blockchain hasn’t yet seen a single real world use-case apart from the speculative cryptocurrency trading.

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Image Credit: Valuethemarkets.com

Ethereum cofounder, Vitalik Buterin explains why blockchain hasn’t yet produced any killer app:

“There will be no “killer app” for blockchain technology. The reason for this is simple: the doctrine of low hanging fruit. If there existed some particular application for which blockchain technology is massively superior to anything else … then people would be loudly talking about it already … And so far, there has been no single application that anyone has seriously stood out to dominate everything else on the horizon.”

The question is — will there ever be one?

The best shot at the answer is-

not until blockchain’s immutability reconciles with life’s reality of “CHANGE”.

But, that’s hugely paradoxical! So how do we reconcile the paradox? We frame a hypothesis to answer that question:

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The Blockchain’s Real World Paradox

It’s the mathematical algorithm that renders smart contract immutable, it will be mathematical algorithm that can inject dynamism in smart contract without compromising its immutability.

Dynamic & Immutable Smart Contracts (DISC): The Hypothesis

A cryptographic hash function freezes a parameter and renders it immutable algorithmically in a smart contract. Can it not immutably record an objective but dynamic parameter? In fact it already does — the time stamp is an essential element of every transaction and every block of the blockchain. But a timestamp in a smart contract does not represent a parameter that determines a future variable that defines the terms of the smart contract. It only represents a permanent record of a transaction.

In any transaction that relates to human activity, the change or dynamism is always implied to be on account of human intervention. So the change will always be subjective, compromising the immutability of that transaction. However, that may not be the case if the change is objective, algorithmically controlled and beyond human intervention, such as the UTC (Coordinated Universal Time). UTC has been an objective time standard since 1984, and remains a universally accepted parameter. Hence, hard coding UTC as a parameter defining the terms of a smart contract will indeed introduce dynamism, while retaining its immutability as no amount of human intervention can change the UTC at any given time. Conceptually the DISC paradox might seem to be resolved, but can it be implemented in real world settings? Although instructive of possibilities, it is of little value in real world governance.

We searched the literature and found at least two references to find some support for the DISC hypothesis:

The first one, is a review article that suggests that a dynamic parameter can be introduced in the blockchain architecture by coding two smart contracts and linking them together to operate in unison as a base SC and a satellite SC. The base SC can outsource its “functional units that are likely to change, into separate [ ] satellite smart contracts and use a reference to these contracts in order to utilize needed functionality.” Essentially dynamism can be introduced by creating an additional satellite SC that encodes the dynamic parameter, and calling the satellite SC from the original baseSC to execute the dynamic parameter. Thus, this protocol has three main transactions: the first one is used to update the address referring to the satellite deployed, the second transaction serves to process and calculate the value of the variable relaying to intermediate call of a satellite, and the third one serves to use the calculated result stored in a variable in order to adapt the contract behavior based on that variable.

The second research paper describes a model of a dynamic smart contract for permissioned blockchain in which the dynamic parameter is stored as an off-chain asset instead of being hard-coded in the smart contract logic, as any classical constant/parameter. As a permissioned blockchain isn’t decentralized and may not meet the strict immutability standards, any proof of injecting dynamism in its smart contract may be at best debatable. Nevertheless, the evidence is instructive enough to support the DISC hypothesis, and justifies need for further studies to test the hypothesis, and make DISC more intelligent and robust to merit deployability across all domains that smart contracts find utility.

Conclusion

While the references in the peer-reviewed literature may be enough to support the DISC hypothesis in limited controlled settings that include parameters that receive autonomous feed from objective sources such as standardized sensors or oracles, there is an urgent need for further studies to test the hypothesis in more real world settings. In real world applications the dynamic parameters may not be as objective and algorithm-driven as the UTC or the autonomous sensors, but more than often than not, they will be rules that change according to the circumstances or jurisdictions. If DISC can handle those complex settings, it will mark an important milestone in evolution of blockchain towards sustainability.

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