The Blockchain landscape is about to alter again. We have seen a number of variants on a theme emerge since Bitcoin was launched eight years ago. The dominant themes have been Proof of Work (PoW) and Proof of Stake (PoS), with most of the numerous Altcoins following their spiritual parent, Bitcoin, into the PoW fold. The Cambrian Explosion in Blockchain was arguably brought about by the launch of Ethereum, which has grown into the second most capitalized blockchain platform after Bitcoin. Ethereum initially uses PoW, but is slated to switch to PoS at some point in the future.
There is an alternative road to PoW and PoS, and that is the much-maligned permissioned blockchain. Bitcoin purists argue that having a blockchain that isn’t public negates the desired features of a blockchain because it doesn’t achieve the scale of participants and is intrinsically prone to manipulation by the very players that are permissioned. This manipulation could be by collusion between one or more groups of participants, which could gain majority advantage much more easily than a public chain which has a much greater number of participants that are less likely to know each other due to the very anonymous nature of participation in such a public chain.
Another concern relates to common mode failure, specifically as it relates to systemic risk and resilience. The concern is that, by not spreading the system wide enough, there remains a level of centralization, which reduces the benefits of decentralization.
The reality is that the world operates in closed, permissioned environments. The biggest networks are trade blocks consisting of particular nations. Then the nations themselves are permissioned in that you have to be a citizen or a company registered in that country in order to be able to function beyond the limited permissions granted to tourists. Every area of commerce and society includes various hooks to establish your identity and qualification to participate in the activities of that social group or enterprise.
Forming a consortium of participants that are somehow pre-qualified is central to modern society. The exception is cash, which anyone can hold (not too much outside of a bank, as stipulated by AML regulations, because that resembles criminal behavior) and transact in without proving they are a qualifying member of any group.
A node of a blockchain can be thought of as an operating member of a group. Its identity is important to the group. Would you deal with an anonymous bank or retailer? To buy a product or pay for a service in the real world one normally finds comfort in dealing with companies with a solid reputation and a name that is more valuable to them than the profit that can be derived from petty larceny.
The actions of that node participant, like a listed company or a financial institution, should be subject to scrutiny, not by everybody, but by the other members of the group, or a regulator appointed democratically by the group. They have a right to privacy, and that is often a mandated requirement for them to conform with in order to protect their customers. Regulatory oversight works quite well in the real world, but blockchain holds the key to perfecting the ability of regulators to be alerted quickly, and for action to precede massive losses by customers. However, a public blockchain simply does not have the required features to fit with most real world markets and businesses.
By building an extensive, interlinking network of networks, or blockchain of blockchains, the scale required to achieve the benefits of a public blockchain is possible.
Against this backdrop emerges a new blockchain player committed to creating and commercializing a viable, permissioned blockchain platform for private, commercial grade blockchain solutions.
Chainreactor is the brainchild of former Capital One database specialist, Jonathan Nelson. He conceived of Chainreactor while building blockchain proofs of concept at Capital One in 2014 and 2015. He left the bank to start his own venture, and this year he teamed up with an industry veteran, Derick Smith, to turn his concept into reality. Based out of Indianapolis for the moment, Chainreactor is planning to release an early version of its technology to a small group of beta testers in June, and hopes to achieve a commercial launch towards the end of 2016.
“Blockchain is just a decentralized transaction log,” says Jon Nelson. “It is a decentralized method for ordering transactions that can be agreed upon and validated by the network. The argument that it is a database or ledger requires more to be added. We are harnessing the power and sophistication that has been engineered into database technology, and we are achieving tremendous results through the combination. For a start we outperform High Availability solutions with 100% uptime. The other results are speed. Much more speed than we thought would be possible.”
Chainreactor aims to provide the industry with a true leap forward in computing capabilities that encapsulate blockchain features at its core.
One of the beta testers, and a commercial customer going forward, is DT-Chain, an enablement platform for travel services and voice telecommunications companies. DT-Chain has two core objectives.
- Replace the opaque and dated system of travel rewards, especially air miles
- Eliminate corporate fraud and drastically reduce processing costs for operator interconnection
DT-Chain has been testing blockchain use cases extensively, and will continue to validate and define further use cases, while commercializing the models that it has already tested.
The tie up between Chainreactor and DT-Chain may well deliver the commercial traction beyond cryptocurrency that has thus far eluded the blockchain.