Blockchain, Explained

Jim Short, director, BLOCKLAB; Lead scientist and co-founder of the Center for Large Scale Data Systems at the San Diego Supercomputer Center

Maybe you’ve seen it in your newsfeed: mysterious buzzwords with alluring stock images that even this magazine can’t get away from. But there’s much more to blockchain than the buzz of Bitcoin or the intrigue of crypto. It is computer science with a lot to be examined. The newly launched BlockLAB at the San Diego Supercomputer Center is exploring applications of this technology, backed by industry leaders like IBM, Dell and Intel. We spoke to BlockLAB’s director, Jim Short, to cut through the hype and get insight into the tech.

Firstly, what is blockchain?
A blockchain is a public electronic ledger that can be shared among users and creates a verifiable record of every transaction made in the system, each one time-stamped and linked to the previous transaction. Each digital transaction in the thread is called a block—hence the name —and the system allows either an open or controlled set of users to participate in the electronic ledger. The blockchain can only be updated by consensus between participants, and when a new transaction is entered, it cannot be erased. Blockchain is not a single technology. Rather, it is an architecture that creates a store of transaction records that are cryptographically secured, distributed across users, and decentralized in form. Blockchains are referred to as write-once, append-many electronic ledgers.

How is blockchain different than Bitcoin?
The Bitcoin system uses blockchain technology, but blockchain is the much bigger architecture—a distributed ledger where transactions are secured by cryptographic signatures among a network of users. Bitcoin is just one system that uses this type of distributed ledger. The two are definitely not the same thing.

Where is there potential in blockchain?
Any technology introduces new ways of doing things. When it comes to using blockchain, one way to think about it is whether its use creates something that is truly new, or is it a substitute for a current process, or is it something that is parallel and could work alongside something currently in effect?

Some examples for these use-cases: as a genuinely new application, there is talk about how blockchain could apply to control of personal information—you could perhaps put your genome or health data into a blockchain and have some transparency as to the use of that data, and better understand how that data is being used. There is current market activity in that space, but it’s very much a new area.

An example of where the technology could be a substitute is within supply chains. In fact, one of the biggest experiments currently underway is a hyperledger that IBM is implementing with Maersk in global shipping logistics. Supply chain logistics is certainly not a new field—it’s a complex process with a very large number of intermediaries in that process, which is why they’re looking into that area.

As for something that sits aside, a good example is banking. It’s unlikely for banks to replace all payment systems with blockchain—that’s certainly not going to happen. But for certain types of cross-border payments, or bank-to-bank global transactions, there are nascent examples of blockchain applications operating. For example, the United Nations is conducting an experiment to see if it helps with fraudulent transactions—people sending money and that money not arriving to the intended recipients.

What is the role of the BlockLAB?
The BlockLAB is consistent with what any lab does, in that we have a few objectives: First, we’re trying to understand the foundation of what’s underway. Blockchain is not rocket science—it’s relatively straightforward to write an application in this software protocol. We’re interested in studying the fit of applications, which brings up many different questions in finding its relevance within organizational, economic and business processes. We look at how the technology might fit within those contexts.

With the BlockLAB being at the San Diego Supercomputer Center, we can also look at questions of large-scale execution and performance. This allows us to address an important question regarding blockchain: Can it scale? Distributed ledgers, by design, update each time a transaction is recorded, and that can be expensive. Scalability and technical performance need to be considered, and we’re well suited to do that.

Third is keeping up with the innovation curve in the industry. Organizations are experimenting with blockchain applications. University labs are looking into blockchain foundations. We need to build a partnership with the industry knowledge curve, and the application environments being tested, in order to bring that information back to the university. With that understanding, our researchers and students will be better able to contribute to the evolution.

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