Henry Chueh argues blockchain will offer improved cyber-security in a world dominated by the use of personal data and the Internet of Things, and thus is the way of the future

By Henry Chueh*

If you clicked into this article seeking a definitive answer to; whether cryptocurrencies are here to stay or should I invest into Bitcoin, then I am sorry because I cannot give you that answer. What I can do though, is describe to you the current landscape we are in and where we are likely heading in the next few decades. You can then make the conclusion for yourself.  

You really have to appreciate how technology has advanced. It was only around 25 years ago when people were getting acclimated to the “internet”. Watching this video really amuses me as there are three talk show hosts questioning what the @ symbol mean in the internet address. Fast forward to now, everyone has an email address and the internet is considered second nature to our daily interactions. Our phones and computers are connected to the internet… our cars are connected to the internet… for some of us even our fridge and coffee makers are connected to the internet!

These interconnections between our everyday devices and the internet are known as the “Internet of Things” (IoT). It is estimated that by 2020, we will have over 30 billion connected devices worldwide, roughly four devices per human ,and this number is only be expected to grow. So what do these everyday devices do? Collecting data and using data to improve our lives, of course!

Billions and billions of data points are now being transferred backwards and forwards. The new BMW car that you are driving will be sending data back to the headquarters to monitor its performance… to see the wear and tear of its mechanical parts and notify the driver when a service is due. Sensors can be placed on shipments of frozen food to monitor the temperature and see if the shipment adheres to the temperature threshold at all times during transport.

People with disability issues have wearable technologies that can monitor their health and call for help should they encounter difficulty, 24/7. Sensors on roads can determine traffic and provide traffic engineers a detailed transport model of their city, identifying where the bottlenecks are. There are sensors and constant satellite imaging on agricultural fields so that our New Zealand farmers can monitor the growth of their crops and the soil salinity. I could go on and on about the limitless benefits of the Internet of Things but you get the gist of it. Pretty soon, the ‘Internet of Things’ will be ubiquitous, connecting everything with everyone.

With all these fancy developments going on right now, we will also need to be aware of the darkside of having all this data flowing through the internet.  How do we make sure governments do not purloin this IoT platform for their own political purposes? What about giant monopoly companies using the data for their own commercial purposes at our expense? Do we really trust these large corporations to act in our best interests?

Just take a look at Facebook and Cambridge Analytica this year. How about the UBER hack in 2016 where the CEO paid the hackers US$100,000 to delete the data but failed to disclose this to the public. Or maybe Equifax, where the personal information of 143 million consumers was exposed. Or maybe the Ashley Madison hack for those that are tinkering on the side? It is not an over exaggeration to say that our privacy is at stake. We have placed too much trust and blindly signed terms and conditions that basically waive our right to our own personal data.

Is our own personal data actually safe from these central authorities?

I have mentioned the importance of our privacy, but data security is also of equal significance. Even a company that collects the data for legitimate reasons may get its central server hacked and data stolen (Uber, Equifax). To compound the problem further, we will have 30 billion connected devices coming into this world in the next few years. It will be extremely dangerous if the data feed between these devices can be easily tampered with. Looking at the IoT examples mentioned above, an autonomous vehicle can easily become a threat if the data feed can be hacked. Tampering with those temperature sensors in the frozen shipments means regulations can be bypassed, and potentially diseased food will be served to customers. How about the wearable technologies where emergency calls can be shut off and the patients will not be able to request assistance?

You can see the images forming. With enormous amounts of data comes the need for a secure system. The viewpoint of having one central authority with a backed up central server is now outdated. This is why I believe that Distributed Ledger Technologies (DLT), such as blockchain, will be the next stepping stone in advancing human civilisation. A DLT is a database that is consensually shared and synchronised across network spread across multiple sites, institutions or geographies. It allows simultaneous access, validation and record updating in an immutable manner. Basically, there is no one single point of failure in a central authority and all transactions in the ledger are viewable across all synchronised nodes. Hacking the system is exponentially difficult because it is a decentralised one and will require astronomically large computing power to tamper with the majority of the nodes.

There is world-wide recognition that blockchain, a subset of DLT, is the way of the future. In Europe, 22 countries have signed a Declaration on the establishment of a European Blockchain Partnership, pooling in over €300 million in the next few years. In China the government has reportedly begun working on national standards for blockchain technology. They believe that blockchain will go hand in hand with their “Belt and Road” initiative. Facebook, Google, Amazon and Walmart have also spent millions exploring blockchain technology. In New Zealand, Fonterra and NZ Post have teamed up to track orders using blockchain. Banks such as ANZ have been using blockchain already in streamlining cross border payments and more.

What does this have to do with cryptocurrency at all? Well, cryptocurrency is the digital token in a DLT ecosystem. Anything transactional, be it data or currency, deals with the native token on that ecosystem. To be able to operate on public blockchain infrastructure, the digital token is required in order to reward those decentralised nodes that help run the ecosystem. Bitcoin is the digital native token to be used on the Bitcoin blockchain and is used to transact the currency between two parties. The ether is used in the Ethereum blockchain for the transactions on the decentralised applications. It goes without saying that cryptocurrency goes hand in hand with blockchain.

Decentralisation is the way forward. This new technology opens up to possibilities that we have yet to imagine is possible. Who knew 25 years ago when the internet was introduced, that we will have E-commerce such as eBay and Alibaba? How about social media like Facebook and Twitter? Or a digital media platform where anyone can upload any video that they want, like YouTube? How about a business model where consumers can access human knowledge on almost anything and everything… for free!? You will be telling me that it is absolutely not possible. Well guess what, Wikipedia is doing just that.

So take a moment and think… and tell me, do you think blockchain and cryptocurrencies are here to stay?  


*Henry Chueh is a blockchain and cryptocurrency researcher. He is a house husband with plenty of time to do research into blockchain and has seven years of experience in the financial services sector, specifically insurance. 

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I am not sure.

On the surface the blockchain technology has a lot of uses going forwards. So I expect it will be here to stay in some form. However in saying that, it also has some limitations that may hinder its ongoing success.

It is not infallible in terms of security - it is just new enough that the flaws haven't all been discovered.
Scalability and longevity are also an issue. What would a block chain look like in 20-30 years time? Given you always have to have all the information to proceed. Just how big would it be? and how long would it take to process?

I think these limitations can be overcome to some degree, or alternatively it will be used where the limitations are not an issue.

Cryptos on the other hand, I just don't see them lasting. It comes down to trust. Anyone can create one - effectively issuing their own currency. Would anyone accept a "Noncents-coin'? I just don't see how they are different to me using post-its with a smiley face and calling them "money".

Wholesale adoption of blockchain tech within 10-15 years.

Cryptocurrency is another matter. It may well depend on the process and relationship to regulation. But will also massively depend on happenstance, timing, psychological climates etc. If there is another major financial upheaval (ie Maudlin article) then that *could* provide the circumstance for wider adoption of cryptos. It's possible. Again, the older generations won't see it coming or believe it's possible, the same as they didn't believe cheque books would disappear or that people would cease carrying cash.

Totally agree. The blockchain/crypto space is still in its infancy. Not every single crypto or blockchain will succeed and be around in 10 years. I would like to think it will be like the dotcom bubble where 90% of so called tech companies dissapeared after the crash. However some notable ones are still thriving like Apple, Google, Amazon etc.

For those that think crypto has no intrinsic value therefore worthless, to some extend your fiat is the same, based on faith. It can be printed to oblivion. What gives it value is the utility and the ecosystem behind it which is innovating very quickly. In saying all that, i do concede there has been some speculative play in the crypto market.

The high level conclusion here I agree with, several of the arguments within I do not.

There are a number of good scenarios for Distributed Ledger Technology - but IoT is not one of them.

I see the logic, ooh lots of things, no security lets throw them on a blockchain - but people always seem to forget that blockchain is a DISTRIBUTED database technology. Every participant in a blockchain needs to store a copy of that blockchain and participates in the transaction validation process.

So, take your snazzy internet fridge. It's great - it tells me I need more milk (which I already know, but it's cool that it does too!).

What it does not, and will not have, is a copy of a blockchain on it alongside entries for all other internet fridges.

What it will not do is communicate with every other fridge in order to participate in transactions to enter information on that blockchain - could you imagine how long that would take?

So the devices themselves using blockchain? not in my opinion.

What about the companies themselves - would decide to store information about fridges on a blockchain database? Maybe, but I find it hard to see the advantage of that over a regular relational database.

If they need to for some reason share that data with suppliers? Perhaps, sure. But at that point it isn't a IoT scenario, it's a supply chain scenario - for which there are plenty of existing examples - some listed above.

TLDR; Blockchain has some promising use cases - I'm not really seeing IoT as one of them - you're just smashing two buzzwords together and hoping for the best.

My thinking is that there will be several variations of blockchain. And once again the potential could have been there if there had been one standard adopted world wide. But no, there will be different blockchain standards developed by the big players.
Why would that matter?
Well the loss of efficiency is in the interface processes required as data transfers across systems. As a quick example, what would be the datetimestamp on a transaction stored on the blockhain? US or other date format. How many fractions of a second do you write to? What clock are you looking at when you get the datetime stamp? Problems that can be solved, but once again they get solved at the interface.
Just look at how many o/s our out there? HTML standards, database systems etc.

Reading the whitepaper for HoweyCoins shows an impressive amount of effort describing mixing blockchain tech into the travel industry. https://www.howeycoins.com/files/howeycoin_white_paper.pdf Just a shame the whitepaper is all complete bunk and as whitepapers go this is one of the good ones. Most are utter complete trash ICOs that have little actual tech backing them aside from a website, third party payment platform, & media campaign https://entertainment.slashdot.org/story/18/05/16/1910233/the-sec-create... The security is even more fraught than those keeping their wallet details with pen and paper. Seems like a bit of an issue there. Nothing should be this bad yet people assume because of a padlock icon they must be safe because the nice nice website said they would be. Come off it, even the guys cracking open their wallet devices to check for middleman hardware hacks are not going too far, (much like many routers & electronic equipment with backdoors added by malware to record & report information back to said middlemen for later theft). Likewise throwing your trust into a bunch of developers who cannot even do basic QA & deployments with blockchain tech and are equally likely to break access to millions of dollars by a stupid untested update & merge with no review, (much like the Parity bug), is the worst thing you could do without a proper tech review & risk assessment. If you want security there is security tech and firms out there. Blockchain by and of itself is not security, it is not inherently secure. It is in fact a ledger generating unique keys with copies but then again so does a database with backups. To secure anything it is the method of communication and access... they screwed that up by having it on non private devices & able to easily be scammed or hacked or just broken by poor development in the first place. Unfortunately decentralisation while keeping multiple copies may sound good, does not always offer benefits when most the copies are able to be corrupted, (even by developers) & data edits for integrity or legal ownership are actually pretty important but often unable to be made in a blockchain environment, (even the business register went for a secured versioned database pool with backups, even Paymark decided for that over decentralisation). Preventing corruption & allowing valid edits are almost competing principles which require the function of central courts or regulated organisations currently to mediate. Those that lose assets due to blockchain tech, through bad updates, through crime, through device failure etc rarely ever see them again.

And now a comparison:
A civil engineer structural plan can fail epically once, and they plan for it to never fail at all. However for software engineers serious failures are expected to occur multiple times, they plan to catch a few that prevent the company getting into large legal payments regardless of the effects to users from most failures.

A civil engineer aims to keep users alive, a software engineer often is told to avoid resourcing for known security concerns due to cost measures, even though people's lives are at risk (pacemakers, insulin pumps, vehicles, door access, cameras etc etc).

It is certainly not an environment where you can give blind trust to any developer, with less training, experience and standards of an engineer even though failures are always still a risk. Much like trusting a hammer hand with multi story office building design. They too need to have a sufficient risk assessment and they too need to follow standards set by a central body & get outside assessment.

When both sides of that equation go wrong, both the builder & the standards review all trust should be lost & personal risk assessments become more important, not less. Yet in the tech industry you start out knowing both sides of the equation never worked or existed in the first place.

You would never want to open your IOT data to an unknown third party because, in and of themselves, they place little standards on support, security, privacy etc. But on the company's end they do get the benefits of user data & the ability to keep it non anonymised on their end for their sales & advertising. In essence does no one read and understand their terms of service any more or research risks from a whitepaper proposal? Well yes we have a lot of research saying many cannot even grock what they are. Most of the trust is blind and foolish. In that environment users & low scale investors would be better served by a picture book, (heck even charts & modelled equations are to complex & time consuming for many).