It seems absurd. When people think of Blockchain, they think of Bitcoin or Ethereum-style cryptocurrencies. Silicon Valley comes to mind, even Asia (Singapore), but you don’t seem to think of old Europe. Rather, Europe sounds obsolete, a loser in the technological race. That vision is reinforced when one looks at the technological giants and what one sees is that 9 of the 10 largest by stock market capitalization are North American and the tenth is Chinese. Europeans are neither seen nor expected. In this context, what can we think of Europe as a reference?
In my opinion, the two main weaknesses of Blockchain technology are its lack of interoperability on the one hand and its lack of adaptation to the new computing power of quantum computers on the other.
The lack of interoperability between different Blockchain networks stems from the fact that there is no single programming standard. This will remind you of when several systems coexisted in the video systems. VHS, Betamax, V2000… What happened? As in the famous”The Immortals” film, there can be only one. And that’s exactly what happened. VHS won, which was not necessarily the highest quality, but the most commercially successful.
The consequences were, among others, the disappearance of the rest of the systems, having to “throw away” tapes, video cameras, video recorders and the entire ecosystem based on other systems. It’s the same at Blockchain. In the absence of a common platform and common standards, each blockchain in a given application is incompatible with another. The most immediate examples are the Bitcoin and Ethereum block chains. It has happened to more than one holder of both currencies that has sent a Bitcoin to an Ethereum wallet with the consequences you already know… the Bitcoin lost in the ether (irrecoverable, lost money).
In other technologies, this lack of interoperability has been addressed by creating a body to bring together the main players in the sector and agreeing on common standards to enable this compatibility. In the case of telecommunications, this body has typically been (and is) the IEEE. The organization has approximately 400,000 members from more than 160 countries. More than half of the members are from outside the U.S.. This organization (and others like it) seeks to develop a set of basic rules to enable telecommunication stakeholders to, for example, manufacture chips, hardware, antennas, etc. that, based on this standard, can communicate and understand each other, even though the components, programming or systems may be different from each other.
Now it seems obvious to us that when we call from an iPhone to a Samsung (different manufacturer and different operating system) the call is received, answered and we communicate. Well, there’s nothing obvious about it, and the main reason is that the standard is common. That doesn’t happen in Blockchain. It takes that standard before the technology evolves to a point of no return where that standard is set to the letter, as in the case of the VHS video system, with the consequent brutal impact on all systems that do not succeed, who would be the Betamax or V-2000?
In Europe, there has been arealisation that we have to make the most of the difficulties. We are not the players, but we can be the referees. The European Union has taken note of this and is encouraging this type of innovation initiative. One of them, in fact, is in Spain and is called Alastria (https://alastria.io). There are others in Switzerland (called the new CryptoValley), the United Kingdom, Estonia or Denmark. Projects are being supported. The EU wants to inject up to €340m into new Blockchain projects between now and 2020. Last April, 22 European countries agreed on a joint initiative to work both on the regulation of Blockchain and on its teaching and capillarity among the population and industry. Let’s hope we don’t miss this train too.
The other area of weakness that also affects Blockchain is the qualitative leap in computing power. One of the strengths of cryptographic systems lies in the robustness of their encryption. Without going into lengthy explanations, it is a question of the computing power that has to be used to decrypt a block in such a way that its decryption is materially unfeasible.
Today’s encryption systems are based on asymmetric systems with elliptical polynomial functions that, in plain English, means that, once a message has been encrypted, its decryption requires exponentially higher power than that required for its encryption. This is ok today with the computing power of traditional computers, or even with Cray or similar supercomputers. This is no longer the case with the advent of quantum computers.
A classic computer is based on handling sets of basic blocks. Each of these blocks can take the value of 0 or 1 (bit). The more of these blocks you can handle and the faster, the more powerful the computer will be. In quantum computers the paradigm is changed. Their systems are based on the fact that at the quantum level different values may exist. The number of these values can be more than two. In fact, they can be found in multiples of the classic bits. No wonder they are called q-Bits. If we were looking at a sphere we could say that 0 could be the state corresponding to the South Pole and 1 to the North Pole. In theory, any point on any other part of the surface of the sphere could represent a possible state of matter and therefore a quantum point.
The two companies that have operational quantum computers are Google (Alphabet) and IBM. IBM expects to have quantum computers available for use in laboratories and universities at a level of 50 qBits by the end of this year. That is, 50 times more powerful than the most powerful today. Now there are already 20 qBits and we already see that the 50 qBits are about to arrive. This means that Google and IBM are already able to identify between 20 and 50 different points on that surface of the sphere we have discussed.
Implication is clear. What for today’s computers can be a barrier, for these quantum computers it’s like a hot knife through butter.
Obviously this affects all current cryptographic systems, and therefore also Blockchain. One of the sectors most exposed to these issues today is the financial sector, and is it any wonder that the major banks in Switzerland are trying to bring together to promote a standard of quantum keys that are resistant to these quantum computers?
This is another opportunity for old Europe. And let us not forget that whoever creates the standards will create the rules, and those rules can be used to create ecosystems of companies, businesses, developers and creative spaces in general that can help take the train back from the digital revolution to the old Europe. I hope it is for the good and digital independence of all of us.