Beautyon

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The Flat Screen Dilemma

There is a lot of talk about using “Blockchains” to improve data integrity, but what all these solutions fail to address is what I call “The Flat Screen Dilemma”. Just because something is displayed on a screen, it does not follow that it is true. No matter how your back end is arranged in terms of databases and languages used, the result of whatever is running is displayed on a flat screen in front of people who have no way of knowing the truth of what is being displayed, if they do not have the power to alter the record to their advantage to another independent system.

In digital cash systems before Bitcoin, there was no way of preventing double spending of tokens without tracking all the tokens and who controlled them in a central database controlled by an issuing institution.

Pre Bitcoin digital cash system with a central issuer

Satoshi Nakamoto invented a new system of keeping track of who controlled what token in a distributed database. When one person transfers control of a token to another person, this is independently verifiable for the layman because there are many different systems all looking at the same database and confirming that a legitimate transfer has taken place and this makes cheating impossible.

In a closed system, where the only people directly exposed to the data in a database are employees, users have no way of verifying that an entry is true when it appears on their screen; they must trust the administrators that the system is showing something that is true. They cannot send the value of an entry to another system; they can only transfer entries between accounts in the same system. There is no way for a person looking at a screen to know what is really happening at the database level, and whether or not it is true or false. All they can see on the screen are unverifiable, unauditable characters, without any tools or means to truly, independently audit what has taken place or what is on display.

This is quite different to many adversarial eyes looking at the same database to detect cheating; that is what happens in Bitcoin.

A Mexican Stand off. Everyone covering everyone else. Everyone wants to stay alive, no one shoots. Its a bad analogy. I know. I just like Mexican stand offs.

When you see a Bitcoin balance on a screen, anyone can verify that an address has a balance, and know that it is true. You can check it from different screens fed by different independent analysis companies and even download the entire blockchain yourself to verify the truth of a balance. In a proprietary closed system, this ability goes away entirely.

Anyone who owns stock and relies on a closed system is vulnerable to the administrators displaying screens that show false information. A stock exchange that runs off of the distributed Bitcoin network on the other hand, is absolutely verifiable from anywhere without needing to refer to a single authority for verification. That is why Bitcoin is a trustless system.

“Private blockchains” introduce the need for trust. This is regressive, introducing a flaw into a system designed to remove it. The client of any service using a private blockchain has to trust that the system administrators are not going to cheat. This trust requirement is something that modern thinkers and entrepreneurs are trying to remove, and Bitcoin does this very well.

What is shown on a screen should not be taken as the truth, unless you have a way to independently verify the data the system is displaying is true. For this to happen, you need to be able to transfer whole control over what someone claims you own to another independent system without needing to refer to a system administrator. If you need to rely upon the service vendor to do transfer control, they could be lying to you, and simply showing you a screen with a false entry that they promised to fulfil to you, like X amount of Apple stock, “credited” to your account.

This is obviously applicable to any screen showing any financial data. When you go to an ATM and are shown a balance, that number is meaningless. You are trusting that the bank has that money, will release it to you on demand and will not confiscate it arbitrarily while you are not looking. It is immaterial to the truth that the bank is using a private blockchain database to store your account data.

Blockchain Wallet with a verifiable balance

Contrast that with the balance display on your Blockchain wallet. They are showing you your balance as a service, not as a deposit they hold on your behalf. This is a fundamentally different proposition to a simple screen display, and it is something that the “Blockchain not Bitcoin” advocates do not understand because they are computer illiterate, and think that anything on a screen that is well designed is true by default.

Its all very well to use new software to improve the efficiency of your back end systems, if indeed you can actually do what you claim to be doing, it is actually more efficient, and there are real advantages. What you cannot claim however, is that as far as the user is concerned, what you display to the viewer of an account is more true simply because you are claiming to use a “Blockchain without Bitcoin”. That is absolutely false.

Medium fillet stake, fries, spinach, house red, lemon sorbet.

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