From the very beginning, Nakamotoan blockchain technology has had a complicated relationship with computing hardware. Much of the case for Bitcoin hinges on the availability of ubiquitous, commodity network and hardware that runs open source software. The Internet is open to all, so the blockchain is both transparent and available to anyone. Furthermore, security and “trustlessness” is assured because it runs of generic equipment .
On the other hand, there has been a constant desire to deploy special hardware, including a never ending (and self defeating) arms race in mining technology, and the notion of embedding the computation in everything. Indeed, some are even splurging on a space program, the ultimate in ‘special’ hardware.
Some special hardware is intended to simplify participation, so everyone can be part of the network without effort. (This notion is philosophically akin to the thinking behind Distributed Autonomous Organizations.). Another intuition is that embedded hardware is a way to accumulate massive amounts of ‘spare’ capacity, running in the background. This argument is something like, ‘While no single light bulb contributes much, a bazillion light bulbs adds up to so much compute power that it will keep the network safe and stable.’
And, of course, corporations are intrigued the possibility of capturing a market by including blockchain in their products. This month Coindesk reports on some of these ideas.
Rachel Rose O’Leary reports that Chinese giant Midea Group is developing capabilities to embed Bitcoin mining in household appliances . O’Leary indicates that their patent is similar to ideas floated by others. Essentially, the excess capacity of the embedded computer would run Bitcoin protocols, and any coins earned will be credited to an account, presumably the owner of the device.
One of the leading proponents of this concept is 21, Inc., and they admit that such a tiny device isn’t likely to generate enough Bitcoins to cover the cost of the electricity. So, one wonders whether this added power consumption, even while not in use, will be a popular feature.
This news is interesting not because it is innovative or even a good idea, but because Midea is a huge manufacturer who could truly deploy many thousands of such devices around the world.
On another front, Michael del Castillo & Bailey Reutzel report that Intel has been working on a different idea, a blockchain that runs on dedicated “secure” hardware . This was introduced in 2015 as “Sawtooth”, which is a variation on Nakamoto, using a different ‘scratch off’ method (poetically named Proof of Elapsed Time Expended) and using special secure hardware. A quick glance at the explanations suggests that the system sets up an tamper proof timer that implements the ‘race’ in place of repeated hashing. To use their blockchain, you have to have their special chips and the software to run on them. (Intel wants to sell chips.)
I really don’t know about these ideas.
Midea’s idea is far from new, it falls right into some classic dreams of a ubiquitous, unstoppable Bitcoin network. The concept will be vulnerable to all the woes of the Internet of Things, including the likelihood that hackers will try to hijack thousands of toasters to steal the cryptocurrency. Furthermore, the economics of cryptomining don’t appear to support these tiny nodes, so it looks like a dead loss to me.
Is this anything other than a gimmick?
But most of all, one wonders exactly what software these devices might be running. Which version of Bitcoin or other coins would it run? What happens when the protocol changes, or everything splits as it has this year? How will upgrades happen in general?
Given the volatility of the cryptocurrency world, it may not be a great idea to “wire in” a protocol in this way, especially when the units are to be distributed to ordinary people who can’t maintain the crypto features.
Intel’s idea is interesting, but not really a Nakamotoan blockchain at all. It is technically incompatible with public blockchains such as Bitcoin, and philosophically incompatible with the “trustless” notion of many cryptocurrencies. You have to trust Intel. For that matter, you have to buy Intel.
There are probably good use cases for this kind of proprietary blockchain, as well as exotics such as a quantum blockchain. But these use cases are not at all the same as for public blockchains.
The economic case for blockchain is essentially a trade off between efficiency and scale. Intel’s blockchain would be well suited to a small or moderate scale network, but then again so would other, non-blockchain protocols. I.e., if you are going to build a network using special Intel security hardware, you have lot’s of choices besides blockchain.
So is Sawtooth anything other than a gimmick?
My own view is that it is far to early to invest in hardware blockchain products. The protocols are changing rapidly and dramatically, and the economics are highly uncertain. To really work, you have to have zillions of units deployed, which would be challenging to say the least.
Furthermore, many of the hardware approaches fly in the face of various philosophical objectives that drive interest in blockchains. Using a “trusted system” to implement a “trustless” protocol makes little sense. Using proprietary hardware to implement a distributed ledger makes little sense. Having your toaster mine tiny, tiny amounts of Bitcoins is a waste of electricity. For that matter, your toaster would soon be obsolete, as the cryptocurrency protocols rapidly evolve.
I think that at this point, cryptocurrency hardware is mostly a gimmick.
- Michael del Castillo and Bailey Reutzel Silicon Blockchain: Intel’s Distributed Ledger Strategy Is All About Hardware Coindesk.August 23 2017, https://www.coindesk.com/silicon-blockchain-intels-distributed-ledger-strategy-hardware/
- Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System. 2009. http://bitcoin.org/bitcoin.pdf
- Rachel Rose O’Leary, Manufacturing Giant Midea Wants to Put Bitcoin Miners in Household Appliances. Coindesk.August 24 2017, https://www.coindesk.com/manufacturing-giant-midea-wants-to-put-bitcoin-miners-in-household-appliances/