Blockchain’s future: can the decentralized blockchain community succeed in creating standards?

The authors would like to thank the following persons for their useful comments in the preparation of this paper: Alan Davidson, John Humphrey, Mark Staples, Sandy Maitland, Burt Tregub, Rick Skibo, and the two anonymous reviewers.

Such organizations in Australia must comply with the non-cash payments facility provisions in the Corporations Act 2001 (Cth). These third parties are required to validate certain financial aspects of the transaction.

Testimony of Sir Timothy Berners-Lee, before the United States House of Representatives Committee on Energy and Commerce (1 March 2007), http://dig.csail.mit.edu/2007/03/01-ushouse-future-of-the-web.html.

Some commentators have described the blockchain as being a trustless environment, but in reality, this is not the case. There may not be a trust structure between the legal entities to the transaction but there needs to be some base trust in the technology deployed.

It should be noted that the term ‘coin’ is actually a metaphor. There is no coin, as such. In legal parlance, the term ‘coin’ as used for a crypto-currency would be known as a ‘Humpty-Dumpty-ism’ (see Lewis Carroll, Through the Glass Darkly). The so-called coin is simply a number stored in a block that forms part of the blockchain ledger and as such represents some stored value. Consequently, the coin nominal is simply a metaphor for the representation of a coin.

Standards Australia home page, https://www.standards.org.au/standards-development/what-is-standard.

Economic historians have argued that standards emerged because production and goods crossed borders. See Shenhav, 1999.

In cryptographic terms a hash algorithm must possess the following characteristics of being pre-image resistant and collision resistant (See Menezes et al.,1996).

Alternatives proposed include: Algorand Proof of Stake, Ouroboros Proof of Stake, Redbelly Proof of Stake, Casper Proof of Stake, and EOS Proof of Stake solution.

Vitalik Buterin has criticized the EOS Proof of Stake solution because instead of ensuring entropy of validators, EOS has a static allocation of 21 validators which could collude and be subject to risk of bribes among block producers operating across different jurisdictions, https://www.reddit.com/r/eos/comments/6qmpjt/vitalik_buterin_on_eos/ <accessed 21 July 2018>

Even Nakamoto identified in her/his/their paper that the proof of work protocol would be susceptible to a 51% attack. It has been identified that currently there exists a few miners that in combination do possess greater than 50% of the computer power which could substantially disrupt the stability of the bitcoin blockchain.

See https://sawtooth.hyperledger.org/docs/core/nightly/0-8/introduction.html, and https://sawtooth.hyperledger.org/docs/core/nightly/0-8/architecture/poet.html

Ibid.

For the GDPR see https://eugdpr.org/

A consortium’s rules would have to cover, at a minimum, joining procedures, exit procedures, impacts on members and existing members after an exit has been completed, minimum security requirements, establishment of a membership committee, procedures to change the technical environments, and auditability of members’ security compliance.

An example of this was identified in the case of USA v. Scarfo et al. 180 F. Supp. 2d 572 (D.N.J. 2001). This case was the first published litigation involving a key logger to capture the PGP private keyring. The FBI used a keylogger to capture the passphrase used by a suspected criminal concerning an encryption program known as PGP. Further, the FBI had transferred a copy of the private keyring which held the private key used by Scarfo in his electronic communications. The PGP application was an open-source encryption program; hence, the FBI had all the necessary components. In having all three components, the PGP program, the private keyring, and the access passphrase, the FBI was able to monitor all communications, even encrypted communications, sent or received by Scarfo.

SPYRUS, Inc. is a hardware security module provider based in Silicon Valley, California, that has obtained FIPS 140-2 Level 3 certification. FIPS certification is an expensive exercise but from an end user’s perspective, it should be a high priority to have peace of mind that their private keys are safe from unauthorized copying. After all, the safety of the end user’s digital assets must be an essential element.

The Ethereum platform was developed by the Ethereum Foundation, a Swiss non-profit organization. The initial project was bootstrapped via an ICO for Ether in August 2014 and went live on 30 July 2015. The Ethereum platform is designed as a decentralized platform that runs smart contracts.

There are now attempts to combine legal and smart contracts. See OpenLaw at https://openlaw.io

Lucio Robert Paciocco & Anor v Australian and New Zealand Banking Group Limited. [2016] HCA 28; paragraph 257. (Australian HC), http://eresources.hcourt.gov.au/downloadPdf/2016/HCA/28

Cavendish Square Holding BV v Talal El Makdessi [2015] UKSC 67 (UK SC).

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 (Australian HC).

Compare Gagnon and Stephen (2018) who propose an interoperable national patient index based on blockchain, but again it is more of a proposal rather than an executed technology.