Welcome!

@ThingsExpo Authors: Liz McMillan, Jason Bloomberg, Yeshim Deniz, Elizabeth White, Ed Featherston

Related Topics: FinTech Journal, @CloudExpo, @ThingsExpo

FinTech Journal: Blog Post

Blockchain: Byzantine Generals and Achieving Consensus | @CloudExpo #Cloud #FinTech #Blockchain

One interesting feature about blockchain technology is that there’s no central authority or single source of the ledger

When discussing disruptive technologies, the topic of blockchain inevitably enters the conversation. Gartner recently listed blockchain as one of the ‘Key platform-enabling technologies to track.' Approximately $1.4B has been invested in blockchain just this year, according to PwC executive Seamus Cushley. IBM announced this week a Blockchain-as-a-Service Enterprise offering at their Interconnect Conference. While there is a lot of ‘hype vs reality' discussions going on, there is no arguing that blockchain is being taken very seriously across industries and cannot be ignored.

In simple terms, blockchain is a digital ledger. You can think of it as a spreadsheet. The blockchain ledger comprises a constantly growing list of transactions called "blocks" - all of which are sequentially connected. Each block has a link to the previous one in the list. Once a block is in the chain it can't be removed, so it becomes part of a permanent database containing all the transactions that have occurred since its inception.

One of the more interesting features about blockchain technology is that there's no central authority or single source of the ledger. Which means it exists on every node that's associated with it. Yes, every node has its own complete copy of the blockchain. As new blocks are added, they're also received by every node that participates. For this to work, it requires distributed consensus and trust to ensure the integrity of the system. Achieving this consensus is one of the challenges and complexities in such a distributed system.

The Byzantine Generals Problem
The consensus challenge is frequently described by a logic problem referred to as The Byzantine Generals Problem. Imagine a group of generals, encircling a city with their armies. They want to coordinate an attack. Their only method of communication is through messengers. Now, add into this mix that some of the generals may be traitors with their own agenda. Those traitors may intercept or modify the messages being sent in the hope of causing the attack to fail. How do the generals know they are receiving information? Solving that conundrum is a frequent challenge in distributed systems. How to ensure the orders are valid and trusted.

As with any challenge, there is always more than one way to address that challenge. I frequently describe my perspective as ‘There is no perfect solution, everything is a tradeoff.' What tradeoffs you are willing to accept determine the appropriate solution for your needs'. There are many techniques that have been developed in the blockchain space to address the consensus challenge, each with their own set of tradeoffs. Three popular ones are:

  • Proof of Work
  • Proof of Stake
  • Byzantine Fault Tolerance

Proof of Work
Proof of Work is the one most people are familiar with, as it is at the core of the biggest use of a blockchain ecosystem today, bitcoin. The basic concept is providing a mechanism that requires effort to add a block, but minimal effort to validate that work was done. In this consensus solution there are ‘miners.' Miners look for the next proposed block to add to the chain. To add the block, the miners are challenged with a mathematical problem to solve. Solving this puzzle requires significant resources, including time, computing power and electricity. Once a miner solves the puzzle, they can add the next block to the chain, with the appropriate hashing information for other participants to easily validate the work was done and that the block belongs. The miner is rewarded for their effort, which is the incentive to expend their resources. In the bitcoin world, they are rewarded with bitcoin, for example.

This has proven to be a very successful technique for gaining consensus and trust in a blockchain ecosystem. The tradeoff is processing time. Solving the puzzle can take up to 10 minutes, obviously having a direct impact on throughput. The time window can be reduced by reducing the complexity of the puzzle. The tradeoff then becomes the risk that it is easier to insert/produce invalid transactions to the chain.

Proof of Stake
In Proof of Stake solutions, mining is done by participants who have a stake in the blockchain ecosystem they belong to. This is unlike proof of work, where the miners can be anyone. Who can insert the next block is done based on a cost associated with the block, the total value(stake) the participant has in the ecosystem, and usually some pseudo-random selection process to avoid risk of only the largest stakeholders having control of block insertions. There are still hashing techniques involved, like proof of work, but not at the resource consuming levels of that solution. This technique is used by the Ethereum blockchain ecosystem.

This solution has become more attractive than proof of work, as it doesn't suffer from the latency issues of proof of work. As everything is a tradeoff, the risk with proof of stake is referred to as the ‘nothing at stake' scenario. This is the fact there is nothing to lose by voting for multiple blockchain histories, creating a problem with reaching consensus. Several alternatives to address this situation exist, including ‘punishment' for bad behavior, as well as reconciliation problems. The other risk, as previously mentioned, is large stakeholders dominating the blockchain.

Byzantine Fault Tolerance
Byzantine Fault Tolerance takes a different perspective. All participants in the blockchain ecosystem are known and each possesses a public key. As a block passes through their node, it is validated, and the message is signed with that public key. Once a predefined number of participants sign the block, it is considered valid and added to the chain. This is the technique used by the Hyperledger blockchain solution that is the underpinning of IBM's solution. This has significant benefits. Unlike proof of work, large amounts of resources are not required to participate. Additionally, it is a much more ‘democratized' solution, as the largest stakeholders don't have any unfair leverage such as can occur in proof of stake solutions.

There are two key tradeoffs with this solution. First, it requires all participants to agree on who belongs in the blockchain. Additionally some method of confirming membership, some level of central authority or agreement is needed, which tends to bounce up against the philosophy of blockchain.

We have miles to go and promises to keep
As with any technology, blockchain is a tool, not a destination. Ultimately, as technologists, our job is to help the business achieve its goals - and reach its destination - by leveraging tools that provide business value. The potential use case scenarios cross multiple industries, from changing the way financial transactions are conducted, into healthcare and the maintaining of Electronic Health Records, over into supply chain as well as the explosively growing Internet of Things.

I count having blockchain in our toolbox as a net positive, and look forward to how this tool can help us provide value back to the business.

More Stories By Ed Featherston

Ed Featherston is VP, Principal Architect at Cloud Technology Partners. He brings 35 years of technology experience in designing, building, and implementing large complex solutions. He has significant expertise in systems integration, Internet/intranet, and cloud technologies. He has delivered projects in various industries, including financial services, pharmacy, government and retail.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


@ThingsExpo Stories
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, whic...
Imagine if you will, a retail floor so densely packed with sensors that they can pick up the movements of insects scurrying across a store aisle. Or a component of a piece of factory equipment so well-instrumented that its digital twin provides resolution down to the micrometer.
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settle...
Product connectivity goes hand and hand these days with increased use of personal data. New IoT devices are becoming more personalized than ever before. In his session at 22nd Cloud Expo | DXWorld Expo, Nicolas Fierro, CEO of MIMIR Blockchain Solutions, will discuss how in order to protect your data and privacy, IoT applications need to embrace Blockchain technology for a new level of product security never before seen - or needed.
BnkToTheFuture.com is the largest online investment platform for investing in FinTech, Bitcoin and Blockchain companies. We believe the future of finance looks very different from the past and we aim to invest and provide trading opportunities for qualifying investors that want to build a portfolio in the sector in compliance with international financial regulations.
Leading companies, from the Global Fortune 500 to the smallest companies, are adopting hybrid cloud as the path to business advantage. Hybrid cloud depends on cloud services and on-premises infrastructure working in unison. Successful implementations require new levels of data mobility, enabled by an automated and seamless flow across on-premises and cloud resources. In his general session at 21st Cloud Expo, Greg Tevis, an IBM Storage Software Technical Strategist and Customer Solution Architec...
Nordstrom is transforming the way that they do business and the cloud is the key to enabling speed and hyper personalized customer experiences. In his session at 21st Cloud Expo, Ken Schow, VP of Engineering at Nordstrom, discussed some of the key learnings and common pitfalls of large enterprises moving to the cloud. This includes strategies around choosing a cloud provider(s), architecture, and lessons learned. In addition, he covered some of the best practices for structured team migration an...
No hype cycles or predictions of a gazillion things here. IoT is here. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, an Associate Partner of Analytics, IoT & Cybersecurity at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He also discussed the evaluation of communication standards and IoT messaging protocols, data...
Coca-Cola’s Google powered digital signage system lays the groundwork for a more valuable connection between Coke and its customers. Digital signs pair software with high-resolution displays so that a message can be changed instantly based on what the operator wants to communicate or sell. In their Day 3 Keynote at 21st Cloud Expo, Greg Chambers, Global Group Director, Digital Innovation, Coca-Cola, and Vidya Nagarajan, a Senior Product Manager at Google, discussed how from store operations and ...
In his session at 21st Cloud Expo, Raju Shreewastava, founder of Big Data Trunk, provided a fun and simple way to introduce Machine Leaning to anyone and everyone. He solved a machine learning problem and demonstrated an easy way to be able to do machine learning without even coding. Raju Shreewastava is the founder of Big Data Trunk (www.BigDataTrunk.com), a Big Data Training and consulting firm with offices in the United States. He previously led the data warehouse/business intelligence and B...
"IBM is really all in on blockchain. We take a look at sort of the history of blockchain ledger technologies. It started out with bitcoin, Ethereum, and IBM evaluated these particular blockchain technologies and found they were anonymous and permissionless and that many companies were looking for permissioned blockchain," stated René Bostic, Technical VP of the IBM Cloud Unit in North America, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Conventi...
When shopping for a new data processing platform for IoT solutions, many development teams want to be able to test-drive options before making a choice. Yet when evaluating an IoT solution, it’s simply not feasible to do so at scale with physical devices. Building a sensor simulator is the next best choice; however, generating a realistic simulation at very high TPS with ease of configurability is a formidable challenge. When dealing with multiple application or transport protocols, you would be...
Smart cities have the potential to change our lives at so many levels for citizens: less pollution, reduced parking obstacles, better health, education and more energy savings. Real-time data streaming and the Internet of Things (IoT) possess the power to turn this vision into a reality. However, most organizations today are building their data infrastructure to focus solely on addressing immediate business needs vs. a platform capable of quickly adapting emerging technologies to address future ...
We are given a desktop platform with Java 8 or Java 9 installed and seek to find a way to deploy high-performance Java applications that use Java 3D and/or Jogl without having to run an installer. We are subject to the constraint that the applications be signed and deployed so that they can be run in a trusted environment (i.e., outside of the sandbox). Further, we seek to do this in a way that does not depend on bundling a JRE with our applications, as this makes downloads and installations rat...
Widespread fragmentation is stalling the growth of the IIoT and making it difficult for partners to work together. The number of software platforms, apps, hardware and connectivity standards is creating paralysis among businesses that are afraid of being locked into a solution. EdgeX Foundry is unifying the community around a common IoT edge framework and an ecosystem of interoperable components.
DX World EXPO, LLC, a Lighthouse Point, Florida-based startup trade show producer and the creator of "DXWorldEXPO® - Digital Transformation Conference & Expo" has announced its executive management team. The team is headed by Levent Selamoglu, who has been named CEO. "Now is the time for a truly global DX event, to bring together the leading minds from the technology world in a conversation about Digital Transformation," he said in making the announcement.
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lead...
Digital Transformation (DX) is not a "one-size-fits all" strategy. Each organization needs to develop its own unique, long-term DX plan. It must do so by realizing that we now live in a data-driven age, and that technologies such as Cloud Computing, Big Data, the IoT, Cognitive Computing, and Blockchain are only tools. In her general session at 21st Cloud Expo, Rebecca Wanta explained how the strategy must focus on DX and include a commitment from top management to create great IT jobs, monitor ...
"Cloud Academy is an enterprise training platform for the cloud, specifically public clouds. We offer guided learning experiences on AWS, Azure, Google Cloud and all the surrounding methodologies and technologies that you need to know and your teams need to know in order to leverage the full benefits of the cloud," explained Alex Brower, VP of Marketing at Cloud Academy, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clar...
The IoT Will Grow: In what might be the most obvious prediction of the decade, the IoT will continue to expand next year, with more and more devices coming online every single day. What isn’t so obvious about this prediction: where that growth will occur. The retail, healthcare, and industrial/supply chain industries will likely see the greatest growth. Forrester Research has predicted the IoT will become “the backbone” of customer value as it continues to grow. It is no surprise that retail is ...