Why Accenture broke the blockchain with IBMs help

Let me guess. You thought blockchains were immutable. Exploring the mystery behind breaking the blockchain. What does this all means for business?

You thought blockchains were distributed, public, time-stamped, and persistent. Guess what? They still are.

Private blockchains introduce a trusted intermediary

Accenture is suggesting that permissioned blockchains will benefit from the ability to change transactions – perform a “do-over.” A permissioned blockchain is a network where the participants can restrict who can participate in the consensus mechanism of the blockchain’s network. A network where the trusted entities or companies self-elect themselves as trustworthy. Who monitors them? Well, they monitor themselves, at least that’s the theory.

Removing the mysterious innovation curtain

Undeniable signatures to practical privacy and chameleon signatures to redactable blockchains, who’s behind the innovation of editing the blockchain? Accenture or IBM?

Four academics Giuseppe Ateniese (USA), Bernardo Magri (Italy), Daniele Venturi (Italy), and Ewerton Andrade (Brazil) are the inventors behind the new framework to re-write and or compress the content of blocks. Their joint paper published on August 5th, 2016, titled “Redactable Blockchain – or – Rewriting History in Bitcoin and Friends,” expands on the early IBM Watson Chameleon Signatures research published in 2000.

Hugo Krawczyk and Tal Rabin were both IBM researchers and drafted, Chameleon Signatures in 2000. They introduced these signatures to provide an undeniable commitment of the signer to the contents of a signed document. The enhancement over digital signatures is that the new signature did “not allow the recipient of the signature to disclose the substance of the signed information to any third party without the signers’ consent.”

Refresh me, where did this start?

Zero knowledge proofs remain the foundation of Undeniable Signatures, a digital signature scheme and implementation presented by David Chaum and Hans van Antwerpen in 1989. In January 1992, Jurjen Bos wrote his dissertation, Practical Privacy, on control coding theories, measurement, and cryptology.

This thesis laid the foundation for Advances in Cryptology – CRYPTO ’92 Provable Unforgeable Signatures, published in 2001. Proveable Unforgeable Signatures improved on existing schemes by offering signatures that were are smaller, where signing and verification required less memory and computed power. 

Permissionless or permissioned blockchains?

The financial crisis of 2007-08 was not $700 billion. Forbes correctly stated that the Special Inspector General for TARP summarized the total government bailout commitment at $16.8 trillion dollars with $4.6 trillion already paid out as of 2015.

Fast forward eight years and Wells Fargo previously a respected financial firm, on Sept. 8. agreed to a $185 million settlement with the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency, and the Los Angeles city attorney. Over 2 million fake bank accounts were created, and Wells Fargo fired 5,300 employees during the period under investigation.

It doesn’t seem that far away that in 2008, Satoshi Nakamoto spoke of the ability to transfer cash electronically peer-to-peer due to a lack of confidence in “trusted third parties.” Trusted third parties can be eliminated from financial transactions in a permissionless blockchain.

A permissioned blockchain depends on “trusting” entities. Lehman Brothers, AIG, Citigroup, Countrywide, and JPMorgan & Co were all trusted third parties in 2006. All untrusted in 2007. In 2012, Wells Fargo was a trusted thirty party. By 2016, untrusted. Faith in trusted third parties is waning. The public is growing tired of self-created trust.

Does a need exist for information in a blockchain to be deleted and not just append-only or is this model designed to fail? How is trust established in this imperfect world?

A redactable blockchain

Accenture just released their most articulate blockchain paper to-date, called, “Editing the Uneditable blockchain: Why distributed ledger technology must adapt to an imperfect world” apparently based on the primary work in Redactable Blockchain – or – Rewriting History in Bitcoin and Friends.”

Since 2009 there have been 157.2 million bitcoin transactions. None of those transactions were removed, redacted, or re-written. They were and continue to be immutable.

Does removing the immutability of blockchains address human error? During our MIT CIO Symposium discussion, How Blockchain Will Transform the Digital Economy my colleague Anders Brownworth of Circle suggested private or permissionless blockchains were equivalent to an intranet, cosmetic and functionless. I agree.

Is there a difference between a consortium operating a private blockchain and a cartel?

Private blockchains are not required to protect IP or privacy. Smart contracts with private code can do this. If you had a choice to bank at a non-profit bank operating on a public blockchain with smart contracts or bank at a for-profit bank operating on a private blockchain – where would you bank?

The pragmatists believe peer-to-peer trust is possible. Idealists clutch onto the world unchanged, controlled by a self-selected minority.

 

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Peter is a technology executive with 19 years of experience, dedicated to driving innovation, digital transformation, leadership, and data in business. He helps organizations connect strategy to execution to maximize company performance. He has been recognized for Digital Innovation by CIO 100, MIT Sloan, Computerworld, and the Project Management Institute. As Managing Director at OROCA Innovations, Peter leads the CXO advisory services practice, driving digital strategies. Peter was honored as an MIT Sloan CIO Leadership Award Finalist in 2015 and is a regular contributor to CIO.com on innovation. Peter has led businesses through complex changes, including the adoption of data-first approaches for portfolio management, lean six sigma for operational excellence, departmental transformations, process improvements, maximizing team performance, designing new IT operating models, digitizing platforms, leading large-scale mission-critical technology deployments, product management, agile methodologies, and building high-performance teams. As Chief Information Officer, Peter was responsible for Connecticut’s Health Insurance Exchange’s (HIX) industry-leading digital platform transforming consumerism and retail oriented services for the health insurance industry. Peter championed the Connecticut marketplace digital implementation with a transformational cloud-based SaaS platform and mobile application recognized as a 2014 PMI Project of the Year Award finalist, CIO 100, and awards for best digital services, API, and platform. He also received a lifetime achievement award for leadership and digital transformation, honored as a 2016 Computerworld Premier 100 IT Leader. Peter is the author of Learning Intelligence: Expand Thinking. Absorb Alternative. Unlock Possibilities (2017), which Marshall Goldsmith, author of the New York Times No. 1 bestseller Triggers, calls "a must-read for any leader wanting to compete in the innovation-powered landscape of today." Peter also authored The Power of Blockchain for Healthcare: How Blockchain Will Ignite The Future of Healthcare (2017), the first book to explore the vast opportunities for blockchain to transform the patient experience. Peter has a B.S. in C.I.S from Bentley University and an MBA from Quinnipiac University, where he graduated Summa Cum Laude. He earned his PMP® in 2001 and is a certified Six Sigma Master Black Belt, Masters in Business Relationship Management (MBRM) and Certified Scrum Master. As a Commercial Rated Aviation Pilot and Master Scuba Diver, Peter understands first hand, how to anticipate change and lead boldly.