The National Institute of Standards and Technology, which is a non-regulatory that works under the Department of Commerce, recently released a blockchain technology report. The report aims to clarify various issues around the technology. By doing so, they hope that people, especially those in the business world can understand the limitations it has and misconceptions about it.
Who Is Targeted?
The document has been prepared with beginners in mind. It is especially targeted at organizations that are thinking of adopting blockchain technology. It is also targeted at businesses trying to move beyond the hype and get to the core of the technology. This report warns the readers that whenever new technology comes out, businesses are usually targeted. Sometimes it turns out to be great, but it may also turn out different. It warns the readers to be careful in their assessments and ensure that they actually need the blockchain as part of their businesses.
Dylan Yaga, one of the authors of the report and a computer scientist, is quoted in the report saying “A company's IT managers need to be able to say, we understand this, and then be able to argue whether or not the company needs to use it based on that clear understanding.”
The report identified common misconceptions around the blockchain in matters of identity management, control, and trust. The report stated that although the technology is decentralized and no institution can control it, developers, who create and maintain the system, have some control over it. Thus, they could twist it to their will if they decided to act in bad faith.
I was also noted in the report that the control over how users behaved on the network was limited. This was because the blockchain could only execute specifications and transaction rules. The paper added that most people often think that the blockchain has the ability to attribute real-world identities to the private keys. However, this was not true.
The report added that most people think blockchain is a trustless system. However, the authors stated that most of the trust is in the users, developers, and technology. Besides that, its success relied on all of these three aspects of trust working together in harmony.
One of the main limitations that NIST noted was the amount of bandwidth and energy required to power a blockchain. This could end up having a significant impact on company’s resources. Besides that, since each user must take care of their private key, losing a key comes with a greater risk than losing a password or username. A password can be change while a private key, once lost, cannot be recovered. Once lost, there was no way to regain entry into the system.
The authors of the report have made it open to public comment until February 23, 2018. After that, they will go back to the drawing board and examine the feedback. From there, they may use it to prepare any future reports on the technology. However, this is still significant as it shows the government is actively looking into this technology. This could prove quite helpful in streamlining the regulatory field for blockchain technology.