When History Is Forever: The Power and Danger of Blockchain Immutability
I recently asked Michael Casey, co-author of the smart new book “The Truth Machine,” how he responded to the common argument that Bitcoin has no value. His response was simple yet elegant. “Bitcoin’s value is that Bitcoin can not be shut down,” he said.
The reason that Bitcoin can not be shut down, of course, is because its transactions are recorded on a distributed ledger known as a blockchain. The blockchain is viewable to everybody and controlled by nobody. This means that no one can change the blockchain without someone else noticing. This helps explain why, in its decade of existence, the Bitcoin blockchain has never been successfully hacked.
This feature, according to Casey, has world-changing ramifications. “The capacity to edit information has for years been at the behest of dictators,” he told me. Now, thanks to blockchain, “We’ve got the first ostensibly immutable record of history.”
But is that always a good thing?
The idea of immutability is at the core of blockchain mythology, and is often presented as unequivocally positive. At blockchain conferences the word “immutable” is tossed around almost as much as “ecosystem.” Organizations are trying to use blockchain to ensure the immutability of everything from journalism to humanitarian aid to supply chains. Blockchain’s immutability has also entered the political sphere. Last month, activists in China tried to challenge censorship by posting a controversial memo on the Ethereum blockchain, where it can not be taken down.
The question of immutability features predominantly in Michael Casey and Paul Vigna’s “The Truth Machine,” which is a kind of sequel to their earlier work, “The Age of Cryptocurrency.” One of the great triumphs of both of these books is the authors’ nuanced take on the hyped crypto world, as well as their rare ability to merge technical detail with broader analysis about how blockchain can reshape society.
“The Truth Machine” describes the cryptography behind blockchain, which is essential for understanding why a blockchain is so difficult to alter. The authors describe how Bitcoin miners compete to solve difficult mathematical puzzles, receiving Bitcoin as a reward for their efforts. Miners are paid when they successfully add a new block of transactions to the ledger. The details of each blockchain transaction, like the date, time, amount, and sender and recipient addresses, are run through a special algorithm to produce a hash, which is basically a string of letters and numbers.
A key feature of hashes is that they are very sensitive to tampering. “If anyone tries to introduce changes to existing transactions,” the authors write, “other miners will clearly recognize that the new hash output doesn’t match what they have in their versions of the blockchain. So they will reject it.”
The authors complement these technical details with big-picture descriptions of how blockchain technology could transform the developing world. Blockchain could have a major impact on countries where public registry systems are plagued by corruption, and where people don’t have official titles to their homes. In parts of Latin America, for example, some people have no official proof of home ownership. Even wealthier homeowners might buy an apartment and then discover that someone else bribed the registrar to keep their name on the title.
Blockchain, which is immutable, time-stamped and publicly auditable, “could execute property transfers almost immediately and completely, letting both parties verify the exchange with their unique private keys,” the authors explain. This would make it “near impossible for one person to unilaterally make a change in their favor.”
“The Truth Machine” presents a largely positive vision of a blockchain future, and there’s no question that both authors are true believers in this technology. But what sets this book apart is that the authors also explore the dark side of blockchain’s much-celebrated “immutability.” There’s so much blockchain hype these days that one could easily get the impression that only people with good intentions will benefit from this technology. This is obviously not the case. What would stop a powerful, nefarious actor from using a blockchain to immortalize slander and abuse? And while the blockchain is widely described as a vehicle for “truth,” why couldn’t it also become a preserver of fake news?
Blockchain’s double-edged sword applies to the registry issue, the authors write. “In poor countries where registries need to be built from scratch, there’s a risk that corrupt government officials charged with attesting to people’s ownership would embed harmful falsehoods into the blockchain-based registry from the outset,” they note. There’s also the “garbage-in/garbage-out,” data problem. If original records are unreliable, putting them on a blockchain will just exacerbate the problem.
“Considering the messy records that date back centuries in many developing countries,” the authors write, “one fear is that rushing to enter them into a permanent, immutable blockchain record would enshrine and legitimize the claims of the powerful and corrupt, to the detriment of others.” Nor is a blockchain going to capture off-chain criminal activity, such as bribes. What a blockchain can do is “reveal irrefutable patterns of activity that, in the event of a dispute, can be used as evidence against corrupt officials.”
There are larger questions too. How do you decide who sets the permanent record? And what if brute force prevails? “In slums, rights to property are often defined by the local drug gangs,” Casey and Vigna note. “Do we want their view of the world to be validated by this system?”
There are no easy answers to these questions, but the authors deserve enormous credit for raising them. The current froth over blockchain is eerily reminiscent of the early days of social media, when so many of us were celebrating the potential of Twitter and Facebook to challenge government censorship and help take down dictators. Social media did do these things, but it also became a powerful tool of authoritarian governments. It’s too early to say that blockchain won’t encounter a similar fate. Yes, activists could use a blockchain to ensure that their stories are preserved for all time. But there’s no reason to believe that oppressive governments won’t also use a blockchain to achieve their goals.
“The Truth Machine” makes a compelling argument for a blockchain-driven world. But if blockchain is the technology of the future, we shouldn’t assume that it will only be used by people who agree with us. Blockchain may create an immutable record of history, but it won’t decide who writes it.