Part 5: Blockchain Technology - Implications
In Part 5 of this multipart series on blockchain technology, we will discuss the implications of blockchain technology. Let's get started!
Regulatory Oversight. Blockchain technology is getting increasingly more oversight from state and Federal regulators across multiple countries as the cryptocurrencies are becoming more visible and valuable. Partly, the technology offers capabilities that circumvent established safeguards against money laundering, and the raising of investments and funds. Other reasons may due to rising concerns for scams and speculations by unsophisticated investors.
Limited Expertise. Blockchain technology is not well understood by many developers due to the complexity of the components and infancy of the technology. Available documentation and formal training are also limited. Experienced developers are not abundant and are most likely locked in with high visibility startups. As the result, most developers are likely to self-taught through trials and errors and therefore will likely to make significant mistakes, which lead into the presence of buggy codes. For example, analyses conducted on smart contracts on Ethereum blockchain shows error rate upward of 100 errors for every 1000 lines of codes, in contrast to industry average of 15 to 50 errors per 1000 lines of delivered code, or to Microsoft’s of 0.5 errors per 1000 lines in released product.
Consider the case of Parity Technologies, one of the best-known software developers in the Ethereum ecosystem, whom contributed to Ethereum core infrastructure software, tools, and implemented blockchain pilot project for banks. Parity’s Smart Contract library supporting multi-signature to handle critical financial assets caused a lock to the Parity wallet that resulted in the freezing of a $150M of Ethereum tokens when the contract was accidently exploited by an inexperience developer. The mishap could have been adverted if the code for the smart contract library was independently reviewed by other developers, but unfortunately it was not.
Employees, Consultants and Auditors. As more organizations adopt blockchain technology, consultants will be needed to model existing business processes into blockchain business logics and smart contracts. The auditing process may become more automated, and less a burden on the entity’s staff as auditors can deploy automation to the blockchain to extract information and analyze transactions in real-time. The adoption of the technology and their smart contracts may need to be certified to meet the requirements of regulatory bodies and ongoing audits/certifications. This demand requires new types of skill sets on the employees, auditors and the consultants, including having a deep understanding of inner working functions of specific block chain technologies (e.g., Ethereum, HyperLedger, etc.) and technical programming language for the smart contracts.
In Part 6, we will discuss the implications as they pertain to security.