Proof of work consensus protocol used in modern cryptocurrencies like Bitcoin and Ethereum consumes a lot of energy and requires participants to use their CPUs for mining instead of other useful work. But exactly this cost is why it is works to prevent Sybil attacks. One cannot participate in the selection of the next block without paying this cost, which makes the issue of puppet participants trying to influence block selection irrelevant, because they also have to do the work, and pay the cost.
In recent Intel CPUs a new set of instructions is available, SGX, which allows one to run code inside a special environment where even operating system cannot change its execution. In the paper we published (arXiv, Cryptology ePrint Archive) we explore consensus protocol designs using the Intel SGX technology, with the goal of making blockchain participation energy efficient, with low CPU usage, and to democratize mining so that participants can participate again with their general purpose computers (with Intel CPUs) instead of only with specialized ASICs.
Bitcoin, Ethereum, and blockchain in particular are often claimed as revolutionary as the Internet itself. They will decentralize the Internet again, change how we make apps, empower end-users, and remove intermediaries. But are they really so revolutionary? Even ignoring the technical limitations of scaling and power consumption, we can hardly imagine such wide influence on our society as we observed for Internet. Internet connected people globally, provided means of immediate communication and access to knowledge and information. It changed many aspects of our lives and how we as a species operate. But blockchain, does it really have this potential?
Together with popularization of blockchain we can notice revived calls for decentralization of national and international governments, their reboots, or even their dissolution. But such calls lack fundamental understanding of how our governments operate, their role in our global society, and what all in fact regulate and control our existence beyond just governments.
Internet of things (IoT) has some big issues. Interoperability is one. And potential vendor lock-in and data silos are another.
But I do not buy that blockchain is the solution to those problems.
Re-decentralizing web and Internet-based technologies is gaining momentum. Just recently there was a Decentralized Web Summit where many projects were represented. But while people contemplate importance of decentralized technologies and are building alternatives, to me it seems we are forgetting one important lecture from the past: we should be building layered technological stacks and not vertically integrated ones. This is how you can encourage diverse implementations (critical for stability of decentralized technologies) and experimentation at each layer without having to reimplement a whole stack. I can understand why this is happening. It is already hard enough to develop decentralized technologies. So it feels easier to control the stack at least vertically. But we should not be building decentralized technologies because it is easy. But because it is hard.
I really like how Bitcoin brought up so much new energy into the cryptocurrencies world. It combined great ideas of P2P networks, proof of work, append-only databases, and others together into a working and popular system and spawn new ideas and new innovation. It started a new cycle of decentralization of technologies.
But as a currency itself, it lacks innovation. It is still an one-dimensional numeric-like value used to valuate everything humans do in the same traditional way. Bitcoin is often compared to the Internet, how it brings a new era. But if we are comparing it with the Internet, then it is the Internet at the stage where people would take physical books, scan them as images, and make them available online. No interactivity, no multimedia, no searching or social capabilities, no additional value besides digitizing the content in the most simple way. Bitcoin does the same. It just digitizes existing concept of money. It does this in an interesting and innovative way, but it is still just a digital image of money.