Is an Editable Blockchain the Future of Finance?
Designed to make the technology more attractive to large banks, the change doesn’t seem to be welcomed by purists—but they may have to tolerate it.
Blockchain, the technology that underlies the cryptocurrency Bitcoin, has been celebrated as a way to change the way transactions of all kinds are made. But a suggestion to make an editable version of the technology is now dividing opinion.
The consultancy firm Accenture is patenting a system that would allow an administrator to make changes to information stored in a blockchain. In an interview with the Financial Times (paywall), Accenture’s global head of financial services, Richard Lumb, said that the development was about “adapting the blockchain to the corporate world” in order to “make it pragmatic and useful for the financial services sector.”
Accenture aims to create a so-called permissioned blockchain—an invitation-only implementation of the technology, and the one currently favored by banks. That’s in contrast to permissionless blockchains, such as Bitcoin, which rely on the fact that they can’t be edited as a means of providing an immutable record of transactions. Accenture insists that the feature would be used only in "extraordinary circumstances," so that troublesome errors could be undone.
Blockchain purists, however, seem unimpressed by the idea. Speaking to Reuters, Gary Nuttall of the consultancy Dislytics, said, “An editable blockchain is just a database. The whole thing about blockchain is that it’s immutable, so this just defeats the object.”
It seems unlikely, though, that records of edits would be cast aside. Financial institutions are legally bound to keep complete records of transactions, so even if it were only held privately for the sake of regulatory requirements, the information would probably persist in one form or other.
It’s not the first time that corporate organizations have decided to put their own spin on the idea of a blockchain. While many banks seem to find the technical features of Bitcoin alluring, for example, they’re also developing ways to work around many of its features—using private blockchains to make the system faster and better suited to handling different currencies, for one.
The news is perhaps a welcome reminder that technologies can, and should, be allowed to evolve. Tweaks to the fundamental nature of blockchain may rankle its earliest adopters—but they could also be be what is required for it to graduate from the preserve of nerds to a system used by the world’s banks.
(Read more: Financial Times, Reuters, “Banks Embrace Bitcoin’s Heart but Not Its Soul,” “Why Bitcoin Could Be Much More Than a Currency”)