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Solving Blockchain’s Privacy Problem

Author: Ian Allison / Source: Newsweek

This article was originally published on International Business Times. Read the original article.

Richard Gendal Brown, the chief technology officer at R3, believes IBM should adopt Corda, the shared ledger platform his engineering team has built for its 80-plus member banks.

Brown, who was formerly executive architect for banking and financial markets at IBM and worked there for over 15 years before joining R3, does not make this statement lightly; it follows a close examination of the latest version of Hyperledger Fabric, the open source consortium platform which is IBM’s preferred blockchain.

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Asked directly about IBM’s position in the blockchain space, Brown said: “I think they are actually exercising their strategy pretty well. From a strategic perspective, I think they are doing all the right things. It may well not succeed but it’s hard to fault them on that.

“I just don’t think the technology is the right architecture. Fabric’s design works for some things but actually it’s fundamentally flawed in other areas. What they should do of course is adopt Corda; and we will happily work with them on that.”

First generation enterprise blockchains have taken the underlying design of Bitcoin and Ethereum and been met with the thorny problem of data privacy. Brown says there are basically two distinct ways to solve this.

One is the Corda approach, which is doing data distribution on a case by case basis—individual deal, trade, balance, loan agreement etc—sent only to those who need to receive it. “You send the data to them and just that amount of history that’s needed for them to verify to their own satisfaction that everything is correct. It’s atomic, precise, narrow; you just send those pieces.”

The other approach is to layer on some additional privacy. Fabric arrives at private data sharing between two or more participants via its privacy channels, a method which Hyperledger says still allows “the veracity and the integrity benefits of writing things to a chain”.

In Brown’s analysis, adding additional privacy channels, might work for a platform such as Slack, but it isn’t an elegant solution for industrial grade financial requirements.

He said: “Rather than having one blockchain where everyone sees everything, there are lots of different ones where each person can see everything in the channel, but nobody else can.

“On its face, it seems quite sensible and could work, and for some scenarios it absolutely can. But only if you know that the data you are collaborating on will only ever be between that fixed set.

“The question is what happens if there is something that we have collaborated on—we have done some deal—and I want to step out of that deal and bring someone else in. How do you do that?

“I can’t just let that person into that channel. Sure they would see our deal and the history of it, but they would see everything else as well. All the other stuff we worked on, all our other private deals would…

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