Industry Interpretation: What kind of data is the blockchain more suitable for processing?

Author: Steven Pu

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foreword

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What counts as "suitable"?

In terms of data processing, there are many excellent indicators that can be used for reference, but as the first application of the blockchain - Bitcoin, has shown some interesting characteristics in these major data characteristics, here we will specifically list them A few points related to the topic:

• Accuracysource

• sourceIt is the origin and history of a piece of data. It can tell people where the data came from, what or who generated it, and what processing has been done since it was generated.

• unchangeableIt refers to the immutability of data, which means that once the data is generated, it cannot be tampered with.

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In the blockchain world, what types of data are there now?

In the blockchain world, we divide data into three categories:

• live on the chainbecome:This type of data is generated entirely within a specific blockchain network, so every node connected to the blockchain network can view the data and can also verify it. And if the network does not require permission, then anyone in the world can view and verify, such as cryptocurrency account balances, transfers, and the persistent state of smart contracts.

• Generated off-chain, most visible:This type of data comes from off-chain, and most people can see it, and generally it is publicly visible. For example, the weather, the result of a general election in a certain country, the stock price of a listed company, and so on.

• Generated off-chain, a few are visible:This kind of data also comes from off-chain, but it is either private data or only a few people can see it, such as your mobile phone number, car accident insurance claim details, data from a temperature sensor on an air compressor in a factory, etc.

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How does the blockchain handle various types of data?

Let's take a look at how the blockchain implements the major attributes of various types of data.

accuracy

• accuracysource

• sourceEnsuring by cryptographic signature

• unchangeableThis is achieved by replicating the complete state across nodes

Given that such data only exists in cryptocurrencies or other purely on-chain assets, guarantees of these characteristics of the data are limited, if any. But it is precisely because of the excellent performance of blockchain technology in this respect that it has become a "sweet pastry". Once other types of data are involved, these are relatively weak.

accuracy

• accuracyNot by a consensus algorithm, but by an elaborate game that incentivizes everyone to report liars to each other. For example, if Company X's highest stock price on the New York Stock Exchange has reached US$1, but the data I gave said it was US$1.2, then others can come to find fault and report my data. If a certain number of people report, I will lose part of the deposit (as a fine) to those who report (as a reward). this game inChainlinkSuch oracles are eitherTruebitsource

• sourceThis can only be ensured if the data producer holds a well-known public key. Oftentimes, there are people who want data from multiple sources so that they can game and witness which version of the truth is true.

• unchangeableThe aspect is similar to the processing of data on the chain, which is ensured by replicating the complete state.

accuracy

• accuracysource

• sourceIt is also only possible if some data producer holds a well-known public key, such as a sensor gateway.

• cannot be changedchangeThe data processing method on the chain is still continued, and it is realized by copying the complete state.

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combined with the internet of things

Almost all IoT-generated data falls into the third category, generated off-chain, and most of it is not publicly visible. That is to say, when dealing with IoT data, the blockchain can only guarantee its source and immutability, but on the other hand, it also shows that the market that the blockchain faces within its capabilities is quite broad. What we have to do is to develop and create various solutions to solve these problems on a large scale.

As the world becomes increasingly connected and automated through devices, we increasingly rely on the data generated by our devices as the basis for doing business. Sensors will provide all kinds of data, including usage patterns, quality of service, contract fulfillment, and more in the future. If there is no basic trust in equipment data, various business models will face various frictions and even be difficult to maintain, resulting in a substantial increase in operating costs and opportunity costs.

Blockchains give devices identities through cryptographic keys, help them provide data provenance, ensure data is immutable, and help devices verify that data has not been tampered with since it was generated. These characteristics lay the foundation of trust to drive creative business models.