A middle way forward for Blockchain

Henrik Hjelte is the co-founder and CEO of ChromaWay, a company focused on the implementation of blockchain solutions.

The following is an exclusive contribution for the 2018 year of CoinDesk under consideration.

Here in Stockholm, we have entered the long winter months. In the coming weeks, the sun will not increase until 9:00 and will be set only four hours later. Perhaps it is a combination of our position and the temperate climate that makes the Swedes both innovative and practical.

We have a track record here on the marketing of technologies (Stockholm is second only to Silicon Valley when it comes to the number of "unicorns" that produces per capita). Companies such as Spotify and Skype have combined cutting-edge technology with a hands-on approach to meeting consumer and business needs.

This in mind, there is a Swedish concept called "Lagom", which roughly translates into "Not too little, Not too much." Right. "

Looking at the blockchain through this Swedish goal, I see a useful design logic on how this technology can evolve to address many of the well-documented limitations of existing platforms and open up new paths (currently difficult to predict) to solve the pressing business challenges and social.

The Internet ushered in a new era of activity made possible only through online technology. The leading companies in the world today, Google, Facebook and Amazon, would not be possible without Internet-based information exchange. The blockchain, some refer to it as Web 3.0, introduces a new level that enables Internet-based exchange of values.

But this leap forward is not a conversion exercise in which companies simply rewrite their code and pass on to the Internet to exchange values. It's more complicated than that, and success will require us to determine the best technology and business to facilitate adoption and scalability without compromising security and trust.

As we are about to cross 2019, I offer these lagom-inspired approaches to solve some of the thorniest problems facing greater adoption of blockchain.

1. Versus Form function

Dapps, applications that run on distributed blockchain data networks, have a number of problems right now.

User interfaces are rather rough and not easily navigable. Performance delays, no doubt due to the time it takes to validate transactions on the blockchain (a potential passenger waiting in the rain on a New York corner may have to wait at least 10 minutes before the transaction is started on a bitcoin-based ride sharing Dapp).

Furthermore, cryptographic keys must be managed by users who will probably consider it an unnecessary burden.

One impulse is to "wrap" the sender in slick user interfaces thereby hiding all the decentralized, unique and added value of blockchain. A better approach would be to introduce much improved design elements, but preserve the features that make the blockchain more powerful. For example, instead of a pure custody model (See: Coinbase) for key retention, use a multi-signature approach.

Instead of centralizing all client application operations (for example, the algorithm that generates unique CryptoKitties), it allows the application logic to work on the blockchain. These are just some of the many ideas to get a better design balance for the world.

2. Data provided and data held

When I log in to LinkedIn, I'm providing the data that the company (actually Microsoft) now owns in return for my use of the application. Dapps offer a radically different model of data ownership. The user himself checks the data access (using the cryptographic signature), not the developer at any time.

This presents some challenges and advantages for all parties. Developers have the complication of having to architect applications that use validated data from nodes managed by independent service providers.

Users will have to adapt to consider data as a resource they own and decide to "lend" to app developers. On the other hand, developers in and out can charge for the use of the application and users benefit by paying for value-added features and functions and not having their data sold to suppliers.

3. Zero-Sum versus Shared benefits

Anger in the app economy is the price of software as a service. Whether you're using a CRM tool like Salesforce or you're spending time on Amazon Web Services (AWS), it's generally a zero-sum game for users. Unless you own AWS (which have a separate set of costs) of AWS, the total economic benefit for use is transferred to the owner of the application.

Blockchain can moderate this imbalance.

Dapps use native tokens that allow users to purchase services and, if the service is popular, benefit from the increasing value of the token. In a public blockchain, tokens can be used to purchase a variety of services (for example, storing data, playing a game, etc.). Token holders will be able to purchase more services as the value of their purchased tokens goes up.

Tokens can also be fungible and can be used through dapps in exchange for other types of services.

4. Proprietary networks against Blockchain Open Source

Open source technology projects have made huge improvements by providing bug-free software, increasing technology performance, facilitating interoperability and reducing the total cost of ownership of technology development.

Leading companies may have Apache servers running on a Linux operating system and use databases that use PostgreSQL (which uses our relational blockchain platform, Postchain). At the same time, few companies have really thrived on 100% open source platforms. However, blockchain presents developers with a potentially cheaper, resilient and highly available platform that is more likely to be successful.

Blockchain is not a business software with a different name. The technical architecture, the data ownership model and the economy are fundamentally different.

Similarly to the emergence of the Internet economy, the valuable Internet transition will not be a straight line. The success will come for those who do not depend on a perfect blockchain ideal, but by those who are able to design the right series of trade-offs in systems that balance the needs of users, developers and service providers.

Have an opinion of 2018? CoinDesk is looking for proposals for our 2018 under consideration. News via e-mail [at] coindesk.com to learn how to be involved.

Wooden bridge through Shutterstock