Blockchain is a relatively new technology and currently there is significant research and interest in the refinement and development of specific aspects how it works.  For example, the three areas below summarise some of the areas that are currently being researched.

  1. Proof of stake versus proof of work

  2. Using the blockchain to contain confidential information

  3. Blockchain ‘bloating’ and data storage

Proof of stake versus proof of work

Virtual currencies like Bitcoin use the concept of ‘proof of work’ to maintain the distributed ledger across the blockchain and provide rewards to miners.  However, different means of storing value in the blockchain are being researched.  At present, an alternative store of value known as ‘proof of stake’ is being developed, this is based on the perception that proof of work algorithms can be subject to certain limitations, such as inflation (consensus algorithms and mining require constant expenditure of resources to work normally, something that bitcoin addresses by paying for this cost in the pre-agreed creation of coins and therefore driving inflation).  Additionally, mining does require a considerable amount of computational power to conduct at scale, which therefore increases both energy usage but also drives centralisation of mining, as to consolidate costs, mining initiatives pool efforts.

Proof of stake has been developed to create an alternative to mining.  It works on a different principle based on validation, rather than rewarding work done.  For proof of stake, ‘validators’ are given a stake in the network, for example an alternative system to bitcoin is Ethereum, in which ‘ether’ is used a unit of value and in which validators are issued units to which they ‘bond’.  ‘Bonding’ a stake means that someone deposits some money into the network and essentially use it as collateral to vouch for a block.  Rather than proof of work, where chain validity is dictated by the proof of the work that’s gone into generating a chain, proof of stake implies trust based on the chains with the highest collateral.  As a process, proof of stake is thought to be greener as it is less energy intensive as coins or tokens need to be locked up to process transactions.  However, there are currently security considerations around the approach as, if small groups of validators own the majority of the coins then it can be more vulnerable to double spend attacks.     

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Using blockchain technology to contain confidential information

Having seen the application of blockchain for virtual currencies, research is currently being conducted to how this principle be applied in other contexts.  For example, in a paper commissioned by MIT, a system has been developed that uses the distributed hash table from blockchain to store shared secret information. The paper, entitled ‘Enigma: Decentralized Computation Platform with Guaranteed Privacy details a system that can enable the decentralized organisation of classified information without the need to be regulated and controlled by a central authority, which theoretically could both improve accountability and make secure systems more resilient.  

Enigma uses blockchain technology to share data between different nodes; preventing a single party from having access to data in its entirety and instead, sharing it across all members of the network, who all have a small, seemingly random pieces of the entire dataset.  Doing so, means that Enigma is able to overcomes some of the issues of bloating and the scalability of data storage that can be seen in bitcoin.  For example, bitcoin blockchains, often ‘bloat’ and store large volumes of data relating to computations and transaction histories that are continually maintained in every node in the network.  Theoretically, this means that the increased scalability and efficiency of enigma enables other computations to be undertaken on the data it contains, allowing the data stored to be subjected to deeper levels of analysis and, in theory apply an attribute based access control (ABACS) style level of control that allows context specific access policies to be applied to the data.  

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Blockchain ‘bloating’ and data storage

As well as researching alternatives and new applications for blockchain, a large level of research is also being conducted into making blockchain more efficient, and address issues such as ‘bloating’.  Bloating occurs as more transactions are made which means the blockchain has more data to record. Eventually, if the blockchain grows too large it can become difficult to share or store. To prevent this in bitcoin, blocks are presently limited in size and the maximum number of transactions per second are limited.  At present, such bloating is occurring at a slower pace than the associated data storage and communication technologies required to store and transmit blockchain data.  

At the moment, it's assumed that although bloating and inflation will increase the average size of blockchains, there will continue to be the associated infrastructure to accommodate such growth, although it will continue to represent a compelling research requirement to increase the storage efficiency in the blockchain, possibly driving the development of alternative value stores such as proof of stake, which would reduce the impact of bloating.  Additionally, research into alternative ways of distributing and storing data around the blockchain network will enable data to be encrypted and accessed with different applications than just as a cryptocurrency.