The Blockchain of Blockchains

Introduction

It seems that more and more things are being placed on the blockchain. Altcoins, smart property, and even decentralized organizations are now emerging, and the inclusion of the Internet Things will add billions of devices from around the world.

Eventually, everything will be on the blockchain, or at least everything in the decentralized world. Stored in readable form, no user would be able to handle that much data; with the advent of Factom, however, we can hash that data down to a manageable size and still use it to authenticate records.

Now, you might be wondering: will there be blockchains on blockchains? Blocks are made of data like everything else, so inserting one into a transaction is trivial. The real question is, what could we do with that, and what’s the best way to go about it?

Preserving the Past

The utility of the blockchain basically boils down to record keeping. The Bitcoin blockchain remembers who has how many bitcoins, or who owns what smart property if things like colored coins are enabled. What we choose to record is arbitrary, technically speaking.

Putting a blockchain on a blockchain is almost like painting a painting, or taking a photo of a photograph. It might sound useless, but the purpose is preservation: paintings and photographs don’t last forever, and making a copy allows its likeness to live on. This applies to blockchains, as well.

There are now thousands of cryptocurrencies, yet only so much mining power to go around. Both proof-of-work and proof-of-stake coins become vulnerable to a 51% attack if their market caps fall too low, in which case everything recorded on their blockchains could be lost. Inserting the hash of those blockchains into a stronger blockchain preserves our ability to verify them.

Even with sufficient network strength, glitches and bugs can arise. A line of code with unforeseen consequences or botched update could corrupt the blockchain, forcing us to rewind and start over from the last valid block. If you haven’t hashed that block to a stable chain, you’ll be forced to trust whomever’s job it was to keep it safe somewhere.

Securing the Network

As the blockchain has grown in size, more casual users with less technical resources have caused the number of full nodes on the Bitcoin network to shrink. Most wallets no longer store a full copy of the blockchain; instead, they access a copy stored elsewhere via the Internet. There are multiple ways to do this, but all involve security risks that can be lessened by hashing the blockchain.

The wallet set-up most commonly used now involves complete reliance on a third party. Browser wallets and apps like Blockchain.info’s conduct all wallet operations on their server, which can be decrypted and accessed with your password. You don’t need to know anything about your private key, but you’re forced to trust the company.

Blockchain.info has proven themselves willing to refund coins lost due to server hacking, but they could potentially save money by reducing their app’s reliance on their central server. If the app connected to the Factom network, they could continuously hash the Bitcoin blockchain to much smaller blockchains of their own. You would instantly know if an infiltrator had replaced Blockchain’s blockchain with something fraudulent.

Opportunities abound for third-party wallet developers, but what’s more interesting is how this could affect the core Bitcoin network, itself. Bitcoin wallet servers like Blockchain.info’s are typically full nodes; they can hold the full blockchain, relay network data, and mine for blocks in addition to standard wallet operations.

Most nodes on the network are now “lightweight” or “thin” nodes, however, like with Electrum or Multibit. Instead of storing a full copy of the blockchain, they only store the transactions that affect the user’s Bitcoin balance, and connect to full nodes on the network to filter and receive the proper block data. Under ideal conditions, this will work just the same.

Conditions are not always ideal, however, and cryptocurrency experts are worried that this trend is weakening the Bitcoin network. If an attacker were able to get enough full nodes on the network, he could launch a form of Sybil attack by surrounding and/or isolating lightweight ones. He could then block your transactions from reaching the miners, prevent you from receiving transactions from others, or even push false block data.

If the lightweight node were connected to the Factom network, it could compare the hash value of the full node’s blockchain to the real one, and reject it if it doesn’t equate. The Factom network could get the real value by polling the full nodes, and trusting either a plurality or some reputable actor. This would not be foolproof, but would provide an additional layer of protection.

The Blockchain of Blockchains

We could theoretically secure any blockchain this way, no matter what it’s used for. Inevitably, every blockchain will be on the blockchain, but this raises a conundrum: if every blockchain is on the blockchain, what will that blockchain be on?

There must eventually be a final layer to this authentication system, an ultimate authority on data validity. For now, this is the Bitcoin network’s blockchain, being the one with the most nodes and highest mining difficulty rate. It’s already used by the Omni Layer, Counterparty, and soon Factom, as well.

The whole point of hashing to a blockchain is to benefit from its greater security, so we have to use the most secure one available. Bitcoin’s dominance might not last forever, though, due to scalability issues with the protocol. Its blockchain is too large, transaction speeds are too slow, and the fees are too high to be used for anything except currency.

The ultimate blockchain will be one designed entirely for this purpose, a relatively small file intended only to store hash values. Its low resource consumption will make it easy for any device to join the network, and conceivably, almost every device will. It will become the universal judge of truth, capable of resolving any dispute–the blockchain of blockchains.