Blockchain: Riding the Roller Coaster Towards a Standard

Abstract

Nakamoto proposed a new solution to transact value via the internet. The internet prior to the advent of bitcoin was primarily a communications environment for non-face-to-face interaction. The Internet developed into a global publishing environment. To carry out a commercial transaction it was necessary to involve some third party who would validate the financial aspects of the transaction. The heart of the bitcoin solution was the blockchain construct, which was designed to dis-intermediate the involvement of the third-party validator, and thus reduce a fiction costs associated with the transaction.

The blockchain as originally proposed, with its proof of work consensus protocol, has been shown to have some uncommercial aspects to which researchers globally are attempting to solve. Further, since the blockchain is a distributed environment, commercial compliance requirements can impact the architecture of a blockchain. The architecture of a blockchain must meet the regulatory compliance which could be industry specific such as financial and health regulatory obligations or general such as privacy compliance as in General Data Protection Rules (GDPR).

An important issue with the development of new technology that has international reach is that such technology should not become siloed; that is technically isolated. This is where standards especially international standards can assist. Of course, standards by themselves will not necessarily obviate the impediments to interoperability, but if standard interfaces, data structures and standard communication structures can be developed or adopted, then the uptake of blockchain environment will be more likely to be achieved, which could financially benefit the global economy.

This paper will analyse some of the issues confronting the further development of blockchain technology and how standards development can assist.

Keywords: Blockchain, Blockchain Governance, Interoperability, Smart Contracts, Standards

JEL Classification: K22, K12, O3