A report commissioned by the Pentagon’s Defense Advanced Research Projects Agency (DARPA) has found that blockchain—the technology behind cryptocurrencies like bitcoin—is not as decentralized as commonly thought, while also being vulnerable to attacks.
“The challenge with using a blockchain is that one has to either (a) accept its immutability and trust that its programmers did not introduce a bug, or (b) permit upgradeable contracts or off-chain code that share the same trust issues as a centralized approach,” according to the report (pdf) published in June.
Every widely used blockchain has a “privileged set of entities” that have the ability to modify the blockchain’s semantics and potentially alter past transactions.
In order for a blockchain to be optimally distributed, there must be a “Sybil cost.” At present, there is no way to implement Sybil costs in a permissionless blockchain like bitcoin without using a centralized trusted third party (TTP). Unless Sybil costs are...
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