“Blockchain” this, “blockchain” that. It’s a concept so momentous that it has even managed to shed its article. Proponents don’t speak of “the” blockchain or “a” blockchain. Instead, they reverently preach Blockchain: the solution to all enterprise needs (in particular, supply chain management). The brute, unassailable, self-evident concept has disrupted not only the rules of commerce but those of grammar. Question it and you’ll be exposed as a hopeless rube and a Luddite. Use it sincerely and you’ll be lumped in with the hype men and techno-utopians.

It’s impossible to avoid. Ads for IBM blare promises about revolutionizing tomato-tracking with blockchain. The U.K. finance minister recently asserted that blockchain may be a solution to Britain’s Brexit woes. At a recent conference held by Ripple, former U.S. President Bill Clinton said of blockchain, “the permutations and possibilities are staggeringly great.”

The word “blockchain” is satire-resistant. It’s such an obvious target that it’s no longer funny, and blockchain proponents are almost totally immune to ridicule. Nothing can check their indefatigable enthusiasm: There are press releases to be written, conferences to attend, and corporate R&D dollars to waste. Blockchain represents both the glittering future and the dismal present — almost all touted use cases are obvious nonsense.

The ICO mania of 2015–2017 that is now unwinding was premised, in large part, on the ability of blockchains to disrupt markets. In simpler terms, the idea was to Uber-ize every conceivable service and replace the intermediary with a magic database detailing who is doing favors for whom. Some of those pitches invoked trillion-dollar (yes, trillion with a T) total addressable markets.

Today’s soulless corporate blockchains and opportunistic, ICO-based blockchains have both endured scorn and ridicule. Yet the term persists, an empty semantic husk, kept alive by a thousand press releases, conveying as little meaning as possible. The term is used to refer simultaneously to projects, structures, and databases that have virtually nothing in common. As a consequence, attempts to define it are usually hopeless failures.

Here, I’ll try to explain the origin of “blockchain” and what we should do about it.

Where did “blockchain” come from, anyway?

Most histories of the term “blockchain” will mention that Satoshi Nakamoto created the first one. Except, that’s not accurate. Nakamoto never referred to bitcoin as a blockchain, calling it instead a “chain of hash-based proof-of-work,” a “chain of blocks,” and even a “timechain” (in an early comment within the original codebase). Imagine: We were so close to living in a world of “enterprise timechains” and “strawberries-on-the-timechain.”

Nakamoto was careful to emphasize that the chain was a set of proofs of work, each linked to the hash of its parent. (See for yourself!) The proof of work is absolutely essential to the concept. It is proof that anyone proposing a block has, well, worked for it. It enables the system to achieve Sybil resistance and to come to convergence (the longest chain — under the same ruleset — is the correct history, by definition) without any single arbitrator.

This data structure, with its inclusion of hashes of previous blocks, ensures that the past is preserved and the database is consistent. Replicating the database to every node in the network ensures that it can’t be shut down or altered unilaterally.

The reason “blockchain” is such seductive marketing… is the subtle implication that the data structure alone — absent proof of work or open validation — could convey the same benefits as bitcoin.

The entire system was built with an adversarial context in mind. Hostile governments had shut down all previous attempts at e-cash. They certainly would have shut down bitcoin if they could have. Thus, it was built for a purpose. To clarify: Nakamoto may have created the first popular, widely used linked-list structure — not the first of its kind — but the innovation was in merging that linked list with the computational hardness of adding new entries to the chain.

Does this sound like what any of the enterprise blockchains are trying to accomplish? Of course not. There is no shadowy organization dedicated to forging strawberry provenance records that might seek to interfere with IBM’s supply-chain blockchain. Thus, IBM’s blockchain does not need to be built to the same standard as bitcoin. The kinds of records preserved on enterprise blockchains do not need the kinds of protections that Nakamoto consensus ensures. They do not need or want open validator sets. Some trusted organization could just vouch for the database, or a consortium of interested parties could share records between them.

For more on the failures of private blockchains, I recommend this post from a reformed private blockchain consultant.

Why is the term so popular?

From what I can tell, people witnessed the success of bitcoin — which relies in part on an ersatz, expensive database — and wanted to generalize it to other uses. Even early bitcoin developer Hal Finney mused about disaggregating the data structure from the monetary system.

It also might be possible to refactor and restructure Bitcoin to separate out the key new idea, a decentralized, global, irreversible transaction database. Such a functionality might be useful for other purposes. Once it exists, using it to record monetary transfers would be a sort of side effet and might be harder to shut down. — Hal Finney in his January 24, 2009 Cryptography Mailing list

However, to the best of our knowledge, these systems only really work if the reward is internal — that is, if well-behaved validation is rewarded with the “native” token. If bitcoin miners were paid in U.S. dollars, they wouldn’t necessarily have any incentive to mine on top of the longest chain. The value of their hardware depends on the continuing existence and flourishing of the chain they’re building on top of. But private, permissioned, or enterprise blockchains do not have native currencies nor do they issue monetary units to validators, as the validator set is permissioned and thus has Sybil resistance and good behavior built in by design.

“Blockchain” is such seductive marketing, I believe, because the data structure alone — absent proof of work or open validation — could convey the same benefits as bitcoin without the token or costly anti-Sybil protection.

Patri Friedman put it well in a tweet:

Bitcoin is a monolith that colors the way investors and corporate R&D offices think about similar projects. Would Ripple have been as popular without bitcoin having been invented? What about Corda and Hyperledger? Litecoin? ICOs generally? Ethereum? It is hard to even imagine the alternate history, but I suspect the answer is no in all cases. Bitcoin is a juggernaut that carried with it a set of assumptions that were ported over to projects with a passing resemblance, rightly or wrongly.

Consequently, I would be suspicious of anyone who routinely uses “blockchain,” especially if they are trying to sell you something. Overuse of the term, especially in a general context and without qualifiers, most likely reveals one of three things about a person:

They are well-meaning but forced by convention to use subpar linguistic tools.

They are a bit muddled and trying to mask their ignorance with technobabble.

They are trying to posture as an expert in an industry which realistically has no experts.

I firmly believe the misuse of the term traces back to a desire to create (or market) systems that are intended to be bitcoin-like without the unsavory bits. That, however, misses the point: Bitcoin’s blockchain is just a part of it, not its essence.

Bitcoin and its blockchain

Referring to bitcoin as a blockchain is like referring to a car as a transmission. A transmission is a key element of the system, but it doesn’t represent it in totality. Blockchain is a metonymy — a part used to refer to the whole. There’s nothing wrong with that, intrinsically. The conceptual tangle comes when one decides that the blockchain is bitcoin’s essence and is owed credit for its success.

Bitcoin relies on a linked list, indeed. But it also relies on a peer-to-peer (P2P) network, an open source and leaderless project, a replicated database, a self-supporting incentive system, a heaviest chain consensus rule, and a proof-of-work scheme that gives block proposals unforgeable costliness. (Unforgeable costliness in simple terms: It’s impossible to fake a block submission; you would have to have allocated a good chunk of computing power, or energy, to the task. It is therefore hard to create new bitcoins but easy for anyone to verify that you worked hard at it.)

These inputs combine nicely to create a system that has certain qualities: provable scarcity, an ability to be audited, tamper-resistance, fair-ish distribution, almost perfect supply inelasticity (rising the price does not — cannot — cause production to accelerate), free participation (no one can stop you from broadcasting a bitcoin transaction), and so on. These qualities make bitcoin a unique relative to, say, Paypal or Visa. They are its differentiators. Without the P2P nature, the open-source collaboration, the voluntarist developers, and, crucially, the proof of work block proposal method, bitcoin would not exist. The below chart, created by David Puell based on ideas from Pierre Rochard, is an attempt to capture bitcoin’s essence. Notice that the chain of blocks, while necessary to make the system work, is not sufficient on its own. Bitcoin relies on more.