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Where lies the line in the sand between Technological risks or technological idiocy?
Would you accept to rely on a “perfect system” that has no bypasses, safety overrides?
Such systems exist and people, corporations are flocking to use them.
We can interpret Blockchain as a “append only” distributed database with no central server.
In addition a blockchain database has no ability to change or modify a record once it is added.
That characteristic is called immutability.
Immmutability renders the database “safe” as no one can change it, but, like usual, safety systems can backfire. In this case we have to decide if we are facing Technological risks or technological idiocy.
Bitcoin, Ethereum and other crypto-currencies are based on blockchain and tout its safety when dealing with payments without a bank in the middle.
Other applications are burgeoning left and right. Soon they will be ubiquitous, including for example:
the mining world and related transportation and shipping activities,
smart contracts including those in the insurance industry.
A database that cannot be edited and software that cannot be turned off present risks that no one should ignore. The hazard can be technological, man-made, voluntary or accidental.
In 2016, an error in the coding of a blockchain based investment fund allowed a user to move large amounts to his advantage. It was impossible to stop the hack because immutability.
However, in that particular case all participants agreed to “hack-back” the system. That operation bears the name of “hard fork” and effectively reverses time and returns the blockchain to the prior state, before the hack.
This was a controversial decision which resulted in the creation of two rival Ethereum blockchains—Ethereum and Ethereum classic. That created already some “unwanted” consequences for some users that became holders in both, the “hard forked” and the truly “immutable” blockchains.
The interaction of a “hard forked” blockchain with other “immutable” blockchains could create havoc, for example, multiple executions of the same contract and who knows what else in the future.
Again, we have probabilities of occurrence and cost of consequences (losses). Thus we can evaluate risks related to these events, even if the technology is new and the risks “emerging”.
The important thing is to work orderly:
Thus it is possible to engage in risk management using a well balanced approach.
The fact the technology is new does not mean starting projects without the best possible understanding of risks.
Technological risks or technological idiocy? There is definitely a line in the sand between them.