Why We Need Modular Blockchains

Why We Need Modular Blockchains

By ZM Peterson • Feb 5, 2019

Obviously, the words "blockchain" and "cryptocurrency" are synonymous to almost everyone except those who work at highest levels of technology. Here at NWES, we believe that blockchain will find its place among established technologies, but facilitating the movement of speculative financial instruments and claims of decentralized parallel machine learning computation, albeit impressive, are not likely to be among the practical uses of blockchain. While it is true that the mousetrap has been reinvented thousands of times throughout human history, not all mousetraps will be adopted by the market.

What the blockchain world needs is an extensible, modular blockchain protocol that can be easily deployed among multiple parties. The main use case for this blockchain need not be in cryptocurrencies, or even in financial transactions at all. Rather, this technology should be used to facilitate two key activities that are critical in a number of areas: auditing and data integrity.

Take auditing as a first example. When cryptocurrency transactions are stored on a digital ledger, the cryptographic hash stored in each block is used to verify that all previous blocks are correct. As long as the blockchain in question is public, anyone can access the ledger and hash any block they like. When the hash of a given block matches the hash stored on the ledger, it proves that the current block and all previous blocks are valid.

Modular blockchains

So what does blockchain-based auditing look like? Any group of organizations that require mutual trust can use a shared blockchain to mediate that trust. The relevant data is shared across every member of the network, and each member has access to every other member’s information. In this way, anyone can audit anyone. Again, this need not be based on financial transactions: auditing can be performed with any kind of data. This requires a blockchain solution that can be adapted to storing and distributing any kind of data.

This concept of sharing hashes is critical to ensuring data integrity. Anyone can calculate anyone else’s hash, yielding proof that the data held on a blockchain was not altered. Again, this does not apply solely to financial transactions; any data can be hashed, and records relating to that data could be stored in a decentralized database, including the hashes themselves.

So far, the closest thing we have to a modular blockchain is the Ethereum blockchain. Their token standards, although not extensible, allow some level of customizability. The drawback to Ethereum is the use of gas to provide computation, plus the fact that they still use proof-of-work. This makes the Ethereum blockchain impractical for most use cases, but it makes it extremely easy for anyone to issue a token and scam prospective investors.

Businesses that are serious about incorporating blockchain into their business processes with the purpose of facilitating auditing and data integrity are not going to be worried about paying their electric bill. So why use the Ethereum blockchain? Businesses need a fully modular, extensible framework that can be customized to their specific needs, rather than waiting for Vitalik Buterin and his colleagues to invent another token standard.


NWES has developed a small-scale blockchain solution that is fully extensible and can be used to ensure data integrity and auditing in nearly any use case. Expect to see more from us in this area as the blockchain universe continues to mature. Contact us to learn more about our techonlogy research services.


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