Blockchain Fallacy

There is a theory that property ownership can be secured by immutable claim-keeping.

Given that a claim is not itself the property, control of the property rests with a custodian against whom the claim is made. A custodian has the ability to surrender or retain the property and is therefore a trusted agent. Abrogation of the claim by the custodian is mitigated by custodian signature alone, with enforcement of the claim left to its holder.

The theory asserts that immutable claim-keeping provides security of the claim against loss by its owner, as nobody else would have an interest in the loss. However, in order to prove ownership of the claim, a clam’s owner must produce proof of ownership to the custodian. This requires that the owner not lose the secret that proves this ownership. As such the security of the claim against loss is not mitigated at all, it merely changes form. The theory is therefore invalid.

Instead of storing a claim immutably, a shorter reference to a claim may be so stored. This can reduce the size of the claim and therefore the cost of its immutable storage. The claim may be in the form of a human or machine contract, and referenced as a one way hash. In either case the validation and execution of the contract is required for property transfer by the custodian. Therefore a referenced contract claim compounds loss risk with additional data, the contract.

As shown in Risk Sharing Principle, people are always the basis of security. People may act collectively to protect the immutability of a money, and therefore any claim data associated with control of the money. However, a custodian is a single trusted agent. Immutable claims do not in any way mitigate direct attacks against, or by, a custodian. Where the custodian is the state or is subject to state control, the claim offers no security against the substitution of state authority in place of proven ownership of the claim.