In this insight, we look at what blockchain identifiers are, their roles, users, and relevance to businesses, plus how they could work with the domain name system.
What Are Blockchain Identifiers?
Blockchain, the technology behind cryptocurrencies, is the decentralised, secure, incorruptible ledger system that enables transparent and tamper-proof transactions. Its value is in providing enhanced security, efficiency, and trust in digital operations
Blockchain identifiers are the unique codes used within blockchain technology to securely identify and authenticate transactions, assets, or participants.
What Do They Look Like?
Since blockchain identifiers are generated using cryptographic algorithms and each is designed to be unique, they look like long strings of code. For example:
Bitcoin addresses, which serve as blockchain identifiers for wallet locations look like ‘1BoatSLRHtKNngkdXEeobR76b53LETtpyT’.
Ethereum addresses which also act as blockchain identifiers, look like ‘0x323b5d4c32345ced77393b3530b1eed0f346429d’.
Who Uses Them?
Blockchain identifiers are employed by a wide range of users, including cryptocurrency holders (as shown in the examples above), businesses leveraging blockchain for supply chain management, and developers creating decentralised applications (dApps). These identifiers are essential for anyone involved in the blockchain ecosystem because they ensure the integrity and traceability of transactions.
Blockchain Identifiers And Domains?
Domain names (part of the DNS system) are, of course, designed to be human-readable addresses that map to the strings of IP address numbers underneath, thereby allowing users to easily find websites without needing to memorise complex strings of numbers. As shown in the examples above, however, blockchain identifiers are long stings of code and not designed to be human-readable, but both domain names and blockchain identifiers broadly serve as tools to navigate and secure the digital world (although they operate in different layers for different purposes).
Since they have this similar purpose, the convergence of blockchain identifiers and domain names is an idea that’s beginning to take shape, offering enhanced security and user control over online identities.
DNS
The Domain Name System (DNS) is a foundational technology that has shaped how we interact with the internet, making it accessible and navigable through human-readable domain names. This system is crucial for the digital identities of entities worldwide, enabling a seamless connection across diverse devices and platforms, from computers and smartphones to the Internet of Things (IoT). The universality and uniqueness provided by DNS are vital for keeping the internet’s vast network of devices connected and functioning.
An Evolution With Blockchain?
However, the emergence of blockchain technology introduces a potential evolution for digital identification and transactions. Blockchain, for example, offers a secure, decentralised ledger system, enhancing transparency, integrity, and resistance to tampering. Its application has extended beyond cryptocurrencies to address some of the limitations of traditional DNS, particularly in terms of security and memorability of identifiers.
Examples
Startups like Ethereum Name Services (ENS) and Unstoppable Domains, for example, are bridging the gap between blockchain’s secure, decentralised nature and the user-friendly accessibility of DNS. They create “blockchain identifiers,” effectively linking memorable, human-readable names with the complex, cryptographic addresses of blockchain wallets. This integration retains the DNS’s ease of use while significantly improving security, reducing the risk of fraud, and enhancing user control over digital identities.
Could Be More Secure
Replacing the centralised control of DNS with blockchain’s decentralised model could mitigate vulnerabilities in the current system, e.g. DNS spoofing and attacks on central registries. Blockchain-based domain names could also resist censorship and provide a more secure, user-owned online identity that is less susceptible to fraud and downtime.
Also, using blockchain could remove the need for management by entities like ICANN and registrars, and remove the need for renewal fees, expirations, or deletions.
Challenges
Despite blockchain technology’s benefits, it’s important to note that blockchain identifiers have many challenges and potential shortcomings in comparison with the DNS system, including:
– Scalability issues, i.e. blockchain networks can struggle with high transaction volumes, leading to slower confirmation times and increased costs.
– Integrating blockchain identifiers with existing web infrastructure could be very complex, requiring significant technical effort and adaptation of current systems.
– The current user experience of managing blockchain identifiers can be complex and unfriendly, especially for non-technical users.
– Despite the security of blockchain, high-profile hacks and thefts in the cryptocurrency space have led to concerns over the security of blockchain-based systems.
– The association of blockchain with volatile cryptocurrencies may have eroded confidence in blockchain identifiers as a stable and reliable system for domain management.
– The lack of widespread understanding of blockchain technology among the public could hinder trust and adoption.
– Blockchain-based domain names could conflict with existing DNS names, leading to confusion and potential security risks.
– The decentralised nature of blockchain could make it challenging to resolve disputes over name ownership or to enforce naming conventions, increasing the risk of name collisions.
– Without a centralised authority to enforce trademark rights, blockchain identifiers could lead to increased incidents of squatting and trademark infringement.
Not Replacing DNS, But Bridging A Gap
Therefore, some commentators have pointed out that instead of replacing DNS, blockchain technology and crypto wallets can be supported by DNS, e.g. users registering .eth domain names with ENS, while .art DNS domains provide the platform to integrate crypto technology. Blockchain technology could, therefore, be used by domain registries and registrars to bridge a gap, thereby improving the security and integration of the Internet.
What Does This Mean For Your Businesses?
UK businesses are familiar with domain names and perhaps, to extent to the fact that there’s an underlying DNS system to the Internet. Blockchain technology, however, is still relatively new to many, and its image may have been tarnished by association with volatile cryptocurrencies. That said, businesses leveraging blockchain for supply chain management, and developers creating decentralised applications (dApps), as well as any businesses who’ve dabbled in/are involved with cryptocurrency may already be familiar with blockchain identifiers. Broadly speaking, blockchain identifiers offer the benefits of enhanced security, decentralisation, and transparency in managing digital identities and transactions.
Some think they promise a more secure and user-controlled alternative to traditional DNS, potentially mitigating vulnerabilities like spoofing and centralised control. However, currently, due to their challenges, they are more of a bridge to gaps in the DNS system than a viable replacement. For example, the challenges to blockchain identifiers replacing the current DNS/domain system include problems with technical scalability, integration complexities, and the need for broader user understanding and confidence. Also, the decentralised nature of blockchain could lead to name collisions and trademark issues.
That said, although blockchain technology is still evolving and has its challenges, it does have important benefits that have meant it has been adopted in many different industries and fields, and blockchain identifiers have proved to be vital to the integrity and traceability of transactions.