Tal Kol

Orbs’ hybrid blockchain technology to impact enterprise systems

Sometimes private blockchains suit a company’s needs and sometimes public ones do. Orbs offers another alternative, founder Tal Kol said.

Mr. Kol has spent his entire career as a tech entrepreneur. In 2012 he co-founded the mobile commerce platform Appixia which was sold to Wix. He spent the next few years running engineering at Wix and then Kik Interactive before cofounding Orbs late in 2017.

“What we saw was traditional companies were trying to create dApps,” Mr. Kol said. “But as time progressed the problem with dApps was their infrastructure was immature. Ethereum was immature, slow.

“This wasn’t an infrastructure problem but a business one.”

Some of the issues are philosophical, Mr. Kol explained. The decentralized model for dApps cancels out standard for-profit business models. Then there are the structural ones common to a sector’s early days such as scaling problems, but those are starting to be solved. So are other issues through trial and error, leaving the challenge of providing public blockchains to the enterprise.

One big obstacle is simple bandwidth, Mr. Kol said. While in theory you could launch an Uber-style service on some blockchains, all it would take is for Crypto Kitties to launch on the same network and your service suddenly stinks.

Then there’s the problem of how some companies address bugs. What if the network votes to roll back the history to before the bug’s infiltration?

Tal Kol

“That may work for dApps, but for a traditional company like Uber, no,” Mr. Kol said.

The key is isolation, he said. Keep every app isolated from the others through their own virtual chains. That solves resource, scaling and governing issues. You share the same infrastructure and the power of validators from around the world.

“It’s a well-known concept,” Mr. Kol said. “We applied it to blockchain technology and it worked remarkably well. It had the security and decentralization of a network but provided an isolated experience.”

Orbs commits to a guaranteed transaction throughput, so if you pay for, say, 100 TPS you will always get that. You also control your governance, so if a bug appears in a different app you maintain your own batch and don’t need network approval to rectify any problems.

What are the best applications for Orbs in today’s marketplace? That’s an interesting question, Mr. Kol said. Does blockchain provide value to a company like Uber? That’s hard to say and Uber likely has no idea of where it fits in, he suggested. The value lies in helping to establish new trust levels with users.

Mr. Kol recently was in New York and took a popular ride sharing service to a meeting across town. The algorithm lied in its estimate of how long the ride would take and that made him late for the meeting. Was it intentional? Did they do that to keep him from using another service, cabs or the subway? If that company operated on blockchain technology you could audit it for yourself and learn the true answer.

Do the Facebooks of the world “take your data seriously”?

“Business will come to see the best way to reach this level of trust is to rely on technology to provide it,” Mr. Kol said.

And look to the grey when arguing the merits of public versus private blockchains, Mr. Kol said.

“Purely private blockchains are not innovative, there is nothing new there which we didn’t have 40 years ago.”

Mix the best of public and private blockchains and you’re on to something, Mr. Kol said. Have block producers and validators, where the app controls the producers and the network controls the validators.

“You need both to work,” he explained.

The reputation of public blockchains suffer from misconceptions, Mr. Kol said. Not all data becomes public and such tools as zero knowledge encryption provide adequate protection.

“The fears of business and governments are irrational,” Mr. Kol said.

Yet for all the talk about red herring security issues, there is one vulnerability not getting nearly enough attention in the industry and that is front running, where, if people know the node order they can choose the order of the transactions on a decentralized exchange to enjoy better margins.

While there is no one perfect solution, an effective tactic could be to encrypt all transactions when they are sent to miners so they don’t know what is underneath. After the consensus round use threshold encryption to open it.

“The miner commits to the order before they see what is transacted inside,” Mr. Kol said.

The problem with consensus is the tradeoff between security and speed, Mr. Kol said. Decentralized security wants lots of nodes but that slows things down. What’s the solution?

With every consensus opportunity randomly choose 21 node committees from every 1,000-node group. Each time choose a different 1,000-node group and differently-situated nodes within that group.

“There are always 21 or 22 talking together. It’s just as decentralized,” Mr. Kol said.

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