On or Off the Blockchain? Insights on Off-Chaining Computation and Data

Abstract

The potential for blockchains to fundamentally transform how organizations produce and capture value is huge and very real. Practical applications dealing with nearly any type of digital asset demonstrate this capacity. Blockchain-based application architectures benefit from a set of unique properties including immutability and transparency of cryptographically-secured and peer-recorded transactions, which have been agreed upon by network consensus. Blockchain-based applications, however, may also suffer from high computational and storage expenses, negatively impacting overall performance and scalability. In this paper, we report on lessons learned and insights gained from a set of experimental blockchain projects, focusing on off-chaining: How to move computation and data off-the-chain, without compromising the properties introduced and benefits gained by using blockchains in the first place.

Atomic Information Disclosure of Off-Chained Computations Using Threshold Encryption

“…Established off-chain mechanisms, like the Challenge-Response pattern mentioned by Eberhardt [9], may prove useful in stifling some of these attacks. One technique that deserves special mention at this point is sybil attacks.…”

“…To circumvent these limitations, several mechanisms have been proposed in the past that allow processes to run off-chain while still relying on the Blockchain as the coordinator and final arbiter in case of dispute. Eberhardt and Tai [9] present an overview of common off-chain patterns. While their list was compiled from past experiences, we look towards a new set of problems with our approach that has not been tackled yet.…”

Blockchain Mutability: Challenges and Proposed Solutions

“…A common workaround suggested throughout the literature for aligning blockchains with the GDPR privacy requirements is the use of blockchains only for storing a timestamp and a hash that point to the actual information held off-chain [73], [74]. Therefore, when information needs to be amended or deleted only the fact that the specific content version existed Off-chain storage [73,74] Encrypted in blockchain…”

“…Bearing in mind that by using the stored hash alone the original content cannot be reconstructed, this workaround seems to resolve the blockchain's immutability collision with the RtbF rather elegantly. Indeed, off-chaining techniques so far are considered to be key tools in blockchain-based application engineering as they present significant benefits, such as reduced blockchain data storage requirements, and hence fewer scalability issues, and GDPR compliance [73], [55]. As a matter of fact, a recently conducted study [59] among experts concluded that blockchains could be indeed compliant with the privacy by design principles of the GDPR, and consequently with the RtbF, by employing these kind of off-chaining techniques.…”

Segment Blockchain: A Size Reduced Storage Mechanism for Blockchain

“…Many flavours of approaches like weighted models [9], [10], [13], off-chain [14], [15], blockchain sharding [16]- [18] are proposed in recent researches to improve the performance of the blockchain. Many approaches attempt to ease the burden of individual nodes and solve the dilemma among having the ability to process everything, maintaining the decentralised system and increasing the performance.…”