A New York startup called Mine Labs has started a metadata protocol based on blockchain technology called Mediachain that uses the Interplanetary File System ( IPFS ), a “hypermedia distribution protocol,” to protect rights to digital works, according to Nasdaq . Other blockchain-based authentication systems use an encoded ID to reference centrally-hosted data, but these have limited storage per transaction.
To encrypt and store digital rights onto the bitcoin blockchain, most blockchain startups do one of two things: 1) they encode an ID onto the blockchain using OP_RETURN or CoinSpark to reference centrally-hosted data, or 2) they use a custom-built distributed ledger to attach metadata directly to transactions.
There are disadvantages to both of these techniques in encoding metadata onto the bitcoin blockchain. Limited Storage
The most data storage per transaction the bitcoin protocol’s built-in OP_RETURN code allows is 40 bytes. The limited storage makes it hard to store extensive strings of metadata onto the bitcoin blockchain. Using OP_RETURN to encrypt metadata onto the blockchain becomes very inefficient, and developers think it contributes to “blockchain bloat.”
The problem with the second technique for building a custom blockchain is security. Newly-established networks that have a lack of miners and hash power can be vulnerable to 51 percent attacks. The issue intensifies if the blockchain and the data expands and there is insufficient hash power to secure protected information. Consider Network Hash Rate
According to blogger Pete Dushenski , as shorter walls are easier to attack, “the city has grown at the expense of security.” The size of the city he refers to is the blockchain, and the height of the city walls is the network’s hash rate. The larger the distributed ledger, the more hash power needed to maintain the security level.
Rather than solely relying on the blockchain’s built-in features to store […]
