The power of the blockchain, the technology that underlies the immutability of the cryptocurrency Bitcoin, may be that once a transaction is secured it cannot be changed or edited. To combat forgery and counterfeiting it is important to make its history indelible.

Now the financial technology consulting and management service provider Accenture PLC has just bucked that expertise by patenting a type of blockchain that is not immutable and whose history can be edited by a central authority, according to Reuters.

The immutability of the Bitcoin blockchain is what instills confidence that transactions taken on the network are truthful and trustworthy. Because everyone involved can have the same version of the public ledger of transactions and any change in one can be witnessed by every other, it creates a way to provide proof that nothing has changed.

The usefulness of this immutability has been discussed at length (“Why Immutability is All That Matters” and “Bitcoin: The Most Immutable Ledger of Them All.” That’s because the Ethereum blockchain proved it was not immutable after the Ethereum DAO suffered an attack and a hard fork was done to fix it.

“An editable blockchain is just a database,” Gary Nuttall, founder of blockchain consultancy Dislytics, told Reuters at a blockchain conference. “The whole thing about blockchain is that it’s immutable, so this just defeats the object.”

This is a common complaint from proponents of blockchains as immutable historical ledgers: Why operate a blockchain just to eschew the major feature of blockchains above and beyond a standard database?

Photo of Richard Lumb, global head of financial services at Accenture.
Picture by Shane O’Neill Photography.

Why does Accenture want an editable blockchain?

“What we are talking about is adapting the blockchain to the corporate world and how do we make it pragmatic and useful for the financial services sector,” Richard Lumb, global head of financial services at Accenture, told the Financial Times. “This prototype allows you expunge a record completely and we think that will be needed by corporates and regulators.”

Blockchain technology has become a favorite over the past years as a potential method for the financial industry to save money and ease compliance with regulation. PriceWaterhouseCoopers published a report recently that blockchain technology could save the segments of the fintech industry from $5 to $10 billion. Accenture is not alone in seeking fintech solutions that involve blockchain infrastructures.

Lumb argues that immutability is a potential roadblock with financial regulations and not a benefit. Last week he penned “Downside of Bitcoin: A Ledger That Can’t Be Corrected,” published in the New York Times. It outlined his reasoning, the thrust of which covered such laws as “the right to be forgotten” and how illegal acts published to an immutable blockchain could not be erased or “corrected.”

The problem, he argued, is accented by the aforementioned attack on the Ethereum DAO, which would have left $55 million worth of cryptocurrency in the hands of the attacker had its immutability not been broken by the hard fork that corrected this.

“One thing is clear: If the financial services industry is to embrace a new technology, it cannot be one in which mischief and mistakes are immutable and fraudsters can defend their actions on spurious ideological grounds,” Lund wrote in the NYT commentary piece. “Even the smartest contracts can be susceptible to human error, and even the cleverest I.T. architectures will be hit by events that need to be undone.”

Although the Accenture blockchain will lack the important capability of immutability, the company believes it can still be secure.

“We can preserve the strength of the original blockchain while making it even more useful,” said Giuseppe Atenies, a leading cryptographer and professor of computer science at The Stevens Institute of Technology, who filed for the new patents with Accenture.

To allow mutability — something that traditional blockchains make very difficult because the longer a block is embedded the more blocks need to be changed — the Accenture blockchain will use something called a  “chameleon hash” that will provide a lock for any given block. This lock can be modified by trusted administrators enabling changes to that block without a chain-reaction of changes needed in subsequent blocks.

“Unlike a traditional database, our solution is compatible with current blockchain frameworks and works in a decentralized and accountable environment,” Ateniese added.

Compatibility may be an important feature for Accenture’s blockchain, especially if the company wants the fintech enterprise to implement its blockchain in an environment where blockchains are being adopted. However, the ability for Accenture to secure its blockchain from adversarial changes, rogue administrators or outside parties may become just as important.

Photo credit: Day 128 – Completely Changed via photopin (license)