With vocal skeptics now abundant, the early, easy days of the blockchainrevolution are over. But Ed Felten, a Princeton professor who also served as deputy chief technology officer in the Barack Obama White House, thinks his startup has an answer for some of the database technology’s problems.
He co-founded the six-person Offchain Labs to try to profit from technology called Arbitrum that moves a lot of blockchain transactions into a separate domain. That liberates them from the slow transaction speeds and data-privacy problems that burden the Ethereum Project while still linking with that widely used blockchain foundation, Felten said.
“It is our goal to operate at the speed of native processing — as fast as the computer you have, but in a blockchain setting,” Felten said.
For nontechies, blockchain is about as exciting an innovation as double-ledger accounting, but it could dramatically cut problems like transaction fees, counterfeit concert tickets and paperwork hassles when you sell your house. Adopting it is complicated, though, and skeptics are increasingly vocal, so the blockchain revolution for now hasn’t delivered the goods.
Moving blockchain interactions off the main data record is a years-old idea, but Arbitrum’s special trick is a mechanism that makes such off-chain transactions more fraud-proof to the parties involved. A single entity behaving properly is enough to thwart shenanigans, so it’s simple for a single company or person to keep blockchain deals above board, Felten said.
The sales pitch has convinced some investors. Pantera Capital and others handed Offchain Labs $3.7 million in a seed round of funding, the company announced Wednesday.
Blockchain, an outgrowth of the cryptocurrency movement, offers a mechanism for companies or people to register information like payments, purchases and property records. But unlike traditional centralized databases like those at your credit card company or department of motor vehicles, blockchain information is stored on a distributed group of servers that make it harder to tamper with data, easier to share and validate it, and harder for a single party to control it.