Data is stored on the blockchain, in custom json transactions.
But as anyone can submit custom json as they like, that needs to be validated (is the sender really in possession of what he's claiming to send). Validation is happening centrally at steem engine. If they stopped working it would not be clear who can validate, as there is no consensus mechanism. From that moment the tokens are unusable. There are different options what could happen then
- everyone agrees on a new central authority
- multiple authorities emerge, which factually leads to different versions of the tokens (as each authority could change the algorithms they use for validation without notice)
- the tokens will never be usable again
Steem Engine is making progress towards decentralization. And they’re doing this faster than SMTs are being developed.
Exchanges can run their own validation nodes so they do not have to heavily rely on Steem Engine’s infrastructure, even now.
Can it be improved? Yes. Is it improving? Yes. Should you be worried? I think it’s healthy to be concerned and continue to press them to handle this aspect properly.
It's only possible to assess the current situation. It surely may improve in the future, but it's important for users to know what they are getting into right now.
And of course development on top of an existing protocol is faster than making changes inside the protocol.
Even if they address all the issues and create a real decentralized product, exchanges still will have the overhead of replaying not only the steem blockchain, but also filtering out the steem engine related transactions, which will take considerably more time on itself.
It would have been way more efficient for everyone to develop the functionality in the core. But of course that would have required qualifications few developers have, and wouldn't have allowed for easy monetization of a half finished product.
They can do this, and it currently takes about three days if they already run
steemd. There are improvements to speed that up. Or, they can bypass this option and just replay the sidechain from a block log which takes less than an hour.This is a viable, safe option because checkpoints can be verified, in theory, although a little work is still needed right now to ensure this option is cryptography verifiable. But we’re talking about the hypothetical scenario where they’ve solved all of the decentralization issues, so checkpoints will be addressed too.
Thanks for those insights! Definitely interesting to see where everything is heading.
End-user validation of embedded consensus works fine and is in fact highly decentralized since validation is the responsibility of every single user and not some potentially-centralized set of validators. Any custom_jsons that violate the consensus rules can simply be ignored. It would mean that the user spent RCs to send a custom_json that does nothing at all. In fact this still relies on Steem's own witnesses to determine and finalize the order of those custom_jsons (since changing the order may change validity), which what happens now.
The most used token in the world, Tether, works this way. It is implemented using Omni, which is an encoding layer on top of Bitcoin. Nothing prevents people from submitting invalid Omni data to Bitcoin, since Bitcoin nodes don't even know anything about it, but the Omni nodes (including those run by exchanges) will ignore/reject it.
I don't know that steem-engine works this way, I've been told conflicting stories including by people who I would expect to know what they are talking about, so I find the whole thing quite perplexing.
Lack of a clear and well-communicated story on how it actually works is perhaps a better reason why it isn't ready for prime time than any clear technical obstacles, but I'm kind of guessing here, for this very reason.
Thanks for choking on and providing this very valuable input!
As @inertia mentioned they are working on the decentralization, and with that comparison in mind it seems very doable to end up with a completely legitimate product in the near future.
Hm... Am I too old, too conservative or simply cautious?
In the "broken banking systems" there are laws, regulations, guarantees, plans if something goes wrong - and it's bad
In the crypto world, like this case for example, it's just a matter of trust. We will provide the services, we sware to god.
If this is true what you say, I'm... Speachless...
In true crypto projects (Bitcoin, altcoins including steem and somewhere in the future SMT) trust is not necessary. Everything is written in code, so there's no need for laws besides what the code dictates.
From that point of view, steem engine is not a crypto project, they just use a blockchain as their database (or to be more precise: as a publicly visible backup for their own, traditional, database).
I think the word you are looking for is...intelligent (that's totally lost on ideologues).