Like any other system, blockchain suffers from the classic “garbage in, garbage out” problem. Blockchain infrastructures cannot make any veracity guarantees for data that was not natively generated on-chain and not publicly available, which unfortunately makes up for the vast majority of the data in this world. Hence, if a person (or a device) commits fraudulent data into the blockchain, there’s no way to ascertain the veracity of this data, and you’d end up with fraudulent data permanently committed to the blockchain’s history. If you put garbage into the blockchain, you get garbage out of the blockchain.

Purported applications that ignore this problem run rampant today, often with additional layers of technologies to give the facade of correctness. Here are a few examples:

Decentralized data markets: where companies are incentivized with tokens to put their data up for sale. But how do you know the data being bought is real?

Privacy-preserving queries: a service where the number of high net worth individuals for a bank could be counted via a zero-knowledge range proof so you’d get a count without the bank giving you any of its customer’s information — how do you know the bank isn’t fabricating its entire customer database?

For publicly available data, you can design a game whereby players with financial stakes at risk challenge one another on the veracity of the data provided, as Chainlink and some other blockchain projects do. But again - the vast majority of the world’s data are not publicly available.

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