Prepare for Blockchain technology to revolutionize business, society, and almost everything in between. Blockchain, also known as Distributed Ledger Technology, has the “potential to deliver disruptive outcomes and reshape digital business in 2018.” Investments in Blockchain startups topped $1.4 billion in 2016 and garnered interest among a variety of industries, from finance to insurance and education to health. Even the voting booth promises to use Blockchain technology, as Australia plans to allow citizens to vote online. Known as the cryptographically secure index of every Bitcoin, Blockchain promises operational efficiency and time-savings.
Anyone who has moved across the country (or to another country) understands inefficiency and slowness. A move, say, from the east to west coast of the United States, requires setting up a forwarding address, opening bank accounts, setting up electricity, finding a new doctor, acquiring a driver’s license from your new state, and much more.
This means filling out an endless string of forms to verify your identity and set up services needed after the move. What if all of this repetitive data entry and verification could be cut to a bare minimum because Blockchain technology could authenticate a person in seconds? MIT Sloan Assistant Professor Christian Catalini, an expert in Blockchain technologies and cryptocurrency, expressed the excitement about Blockchain, citing “the possibility to use this as a better identity and authentication system.”
However, Blockchain technology does not guarantee success. Gartner predicts that 90 percent of the enterprise Blockchain projects launched in 2016 and the first half of 2017 will meet a premature end within 24 months. Ray Valdes, vice president and Gartner Fellow said:
“[A] primary cause of failure is a fundamental lack of understanding around the basic concept of blockchain technology, which results in a misalignment of its capabilities with the business problem that the enterprise is seeking to solve.
What Is Blockchain?
A Blockchain (or distributed ledger) is a mechanism for adding trust in an untrusted environment. This increased trust comes from Blockchain’s special capabilities in cryptography and distributed ledgers, among others. “At a high level, blockchain technology allows a network of computers to agree at regular intervals on the true state of a distributed ledger,” said MIT Sloan Assistant Professor Christian Catalini.
Characteristics of Blockchain technologies include the following:
- Shared consensus: Using Blockchain to increase trust and transparency is the heart of this technology. Any record of a transaction is agreed upon through a shared consensus. Both parties have access to any record, because it is distributed across the interested businesses and nobody has singular control of the record.
- Reduces need for third party or a central authority: In a business transaction context, a Blockchain could be used to build a reputation score for a party, who could then be verified as trustworthy or solvent without having to open its books for a full audit. As a result, Blockchain can enable people to create, transfer, and store value directly without a traditional central authority.
- Secure when used along with a Data Governance strategy: Blockchain implements a database that ensures privacy, security, availability, and other essential business requirements. As an added benefit, Blockchain technology discloses only relevant information, reducing the likelihood of a data breach. Although Blockchain is not a silver bullet, securing devices, having good passwords, and other Data Governance strategies would be best aligned with Blockchain technology.
- Establishes a permanent Data Lineage: Blockchain’s transaction records are distributed and simultaneously updated for the supplier and the customer. As Karen Lewis notes, by design no one party “can modify, delete, or even append any record to the ledger without the consensus from others on the network.” This leads to better Data Lineage by making it easier to answer questions about where the data comes from and where it goes.
How Does Blockchain Work?
According to the DAMA International, DMBOK “Blockchain databases have 2 types of structures: individual records and blocks. […] Each transaction has a record.” Since Blockchain is a distributed database, storage devices for the database are not all connected to a common processor.
The growing list of ordered records, also known as “blocks,” has a timestamp and a link to a previous block. Cryptography ensures that users can only edit the parts of the Blockchain that they “own” by possessing the private keys necessary to write to the file. It also ensures that everyone’s copy of the distributed Blockchain is kept in sync. Only by giving a private key which you own to someone else, you effectively transfer the Data stored in that section of the Blockchain.
Each transaction in the chain contains Metadata about when and how the transaction was made. Also, the DMBOK states that Hash algorithms are used to create “this kind of Metadata […] to store in blocks while the block is the end of a chain.” The passage goes on:
“Once a new block is created, the old block hash should never change, which means that no transactions contained within the block may change. Any change to transaction or blocks (tampering) will be apparent when the hash values no longer match.”
Actual Database Use Cases
If Blockchain use cases are snowflakes, then businesses should ready themselves for a blizzard. Almost everything could be considered a possible use case for Blockchain, from voting management to cross border refugee identity and citizen identification.
In March 2016, analysts documented 130 different use cases for Blockchain across different industries, and the number is growing rapidly. Gartner predicts that by 2022, an innovative business built on a Blockchain will be worth $10 billion. To prevent this article from becoming a tome, find only a few use cases below. But consider digging more to get an extensive list.
- Internet of Things: Upon purchasing a car, dealers provide the new owner a unique physical key to start the vehicle. Blockchain provides a solution. WISeKey, a lead Swiss cybersecurity and IOT firm, has established an IoT Blockchain Center of Excellence to deploy Blockchain based solutions and services in the IoT public key infrastructure (PKI) space. PKI provides security results early on as the technology can be installed at manufacture and before a consumer turns on an IoT device.
- Supply Chain: In mid-September, IBM and Microsoft announced a collaboration with GS1, the global business communications standards organization, to leverage its standards for identification and structured data in their Enterprise Blockchain applications for supply chain clients. IBM and Walmart have already tested using an aspect of this to track pork and Mexican mangoes. In the case of a foodborne illness, information about the products can be pulled up in seconds and retailers only need to take the identified items off the shelf, saving the unaffected goods to sell.
- Education: To empower new MIT graduates, Blockcerts Wallet “enables students to quickly and easily get a verifiable, tamper-proof version of their diploma that they can share with employers, schools, family, and friends.” Coming in 2018, 111 graduates will have the option to receive these digital certificates. This means the school has less data to curate and alumni are in charge of their records. Also, any transcript fees can be avoided.
- Government: Having a baby in Illinois? Well, that new child will have a self-sovereign identity through the Illinois Blockchain Initiative, in partnership with self-sovereign identity solutions leader Evernym. Government agencies will then be able to verify birth registration information and cryptographically sign identity attributes such as legal name, date of birth, sex, or blood type. Maybe that child will no longer need to show identification to an employer, upon reaching a hireable age.
- Health Care: Swamped with Electronic Medical Records (EMRs)? MIT’s Media Lab introduces MedRec: a novel, decentralized record management system to handle EMRs using Blockchain technology. This provides researchers access to Big Data while allowing patients and providers the choice of whether to disclose.
Blockchain in the Future
Looking five to ten years ahead, Blockchain has internet-level disruption potential, but like the internet, it will likely come over a multi-decade timeline with fits and starts, and occasional setbacks. Some industries, especially finance, will see drastic change soon. Others will take longer. To access the Blockchain API for future projects, go to blockchain.info. No doubt there is much to learn before diving into Blockchain technologies.
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