In my thirty plus years in IT ‘a single version of the truth’ has always been, across all sectors, one of the “holy grails” of systems and data. This is part two of a three-part Blockchain discussion designed to move the conversation back to the business view… given that any business spend on technology is an investment, we’re going to investigate where and how the blockchain might provide a return on that investment.
The first article discussed, defined, distinguished and separated the blockchain from its most famous user, Bitcoin. A quick recap: blockchain is a mechanism – or system, or protocol, or set of rules which delivers a single, trusted, consensus version of the truth, as validated and accepted by the disparate users and systems of that blockchain.
We are now going to look a little deeper (but remain non-technical, mostly) to see how blockchain implementations – confederated, interrelated or related – can be applied to solve previously unsolvable problems… and to enable fraud-proof transactions.
Delivery Vehicle v. Goods Being Delivered
The significance and potential of business-focused, problem-solving blockchain solutions remains to be proven but it is very early days for such applications. So even though the opportunities exist to, for example, interconnect the data and logistics of an industry sector, the uptake, proliferation and interconnection of blockchains across the business and government stakeholders in that sector is where the real values start to be derived.
One important lesson learned from my years at Accenture back in the 90s is the analogy of delivery vehicles versus the goods being delivered, as applied to business technologies. Here a couple of comparators for this analogy using game-changing technology advents:
- While the IBM PC became an indispensable delivery vehicle on millions of office desktops, from the point of view of business users it was an empty shell on day one… and then VisiCalc enabled a magical set of capabilities to perform calculations on corporate data – and in doing so created the need for PCs in business, along with a vast industry of systems development and integration, upgrades and replacements, etc. to enable and exploit these tools – and the basis for investment in creating more.
- The Internet is the second game-changing delivery vehicle, with digital content of all forms – and online access to physical items – as the goods in question. As you might well know, computers have been internetworked for over 50 years but that it was HTTP addressing that opened the doors by delivering unencumbered “from any, to many” access, thus enabling new forms of goods, of content, of delivery, of ways to pay – and of ways to market, present and advertise.
In both cases I’m pretty sure we all know the rest of those stories, which also reminds us about a certain tech truism: too often the answers are hidden but sometimes they are almost too obvious… and by now I’ve surely positioned you as to my mindset that blockchain will prove to be the next example of such significance.
…After all, how many technologies do you know of that can not only improve the operations and efficiencies across sectors but also, in so doing, potentially impact and transform economies? This video from FutureThinkers touches on these potential efficiencies – and the disruptions along the way – across nineteen separate industries. Blockchain is, simply put, a “next wave”.
But, to ensure that I leave just a little confusion in my wake (tech, especially new tech, isn’t always clear! 😉), do note that while the blockchain is typically the delivery vehicle, it – and / or its data elements – could also themselves be the goods being delivered and, as inter-related blockchain implementations start to become prevalent, more and more blockchains will exist as both the goods and the vehicle delivering them.
Yet Another Database?
So, is blockchain really just yet another database? While there are increasing numbers of specialised and sophisticated solutions available using Ethereum (and other alternative) mechanisms, there are also distributed SQL database answers from Oracle and a raft of others at varying stages – and there are other alternative takes on blockchain implementations being announced weekly.
But, yes, a blockchain is really just another database – containing data, transactions and links to (or copies of) data and transactions from other related, interconnected databases… and like everything else when “tech meets business”, the right answer comes down to the requirements: a public, international, massively-scaled cryptocurrency like Bitcoin has complexities than, say, a more localised (even national level) solution might have.
BlockChain the Mechanism v. BitCoin the Product
Broad awareness of the blockchain has come to the forefront due to Bitcoin (which uses a public blockchain to secure, map, validate and audit virtual currency transactions). But cryptocurrency is only one type of “scarce asset” (or zero-sum properties) to which a blockchain is ideally suited.
These are unique items, digital or legal digital representations of physical elements (for example, an electronic property certificate of ownership, or my personal medical records)… something that, by definition, is “proof that I have it, which proves that nobody else has it” or “this source of information is attached to this person/place/thing only”.
Each transaction related to that property is stored in a block, with each block linked to every other transaction related to that “asset” (past and future)… hence, the term ‘blockchain’.
How Does it Work (without too much techno-babble)
Connected databases called “nodes” run on the systems of the users of the database (multiple, typically independent stakeholders/users of the data and systems: Businesses, Departments, Agencies). Using their own high-security data storage and distribution facilities, either cloud or local, they communicate peer to peer, either publicly or privately.
Always on: The nature of this element of blockchain distribution is where an essentially ‘always on’ system takes form, given that even in the event of catastrophic node failures, the ledger and database remains accurate and available other nodes – and that the blockchain is guaranteed against data loss from single or even multiple node systems failures.
Veracity and Currency of Data: Each database record that is read or written – that is, every single transaction at operational and system levels – is automatically verified and reconciled by a cross-selection of these nodes, to ensure its veracity, state and currency to deliver “data consensus”.
Not Yet Another Database?
Putting the nature of data relations and distribute database mechanisms to one side for a moment, consider this small but powerful set of indicative differences resulting from a blockchain implementation:
- processes ensuring that transactions are verified, reconciled and effectively ‘written in stone’
- automated and proceduralised checks and balances serve to enable trusted, automated adherence to these processes
- automated trust mechanisms reduce bottlenecks to enable high-speed transaction processing
And let’s not neglect my favourite by-product of a blockchain solution: the capability to reduce (and in some cases eliminate) the necessity for redundant failover and backup systems and communications: the users / stakeholders of a blockchain business solution, by design, each maintain and manage parts of the infrastructure and network access to support computing and storage requirements (which is also why a well-designed blockchain provides an essentially “non-stop computing” environment… coincidentally, another systems and data “holy grail”.
Not so many holy grails come along – and not so often does one support another in this manner… and we are not the only ones to have noticed! So, to repeat my warning from part 1, be prepared for an onslaught of blockchain hype over the coming months – it has already started!!
Application and applicability will provide the direction… once the problems to be sorted have been identified, that is. And while there may arguments that blockchain solutions can only be delivered for digital issues but Nigerian/EU-based Domineum.io, are proving otherwise.
In the final part of this series we’ll discuss their land registry focused solution and other practical applications of blockchains.
The Blockchain: Why Does it Matter? Part 2
by Daniel Steeves, Steeves Solutions, Germany and Nigeria “Why does it Matter?” is a series of articles on those technology-orientated topics about which much has been written but not always so much said, at least not from the business points-of-view: what problem is being solved; what requirement is being delivered to; what value is being added.