6 Takeaways for Blockchain
Organizations are starting to understand the power of a distributed ledger system, and Blockchain is being tested and implemented across multiple industries across the globe. Gartner’s blockchain hypecycle research found that some industries will not reach maturity for 5-10 years with others not reaching maturity for 10 years or beyond with the financial industry leading the charge with adoption. Skepticism will remain until large industry drives adoption. However, organizations are starting to see the value of a distributed ledger. Take into consideration that, currently, 94% of the Total Monetary Value of the United States is on ledgers with only 6% being actual currency. Take also into consideration the sheer volume of information that currently exists in ledger form like: money, personal identity and health records, voting records, education and certifications, land and buildings, intellectual property, etc., and you can start to understand where the potential lies for Blockchain adoption. What are the current takeaways?
1. Transformative Technology
Blockchain technology has a large potential to transform business operating models in the long term. Blockchain distributed ledger technology is more a foundational technology—with the potential to create new foundations for global economic and social systems—than a disruptive technology, which typically “attack a traditional business model with a lower-cost solution and overtake incumbent firms quickly.
2. Data is Permanent
By design, a blockchain is inherently resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.” For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.
3. Security by Design
Blockchains are secure by design and exemplify a distributed computing system with high Byzantine fault tolerance. Decentralized consensus has therefore been achieved with a blockchain. This makes blockchains potentially suitable for the recording of events, medical records, and other records management activities, such as identity management, transaction processing, documenting provenance, food traceability or voting.
4. Crypto-currency is Inspiring
The bitcoin design has been the inspiration for other applications. The great advantage to an open, permissionless, or public, blockchain network is that guarding against bad actors is not required and no access control is needed.
5. Data Interchange Problematic?
Data interchange between participants in a blockchain is a technical challenge that could inhibit blockchain’s adoption and use. This has not yet become an issue because thus far participants in a blockchain have agreed (either tacitly or actively) on metadata standards.
6. Permissioned Blockchain
Standardized metadata will be the best approach for permissioned blockchains such as payments and securities trading with high transaction volumes and a limited number of participants. Such standards reduce the transaction overhead for the blockchain without imposing burdensome mapping and translation requirements on the participants. However, Robert Kugel of Ventana Research points out that general purpose commercial blockchains require a system of self-describing data to permit automated data interchange.
Ulf Mattsson is the Head of Innovation for TokenEx, and he is the inventor of more than 55 patents in the areas of Encryption, Policy Driven Data Encryption, Internal Threat Protection, Data Usage Control and Intrusion Prevention. TokenEx is the enterprise leader in data protection. Follow us on Twitter and LinkedIn.