This is the first 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.
This article builds on last year’s MahindraComviva blog What is Blockchain? to simplify just why the blockchain matters and to contextually separate it from Bitcoin. Part two will move forward to discover the business applicability of blockchains, while part three will illustrate, using a Nigerian blockchain start-up (which generates revenues, stimulates economies and even mitigates / eliminates fraud) just how Blockchain may well be the obvious solution to problems common across Frontier economies… and beyond.
Does the Blockchain Matter?
First things first: a definition. The blockchain – which by the way pre-dates bitcoin by a good many years – is a mechanism – or system, or protocol, or set of rules – which enables “trustless transactions”. These are automated transactions that are contractual, guaranteed, secure, legitimate, which do not require human intervention and which, due to just how the blockchain works, prevents nd self-heals both unauthorised transactions or data alterations… it is a single, trusted, consensus version of the truth.
Let me repeat that: a Single, Trusted, Consensus Version of the Truth accepted by all stakeholders and users of any given distributed system – let alone a system that is distributed organisationally as well as geographically – is one of the ‘holy grails’ of info and data technology.
… and the blockchain takes things to a different level entirely: with data relationship management in its definition and enhanced security inherent in its design, blockchain can enable cross-sectional views of the interrelationship of data across disparately managed, even cross-organisational database systems, bringing order to and deriving opportunity from the chaos that the sheer masses of big data have introduced.
Reduced Fraud and Connected Order from Big Data Chaos
Blockchain-based solutions can mitigate or eliminate fraud from almost any environment, connect all physical and digital interactions related to almost any asset; can support secure data- sharing consortiums of all forms (research, intelligence, defence and beyond). A well designed blockchain will deliver big data dataset value chains and interconnects.
Such selected, connected, validated and verifiable subsets of data could be applied to impact the precision, reliability and delivery of services across fields as diverse as healthcare; land registration; social benefits; vehicle and driver registration, ownership and insurance; taxes of all forms; complex contracts and negotiations, project and budget control; scientific and other research.
From my p.o.v. after more than thirty-five years in the ICT industry, I would easily rank blockchain in the top 5 most critical computing inventions / advances of all time… so, I guess, that would be a yes, that I do think that the blockchain matters.
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’.
A Couple of (simple) Examples
With real estate as an example, the blocks would range from land surveys, building blueprints and planning approvals through to records of mortgages, tax and insurance – and every contract along the way.
Looking at Patient Medical History records, how great would it be to know that your personal records (blocks from full health records through to prescriptions, tests, scheduled follow ups, etc.) are secured, stored and updated in one place ensuring that each health care provider has current and complete information?
Differentiation is Easy; Applicability needs a Little Innovation
This video from IBM provides a solid, not-too-technical (and surprisingly non-commercial) overview of the two… which goes to prove my point: it is non-commercial because while they want to help you on your blockchain projects they just don’t know what those projects are yet… and for the most part, either do the customers!
Trust me on this: if they had a ‘product’ it would have been all over that video! ( … and didn’t we all experience the very same things, a few years back when everyone was plunging into big data, and a few years before that when their heads were all in the clouds! And you can take that as a warning: be prepared for an onslaught of blockchain hype over the coming months.
So, it is quite easy to differentiate Blockchain from Bitcoin: blockchain is a delivery vehicle providing security, accuracy and veracity of data whereas bitcoin is a rather hyperactive cryptocurrency which uses blockchain to securely control, manage, link and validate all transactions.
Another way to express it is that, without blockchain there would be no bitcoin, but blockchain doesn’t need bitcoin. Blockchain is a very clever approach to data management and sharing which can be modelled to solve a myriad of business and government problems, with or without a token or cryptocurrency element. As we’ve seen with past technology advances, it takes time to realise the capabilities that can help us redefine ‘acceptable’ levels and areas of risks by providing solutions that can redefine such thresholds.
What isn’t easy is sparking up and encouraging the innovative mindsets who will recognise those problems and create such solutions… and, along the way, I can pretty much guarantee that we’ll see more than a few wrong answers as well, both offered and sold.
More on all of that in Part 2, coming soon.
The Blockchain: Why Does it Matter, Part 1
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 has been said, at least not from the business points-of-view of: what problem is being solved; what requirement is being delivered to; what value is being added.