Click to learn more about author Andrew Sohn. Many pundits liken the potential why invest in blockchain of Blockchain to that of the Internet.
4B in 2016 and new industry consortia seem to pop up every week. While this technology began as the infrastructure underpinning for the Bitcoin cryptocurrency and is heavily associated with financial services, it is being developed for a diverse set of business capabilities including medical records, land registry holdings, electronic voting, digital identity, and drug authentication. Despite all this investment and attention, there are still few significant Blockchain implementations happening outside of cryptocurrency. Defining Blockchain in business terms is relatively simple, but it masks the complex science, math, operations coordination and infrastructure to make it work.
Blockchain implements a database that can be used by multiple entities while ensuring real-time data visibility, immutability, privacy, security, availability and other critical business requirements. Pretty much any information can be stored in the Blockchain, from data that represent value, registration information or even electronic documents or pictures. Once written into the Blockchain, the data can’t be changed and authenticity can be verified. Also, the Blockchain can implement smart contracts, which are programmatic actions triggered by events written to the chain. How this is different than just establishing a database on a Cloud service like AWS and allowing other organizations have access to it? With any transitional database, there needs to be an owner or central authority that administers the database and has ultimate control of the data. Whether the database is on-site or hosted by a service provider, the host entity controls many critical aspects of the system and thus, the data.
While there may be many controls and audit capabilities in place, ultimately all database users need to trust the host with the integrity of their data. That’s a big reason many joint partnership organizations are established — so that the data and processes and not just owned by one company. An entire new independent entity is created to manage joint data and intellectual property. Using a Blockchain, the data and processes can be shared by multiple entities without the need to trust a central authority. Another important aspect of the shared Blockchain is that it enables easy and secure sharing of information between Blockhain participants without the need for complex and expensive data transfer and reconciliation functions.
Just like the Internet, the value of the Blockchain technology will increase as more organizations participate and standards are widely adopted. There are also scaleablity challenges and performance issues to be resolved. Blockchain implementations that involve monetary or other value transfer, as well as those that work across country borders, face significant regulatory issues. Given the assumption that Blockchain will soon be a competitive advantage then offer critical capabilities at some point in the future, what can a company do now to get experience with Blockchain? While it may be premature or impossible for many companies to invest money and other resources to participate in these large consortium, there are still ways these businesses can position themselves to take advantage of the Blockchain benefits and get some immediate value from the technology. Company, the world’s largest publicly listed independent provider of claims management solutions. All trademarks and registered trademarks appearing on DATAVERSITY.