Blockchain Technology : facilitating decentralisation in enterprise
Blockchain, Bitcoin and other cryptocurrencies
The emergence of Bitcoin and other cryptocurrencies, such as Ethereum and Litecoin, has shone a light on the underlying blockchain technology and potential real-world applications of the decentralised, open source platform. Blockchain is to 2018 what AI was to 2017; the must-have pivot, innovation or sales patter driving corporate growth strategy. Blockchain discussions inevitably start with Bitcoin, the basis of the technology’s development. Bitcoin and its cryptocurrency counterparts have forged a case to be classed as an alternative asset class, akin to gold, albeit considerably more volatile. Bitcoin increased 1,300% in 2017 and the cryptocurrency market was worth US $600 billion by the close of the year, equivalent to 0.8% of global GDP. However, since the start of 2018 Bitcoin has lost nearly half its value*.
How does Blockchain work?
The underlying blockchain technology has been slower to enter the public consciousness, however it has now reached the point that some consider it overhyped, categorised as ‘Peak of Inflated Expectations’ in Gartner’s Hype Cycle, and drawing comparisons with technological advances like the birth of the internet. Given this hype, corporate budgets are growing significantly as firms explore its potential; US $2.1 billion is expected to be spent on blockchain solutions globally in 2018, according to IDC, more than double the amount spent in 2017, and this rapid growth is expected to continue, with Netscribe estimating that the space will grow at a CAGR of 42.8% to 2022.
Imagined as a ‘peer-to-peer electronic cash system’ by Satoshi Nakamoto, the elusive creator, Bitcoin was built off the back of a lack of trust in the world’s banking system following the 2008 crash. The goal was to make financial institution middle-men redundant and decentralise their decision-making power. This was achieved by Nakamoto’s solution to the Byzantine Generals Problem; a decentralised system in which no one could cheat, based on three core principles: game theory, cryptology and interoperability. These underlying principles gave birth to Blockchain.
Blockchain removes a single trusted intermediary and allows cryptography to mimic that role: ensuring the legitimacy and integrity of a transaction. With no third party in charge, the participants of the blockchain network are the owners and the police; with the consensus in charge of agreeing the state of the ledger, legitimising transactions and upholding the rules within.
Blockchain in enterprise
Blockchain is primarily associated with financial services due to its cryptocurrency heritage, however the application of the technology has potential to transform multiple industries. For example, global land registries – considered to have the potential to spearhead blockchain’s viability – are trialling blockchain to improve speed and accuracy in transferring land titles, with Sweden’s land-ownership authority, the Lantmäteriet, set to conduct its first blockchain property transaction. Major CPGs are applying blockchain to the food supply chain to increase food safety; accurately sourcing the root cause of a contamination problem – tracing through manufacturers and distributers through to the source farm – facilitates speedy and accurate identification, leading to efficient treatment. Following successful trials, blockchain is being integrated by Walmart, Nestle and Unilever, among others, into their supply chains in partnership with IBM.
The aspiration of creating a secure, shared patient record database within the UK’s NHS has previously been deemed a challenge too difficult to solve. However, with the emergence of blockchain, Accession Health is setting out to prove it can be done. With interoperability and governance among the challenges to accessing consistent patient level data, Accession Health is looking to utilise blockchain to create a ‘single source of truth’, whereby users and applications can read and write to a distributed database using blockchain to govern permissions. While sidestepping blockchain’s inherent scalability weakness, the system utilises blockchain to ensure data access is fully consented and adequate permissions are in place before data is accessed.
In utilising blockchain, Accession Health hopes to create a network and data lake that facilitates seamless data sharing for use at the point of care, furthering patient treatment, diagnosis and reducing infrastructure and care-related costs. Opening this read and write access to third party providers will further the health ecosystem; creating greater competition within NHS suppliers and further enrich clinical data with lifestyle information from consumer apps. This will be a major change for the NHS, one of the world’s 10 largest employers; starting with incremental changes and encouraging adoption across the numerous stakeholders, Accession Health hopes to modernise the NHS, creating a more efficient system to the benefit of UK healthcare.
Blockchain and cybersecurity share an inherent goal; protecting data. As blue-chip corporates and nation states reel from hacks, huge data leaks and the subsequent loss of public trust, they search for the holy grail; an unhackable database that is confidential, trustworthy, accurate and ultimately secure. Having not been hacked since its inception, along with its unique attributes, blockchain goes a long way to fulfilling that requirement.
With GDPR coming into effect in May 2018 the management, use and storage of consumer data is being forced to the fore of corporate consciousness in Europe. The way blockchain is structured – transparent, anonymous and secure – offers a potential solution to the new EU regulation, one that could be standardised across industries. However, GDPR’s requirement to facilitate the right to erasure (or ‘the right to be forgotten’) goes against blockchain’s core principle of immutability, and while transactions are stored anonymously, removing data could compromise the database. Understanding how the law interprets ‘erasure’ will be key for blockchain’s legitimacy under GDPR.
Reliable verification of ad delivery has plagued marketing and advertising in recent years; with fraudulent sites and bots meaning ads are not always actually being seen by a consumer.
Blockchain can solve this problem by creating a direct relationship between the brand and publisher, removing the intermediary and facilitating greater publisher accountability whilst ensuring the brand can see whether the ad is being delivered, in the desired place.This direct relationship will have several additional benefits: improving transparency thereby clarifying (and likely reducing) the cost of ad placement, and the data informing campaign ROI will become easier to track and obtain which will both suggest the marketing investment and facilitate better targeting and segmentation. The impact on the current duopoly of middle men, Facebook and Google, would cause undeniable disruption.
Read the full version of The Bulletin: Issue 69 Blockchain Technology