Blockchain Fundamentals over a cuppa coffee
The technology that is most likely to change the next decade of business… its blockchain – Harvard Business Review
Bitcoin is a remarkable cryptographic achievement and the ability to create something that is not duplicable in the digital world has enormous value– Eric Schmidt, CEO of Google
Blockchain is named as one of the “essential eight tech megatrend technologies” by PwC, while Gartner has named it as one of its top 10 strategic technologies for 2017.
Gartner’s Hype Cycle- 2017 puts blockchain in the “peak of inflated expectations”. Organizations are rapidly adopting this new technology. What is this blockchain really? Where can I use it? These are two simple questions that I will try to address here.
Recent posts on about the surge of bitcoin, explains how lots of people are confused blockchain and bitcoin. Blockchain is not Bitcoin. Bitcoin is the world’s first decentralized digital currency. In other words, it’s like a dollar ($) but without a central bank (aka Fed). You can use it in transactions similar to normal currency, however its adoption is not widespread and certain countries are already talking about banning crypto currencies like Bitcoin.
Blockchain is the technology that powers Bitcoin. Even though both are connected, it’s not one and the same. A simple analogy would be to think of a coffee machine. Let’s say you are brewing a cup of coffee. You might be using a Keurig machine to brew a cup of “Pike Place Roast” Starbucks Coffee. Though they are related, we all know Keurig is the technology that brews the coffee and it’s different from coffee itself! Hope I have not taken the analogy too far!!
While bitcoin is related to financial domain, blockchain is related to distributed technology. Now that we know the difference, I want to clarify that blockchain can be decoupled from bitcoin and used independently to apply against several business domain problems. Brining my analogy back, it’s kind of like saying “My Keurig Machine can make not only coffee, but can also be used for several other use cases like say, make a ‘Pinot Noir’ wine from red grapes”. That’s powerful, isn’t it? That’s exactly what Blockchain is!
4 pillars of Blockchain:
Our focus here will only be on Blockchain and not on bitcoin trading or analyzing other crypto currencies. Now let us focus on the value of blockchain. It’s become a trend to associate blockchain with almost everything, these days. But what can a technology like this really solve? In order to answer that, we should look at the fundamental key characteristics of this technology. The same can be concisely broken up into 4 pillars as summarized below:
- Integrity – Once recorded, the data cannot be tampered with and the data submission can proved with mathematical proof. Technically called non-repudiation. Also the data entry cannot be changed, meaning data integrity.
- Traceability – The data can be moved across multiple systems or actors without losing track of each participant involved.
- Resilience – The data is distributed across hundreds of thousands of machines thereby achieving high resilience and making the data non-vulnerable to malicious attacks.
- Consensus – This means that there is no ‘central authority’ to validate or approve the data submission or check the correctness of data. It is done by each node on its own through a consensus mechanism. The beauty about the consensus mechanism is that one node does not have to trust another node to reach a consensus. It is also called “disintermediation”.
Blockchain Use Cases:
You can use these characteristics in any possible combinations to solve a lot of real world challenges.
I have listed below a few of the blockchain scenarios:
- Health Care – Decentralized Patient Data Exchange, Longitudinal Health Records, Claims adjudication.
- Asset Management – manage & track organizational assets within an organization or across business boundaries. Asset could be a piece of land or a piece of hardware.
- Supply Chain – Improving operational workflow & real time visibility into shipments
- Maintenance & Repair System Monitoring – From industrial plants to aircraft
- Finance – secure transactions and other financial services
Other use cases include Food Quality Tracking, Intellectual Property Management, Notarization, Clinical Trials…on and on..
Where are you with your blockchain strategy?