The Blockchain is here to stay
This guest post is written Andrij Sytnyk, a co-founder of Ambitorio, a Crypto Valley based startup in the digital licensing space. Andrij is a certified Information Technology Infrastructure Library (ITIL) specialist with more than 15 years of experience with enterprise IT development and management covering manufacturing environments, cloud architecture, Fiber to the Home (FTTH) implementations, and IT rollouts and network monitoring.
Recent turbulence in the cryptocurrency market led many people to assume that Bitcoin and its underlying Blockchain technologies are on their deathbed: The Hype is over. ICOs are mostly scams. I disagree. This is the beginning, and the outlook for Blockchain technology or Distributed Ledger Technology (DLT) is frightening terrific. This post does not dive into the technology, rather it examines business reasons for the adopting and using technology.
I use the term “Blockchain” to refer to Blockchain technology. "Bitcoin” cryptocurrency was and is a use-case for the first Blockchain. The next logical step was a Blockchain called "Ethereum" with its smart contracts, which are computer programs on the blockchain enhancing its functionalities. Next comes "Hyperledger" which is a Blockchain for nearly everyone. Hyperledger provides a programmable open source environment and it is an indication of what is coming.
Blockchain can enhance the capabilities of traditional IT technology by restricting the rights to execute code and automatic functions, and it can restrain some unwanted side effects in our current IT environment like collecting and retaining data, and execution of dangerous and/or unwanted code.
The EU based GDPR is forcing companies to revise their processes so data collection is minimized, personal data can be deleted, and users can see what data has been collected. For example, software development companies must now distinguish between data that they store for legal and tax purposes – and data that is within the scope of the GDPR and can be reviewed and deleted. This task is massive and businesses must review all the data on their computers, mobile devices, and servers.
By adding into applications and platforms the Blockchain concept of an immutable ledger collecting hashes of stored data, you’ll have a scalable technology layer to restrict and control dataflow. Data identified as “personal data under GDPR” will be connected to a smart contract under the control of data security management, while data needed for legal and tax purposes will be connected to a different smart contract. And every transaction, deletion or access to the data also will be stored as transaction on the ledger – immutable, and transparent.
We are moving from Internet 2.0 to Internet 3.0, and the time of corporations, harvesting and mining information is running out.
Blockchain will lead to new economic architectures for the IT- and the traditional brick and mortar economy. The technology enables companies to build a "programmable economy" where business processes can be programmed by using smart contracts as business-process tools and token as triggers for events happening within the business-process. Combined with the know-how and best practices amassed in the ISO standardisation market, Blockchain will create many business opportunities as businesses transform.
Using the transparency that a Blockchain provides, businesses will change how they govern. Not only issued documents, but decisions alongside the whole value chain will be transparent and the accountable person or group identified. This reduces the risk of corruption and laziness in business’s divisions and opens ways to optimize the amount of resources (i.e., people) working on a project. With Blockchain, it will be possible to identify who wrote the analysis you needed for a decision, and who pretended to work on it. Until today, there was no verified means of determining who worked on a file and who pretended to do so.
Further, Blockchain will lead to distributed enterprises with lesser operational costs for control and security. Blockchain allows a person to distribute data securely and trackably across an unsecured environment with others who are part of their enterprise. Blockchain removes the need for an enterprise to have centralised security authority like a Public Key Infrastructure (PKI) or central server to maintain and manage login and read/write rights.
Blockchain still has a ways to go. While businesses are experimenting with and using Blockchain to improve their internal business processes, not much headway has been made in finding viable customer adoption paths for Blockchain (apart from cryptocurrencies). There are taxation and accounting issues, there are regulatory environment issues, and business processes need to accommodate the new technology. Until these issues are resolved, companies won’t be able to take full advantage of the changes brought by Blockchain.
Image by Michael Marrs.