Blockchain: From Cryptocurrency to Business Value
Thane Hall, of aerospace, space, defence, security and transportation group, Thales, outlines how this digital phenomenon will add security, robustness and efficiency to their products, processes and logistics.
Technologies come and technologies go. Some are adopted quickly, some slowly. Blockchain technology, after a slow beginning, is now following a ballistic adoption curve that closely matches the profile of the Eiffel Tower. It’s quite astonishing what a small technology step forward can have. At its core, blockchain technology is not much more than a secure database that can’t be hacked, and is what corporations like Google, Amazon and Microsoft have been building for years isn’t it? Well maybe. The large delta is that these databases have ‘trust’ baked in; they don’t live behind fortresses, they live in the wild, accessible to all, hiding in plain sight. Yet try as people may, it has, so far, not been practicably possible to hack them. I’m careful with my words; it’s not impossible, but it is, for all intents and purposes, impossible.
Blockchain technology is the underpinning technology of Bitcoin, albeit a necessary by-product of the intent to develop the world’s first globally decentralised currency requiring no banks or central authorities, just a consensus of people to operate it. Blockchain is the jewel in the crown of Bitcoin, a technology so secure, yet accessible, that it has the ability to manage cash amongst people worldwide that inherently don’t trust each other not to run off with it. So, in a lot of ways, solving the harder problem of money first has given everyone the confidence that it can deliver trusted databases for all manner of applications.
Blockchain technology was invented in 2008 by an unknown individual or group going by the name Satoshi Nakamoto, and is the combination of pre-existing technologies such as PKI, hashing and linked data infrastructures, but with the added magic sauce of consensus (the method by which infrastructure nodes agree on the blockchain’s true state, steering it away from untrusted bad data) and an economic incentive based on ‘mining’ which incentivises the necessary infrastructure to exist and implement the security ‘trust’ protocols.
For sure, there is hype around the technology; this technology is not immune from the Gartner Hype Cycle. But like the internet, it very much has its place. Start-ups and existing players are now fighting it out. Oracle, Microsoft and IBM are toeing the line with small blockchain focussed start-ups who have raised, in many cases, hundreds of millions from nothing more than ideas for the next Bitcoin captured in whitepapers. What’s more, they raised this capital by smart contracts on the Ethereum blockchain, the second largest blockchain by market capitalisation after Bitcoin. Whilst the gold rush investments might have peaked, they’re not over and the race to bring revolutionary new products and services to market is very much full-on.
Like the internet, Blockchain very much has its place...
There are lots of blockchain businesses now setting up, and it’s not hard to see why; that little bit of trust goes a long way in enabling digitally function-rich currencies, token based societies and secure data stores for things like identity, land rights and a wide array of other assets. Coins in the most part aren’t just money or shares, they’re a new asset class that obscure the boundaries between cash, shares and value; it’s understandably hard for governments and legislators to keep up.
One of the more interesting potential benefits of blockchain is the tokenisation of society. By this, we mean the ability to create circular economies around aspects of society such as mobility, social media and help in the community. By sharing your mobility data you could earn mobility tokens that you could transfer and spend to consume a social media service. Perhaps you help in the community which provides you with tokens to travel. It will be exciting to see if this new way of delivering and consuming benefit will catch on.
The United Nations are running a programme, ID2020, to give every refugee an identity so they can access aid and services without the need for documentation; just a password and an iris scan checked against the identity blockchain is enough. Additionally, many people in the world can’t prove they own the land they live on so there are multiple projects to capture this data to protect their way of life.
But what of industry? In Thales, we’ve been using the technology to develop a way of tracking goods through a supply chain so that collectively, the community of interest can trust what it’s receiving and the end customer can be assured in the provenance of the capability they purchased. The key enabler is being able to share information, and trust in it. Don’t think solely about physical things though; software and documents can also be tracked with the fingerprints of all these products being held in the supply chain blockchain. On system start-ups, equipment, be it on a manufacturing line or in critical mission system, could check that it’s running the correct software, comprising the right parts, and is following accredited procedure and processes. Trust in this information reduces uncertainty which makes everything more efficient and safe. In fact, blockchains can’t only store information and fingerprints but executable code similar to the way smart contract rules are stored on Ethereum. Perhaps in the near future, with a few tweaks, blockchains will store, track and advise assets in real-time, such as autonomous cars on our super-highways and aircraft in the sky.
The key enabler is being able to share information, and trust in it...
So what of the future? There is little doubt that blockchain technology is here to stay, and Governments around the world are excited by the potential efficiencies they can bring. Imagine the efficiencies that could be achieved by having blockchains covering identity, benefits, work and pensions, health and the ‘cross-chain’ ability to cut out fraud and ensure those who need help, get it. Simultaneously, however, governments wrestle with the country-independent nature of cryptocurrencies played out against the backdrop of personal privacy and banking independence versus the need to monitor illicit behaviour.
Blockchains aren’t a magic bullet. For sure they can realise many benefits and offer a great step forward, but not all data is open and you need to ensure you know who all the players are so aspects such as end-point security, data protection and identity verification will be important. The next few years could be very interesting indeed!
Thane Hall is Account Manager at Thales and founder member of Bristol Blockchain meetup group.