Blockchain: the reality
Of all the technologies to be hyped in recent years, few have generated as much light and heat as blockchain. But as is often the case with things that are so very hyped, real world enterprise applications can seem to be thin on the ground.
Since blockchain entered the lexicon of the industry, lots of proofs-of-concepts and tests have been done but it does not seem like many enterprise applications have made it to the market. Left with little else to write about, much of the ink spilled on the subject has ended up being devoted to cryptocurrencies and Bitcoin in particular.
This, some argue, does the technology a disservice. Yes, cryptocurrencies are built on blockchain but blockchain is capable of so much more. Now that some time has passed, it is time to look at the real-world applications of blockchain and see what is been achieved.
“This time last year, we were seeing proofs-of-concept and lots of announcements of what people were intending to do but only one or two real applications. At the same time, there was a lot of hype going on around cryptocurrencies and when that started to diminish, things started to get a bit more real,” said Peter Fellows-McCully, chief executive of Evidential.tech, a blockchain specialist ideally placed to comment on the state of the technology.
In his opinion, the best thing to happen to blockchain in the last 12 months has been the change in focus in the industry away from cryptocurrencies towards other uses of blockchain.
“A lot of people equated blockchain with Bitcoin, and to be honest, we had to move past that. Now people understand that blockchain is a technology and not just a cryptocurrency thing. However, there are still a lot of people out there coming to us and suggesting they need a blockchain solution for a project they’re working on and the reality is that maybe one in 10 actually does,” he said.
“So blockchain is suffering a little still from being a ‘buzz term’, from being fashionable for lack of a better word.”
One area in which Fellows-McCully believes blockchain hasn’t fulfilled some of its early promise is in supply chain – it was originally suggested by many commentators that this was going to be one of the larger applications of blockchain.
“It looked like a classic application, and in some cases it actually is, but the use cases are quite specific. Where you have easily identifiable items such as containers, it can work. But I came across a company recently that was in the honey business in Europe and wanted to use blockchain to add biological tests at the point of origin of the farm, and then again at a warehouse, and then again at retail,” he said.
“The idea was that the customer could point a smart phone at a QR code and get information on its origins and the test values along the way. But it’s very hard to prove the link between the original natural honey and the code assigned to it. They’ve spent a long time trying to get it to work.”
Where this is relatively easy to do, the system can work. Fellows-McCully offers the example of Ambrosus, a food and pharma company that is using blockchain to secure the supply chain for some of its products.
“This is a blockchain-powered IoT network for food and pharmaceutical products that has had success tracking the path of Madagascar Bourbon vanilla, which is a high value food product, through the supply chain using tags on bunches of vanilla pods,” he said.
“There is, for example, the stablecoin movement which is a cryptocurrency that’s pinned to real world value and isn’t floating like the better-known cryptocurrencies. But in general, there was a lot of hot air around this in the past, as people talked it up and wanted to be seen to be associated with it,” he said.
“While I’ve no crystal ball in my toolbox, my guess is that in another year or so, blockchain will just be seen as just another tool in the IT tool chest. It’s a technology that has certain properties which are useful for certain applications and that’s all it is. You have to be sure you’re using it the right way, as you would with any other tool.”
This is an assessment that Comtrade’s Dejan Cusic is not so sure about. To start with, he thinks that the industry hasn’t yet seen the end of the cryptocurrency connection when it comes to blockchain. On the morning TechPro spoke to him, he’d just returned from a blockchain conference in New York where he said fully half of the presentations given concerned cryptocurrencies.
“This was a three-day conference and most of the exhibitors and probably 50% of the talks were about cryptocurrencies and related subjects like exchanges and wallets and how to manage currencies. They were also hyping the idea that Bitcoin is due a comeback,” he said.
“Overall, I think blockchain is becoming recognised as a distinct technology from its use in cryptocurrencies and that is something to be welcomed but it’s a process that’s still ongoing and I’m not sure it’s happening fast enough. Probably we will see another period of hype related to Bitcoin and other cryptocurrencies but blockchain has many more applications than just that and we need to sit this hype out to reveal that.”
Commtrade has worked on many enterprise blockchain implementations with partners like ConsenSys and GlobaliD, and according to Cusic, blockchain is currently moving towards a ‘plateau of maturity’.
“We’re seeing more and more people asking us about projects based on blockchain. When it comes to actually executing blockchain projects, there are challenges of course. There are challenges regarding regulation, because regulators aren’t used to the new ways of doing things but there are no challenges that can’t be overcome,” he said.
“Most significantly, while there are gaps with regard to finding people with the right certifications and qualifications, it can be done.”
While blockchain is achieving more market maturity, just how accepted it has become depends a little on which market vertical you look at, according to Nkiru Uwaje, blockchain strategy lead for the UK and Ireland for Dell Technologies.
“There are a variety of different maturity curves. For example, financial services have been involved with blockchain for far longer than most other verticals, but in the last 18 months, we’ve seen a number of other industry verticals become more mature in terms of their adoption and testing of use cases,” she said.
“That includes big retailers and also purveyors of fast-moving consumer goods who want to look at track and trace and supply chain use cases, in terms of how to do provenance etc. What’s interesting about that is that it’s part of a wider transformation agenda and we think that blockchain has the greatest potential impact on processes where you usually have a high number of intermediaries or a low level of transparency.”
According to Uwaje, using blockchain can help to drive increased levels of transparency and assurance throughout a process as well as cutting out intermediaries to allow large retailers to make gains on cost reductions and automation.
“Food safety is a key example of this. At the moment, each time a retailer or a grocery chain has an issue with a food item, they can track the issue down to the container of food but it can cost an awful of money to track down the source of contamination,” said Uwaje.
End users and consumers want to know where the goods they pay for are coming from, either from the point of view of sustainability or from the point of view of traceability and allergy management. Blockchain can help retailers provide this, satisfying customer demand at the same time as streamlining their own internal systems.
“Take fish. When a fish is taken out of the ocean it’s possible to test the microbes in its bacteria and be able to say where it was caught. So you could assess that a batch of fish swam in the North Sea, for example, and you could log this information onto the blockchain as the catch point, and then tag that fish with RFID tags that would feed that data back into the blockchain at every point of handover in the supply chain,” said Uwaje.
“You could also embed temperature sensors so that you’d know if that fish had ever been at the wrong temperature at any stage on its journey to the consumer. You can have a smart contract that stipulates that if that fish is at the wrong temperature then it stops at the next logging point and isn’t sent on to the supermarket or wherever it’s destined for.”
“A retailer could ensure that customers don’t get food poisoning, but it could also ensure that it doesn’t end up paying for a shipment of fish to be transported to an end point where it can’t be sold. It’s not hard to see the advantages,” she said.
Importantly, given how complicated supply chains can be and how difficult it can be to make each stage visible to the end buyer, this kind of system gives retailers full transparency.
“Where are their goods and services coming from and are they getting the quality they’re paying for, and can we in turn charge the end user for? Those are the key questions,” said Uwaje.
With more than 500 active blockchain projects and 85 live networks underway, IBM thinks it has learned a thing or two about blockchain. According to Marie Wieck, IBM general manager for blockchain, the company has five principles that it thinks can help companies make the most of the technology.
“These principles were honed through hundreds of client engagements and tens of millions of live transactions across multiple networks. In our view, these design tenets are the only way to deliver real business value and create an equitable enterprise platform that promotes collaboration across a diverse and thriving community,” she said.
“The first is that ‘open is better’. Blockchain networks should support diverse communities of open source contributors and organisations to foster innovation, hasten time to maturity and decrease cost.”
“An example of this in action is the Hyperledger Project, operated under the Linux Foundation, which is a ‘greenhouse’ for growing enterprise-grade blockchain software with strong and diverse code contributors, and liberal licensing. Hyperledger recently added 45 new members and three of its 12 projects are now active,” she said.
The second of the five principle is that ‘permissioned doesn’t mean private’. Permissioned and trusted access should be a guiding principle for enterprise blockchains to ensure regulatory and fiduciary compliance.
“Some examples of this in action are Sovrin, a digital identity management network and Stellar, a decentralised global payment platform – both are public yet permissioned blockchain networks,” said Wieck.
“Next we say that ‘governance is a team sport’ meaning that the responsibility of running network nodes and validating transactions should be distributed across at least three trust anchors to prevent undue concentrations of influence,” said Wieck.
“The Verified:Me identity network in Canada, convened by SecureKey Inc, has enlisted major Canadian banks to participate as trust anchors to host nodes and validate network transactions.”
The fourth principle, according to IBM, is that ‘common standards are common sense,’ implying that blockchains should be designed around common standards to prevent vendor lock-in and foster interoperability and a robust ecosystem of innovators.
“Decentralised Identity Foundation has defined a set of specifications on how to identify organisations, people and digital assets, called DIDs, that enable entities to be identified across blockchain, and non-blockchain, networks,” said Wieck.
The final principle is that ‘privacy is paramount’ and data residing on the blockchain should always belong to the creator to safeguard individual and corporate information. IBM facilitates this with its IBM Food Trust, a blockchain network designed to ensure food safety and freshness and used by brands like Walmart, Carrefour and Driscoll’s to use shared data while safeguarding each member’s proprietary information.
“We first started investing in blockchain in 2015, and one thing has become really clear – developers need innovative tools to support development as the demand of enterprise blockchain solutions continues to grow,” said Wieck.