It’s no surprise Blockchain is such a hot topic at the moment. The most well-recognised Blockchain use, Bitcoin, recently rocketed over $17,000 USD in value. There are Bitcoin millionaires and even billionaires, and investment advisors are still deciding how/what to inform their clients. Is it safe? Will the bubble burst? Whatever the outcome, it is going to be a wild ride.
Irrespective of what happens to the price of Bitcoin and other crypto currencies, the most exciting piece of the puzzle is the underlying Distributed Ledger Technology (DLT) and how it can be applied within various industries. There are many interesting programs taking place around the world: peer to peer solar power networks (Power Ledger), tracking food provenance to quickly identify legitimacy and potential food poisoning (Walmart and IBM) and many others. Some experts even feel that eventually all data will transition into an immutable state and require DLT. In any case, the time is now to start testing concepts before you fall behind the curve.
Before applying DLT to your business, 5 aspects should be considered:
1) Permissioned or Permission-less Network
The characteristics of a permission-less Blockchain are that it is decentralised, anonymous and equally accessible to anyone with a computer. In contrast, the permissioned Blockchain is a closed and monitored ecosystem where the access of each participant is well-defined and differentiated based on role. They are built for a purpose, establishing rules for a transaction that align with the needs of an organisation or a consortium. There are benefits and drawbacks to both approaches, but all of these considerations boil down to one fundamental design trade-off; the ability to create trust and the ability to scale.
2) Privacy and Security
Your stakeholders will no doubt be new to DLT so chances are they will need some assurance about the safe keeping of their personal data. Most industry verticals will require strong user security layers to complement the inherent DLT features.
3) Validation Type
The 2 most common types of consensus protocol types are Proof of Work and Proof of Stake (There is also Proof of Activity, Proof of Burn, Proof of Capacity and Proof of Elapsed Time).
In Proof of Work, miners compete to add the next block in the chain by racing to solve an extremely difficult cryptographic puzzle. The first to solve the puzzle is rewarded for their efforts.
The most common alternative to Proof of Work is Proof of Stake. In this type of consensus algorithm, instead of investing in expensive computer equipment in a race to mine blocks, a validator invests in the coins of the system. The good news is – consensus protocol is usually linked to the platform you decide to build your solution on so it happens by default but you should still be aware of the process.
4) Smart Contracts
In a smart contract approach, an asset or currency is transferred into a program and the program runs this code. At some point, the smart contract automatically validates a condition and it automatically determines whether the asset should transfer to one person or back to the original person. In the meantime, the decentralized ledger also stores and replicates the document which gives it a certain security and immutability. Decide if you require this additional level of complexity or if you simply want to commit information to the DLT keeping in mind smart contracts are still in their infancy.
5) Just a Regular IT Project
DLT projects should be treated just like any other part of your digital transformation strategy. They are a great way to get all stakeholders involved including all departments, customers and partners. Accordingly, they require the same processes and governance as all of your other projects. Don’t forget to add training and up-skilling to your budget!
Some POC’s to consider in different industries:
- Tracking Provenance – tracking product authenticity throughout the entire supply chain. (Transport, Manufacturing)
- Know Your Customer (KYC) – verifying and identifying customers and serving up relevant information/products. (Finance, Retail, Healthcare)
- Healthcare – ensuring the right people are using prescriptions, prevent double dosing, drug provenance, health records readily available.
Unico has over 30 years experience specializing in developing intelligent solutions to the most complex challenges facing business. In a hyper-connected digital economy, we enable organisations to differentiate through technology. We are currently engaged in multiple Blockchain projects and are excited by this technology.
Feel free to get in touch with Unico to see how you can stay ahead of the curve.