Monday, September 12, 2016
Blockchain is here, where are you ?
Bitcoin has revolutionized the financial world with almost every bank, insurance provider and financial institution taking initiatives to understand the impact of the cryptocurrency and purported disintermediation of sovereign currencies as we know it today. Just a couple of years back, the big crash of the most sought after virtual currency led to the emergence of alternatives that have gained favor of cybercriminals and the likes. Today there are interesting startups leveraging the underlying technology for various use cases in the real world.
Skyrocketing valuations of these startups offering lending services threaten to take away the conventional business of banks who thrived on arbitrage between the borrowing and savings pools. It is forcing banks to review their centralized model of managing information, settlements and transfer of deeds. Other industries are being pushed by FUD factor to incorporate blockchain somewhere within their technology landscape; experiments thus far have not provided clear use cases on how they can benefit.
With limitations on physical scalability of any business, CIOs and CDOs are being pushed to create non-linear scalable architectures to support networked business models for the future. Disruptors in transportation and hospitality space have given impetus to other industries to get out of the box and engage in network centric thinking. It is moving away from infrequent sales or provision of services to an asset lite subscription based digitally enabled models co-created by customers, fueled by big data analytics.
Simplistically blockchain is a cryptographically secure tamperproof distributed set of blocks organized into a database or ledger offering non-repudiation and immutability for any transaction. Implementation is complex involving a network of nodes created by public or micro-consortium, which may be geographically distributed across political boundaries with limited jurisdiction by governments and enterprises. Thus cryptocurrencies are the first choice for anonymous transactions as no central authority tracks or has the ability to track ownership data.
Stock markets, smart contracts, authentication data on copyrighted material or physical goods tagged with data verifying its source by recording milestones of its journey are some of the innovative experiments using blockchain. Some global companies have started experimenting with the security features with protection of assets of national interest like power plants and distribution networks, clean water supply, and finally creating a digital trust network enhancing existing solutions like federated PKI.
Experts and Insiders have always dismissed disruptive opportunities, starting from the horse-carriage, Personal Computer, mobile telephony, Internet, and the smartphone ! This time around the rapid evolution and rise of blockchain’s most popular implementation Bitcoin in less than a decade including falls has brought this technology to everyone’s attention. Money is chasing opportunity and none dare conservative predictions on the potential future impact or ignore its disruptive nature driven by increasing global interest especially in Fintech.
Can retail industry embrace blockchain in the as yet evolving omni-channel world providing trust of authenticity and guarantees to the customer ? Is it possible for manufacturing to move away from low cost mass production to unit level customized products assured by blockchain delivered to consumers with flexible manufacturing and 3D printed products ? Can distributed information using blockchain change the way information is stored, consumed and protected, allowing only rightfully permissioned access ?
The question remains when blockchain will see the S-curve of that most technologies see after initial trials and tribulations. The charge needs to be led by technology leaders considering the not so simple nature of implementation; it was heartening to observe a group of CIOs who have already started dabbling in cryptocurrencies and how it could if at all impact their respective industries. Another group hit by ransomware was forced to figure out payments using bitcoins, one of the popular cryptocurrencies.
Beyond the Proof of Concepts, I believe that enterprises need to create cross-functional teams from compliance, risk and internal audit to assess impact on internal process and customers. Blockchain benefits accrue within groups or micro-consortiums participating together; however large groups can reduce collaboration effectiveness and decision making. Speed of execution still remains a challenge with blockchain; having said that technology is evolving rapidly to bridge the gap from current transactional technologies.
Reality is Blockchain will become mainstream sooner or later; where are you ?