Blockchain: Beyond CryptocurrencyJanuary 30, 2018 7:30 am ·
In current discussions and explorations of blockchain, the focus lies heavily with cryptocurrency. Questions concerning whether this monetary system will last, its impact, and how blockchain can make a difference are most commonly discussed. Many people involved in this conversation overlook the fact that blockchain is so much more than cryptocurrency.
“People have no idea what it’s capable of. They only understand it as a cryptocurrency,” said Ben Wald, partner and head of client strategy at Very, a web and mobile application development company that has recently transitioned its focus to developing applications for data science, IoT machine learning, and blockchain technologies.
“It’s fascinating to be on the engineering side of blockchain and see all the other conversations on this topic. From our perspective there’s a really big difference between the signals among the noise–between what’s real and what’s important and what’s just a lot of chatter from people who really have no idea what the technology is,” Wald said.
In his career so far, Wald said he’s seen potential in using blockchain as a transformative technology.
When you break it down, a public blockchain is a distributed ledger that anyone can use to store transactions. The transformative concept, Wald explained, takes a hard look at industries that have succeeded by brokering deals. It questions whether the intermediary between two parties conducting a transaction is still needed when you have this global, immutable ledger.
Formerly the executive director of nonprofit Ashoka Changemakers, Wald spent the early part of his career working alongside social entrepreneurs on global initiatives, including “banking the unbanked.” At Very, he’s been able to continue this work with groups like the Environmental Investigative Agency on projects of supply chain transparency and accountability. Blockchain technology, he said, provides his team with new protocols to help these clients make a difference.
“A lot of the projects we’re taking on have an element of social impact. There’s this confluence of being able to leverage deep and senior talent and building stuff that could have a positive impact,” Wald said.
A Look at How Teams Can Explore Blockchain Development
For Very, moving to blockchain development was a natural progression, as the company focus has shifted in recent years toward more technical segments. Most of the team began their training through online courses on Ethereum blockchain development using Solidity, and they constantly turn to the many available open source solutions when they need workarounds or have questions. For the most part, Wald said their learning comes from doing; from solving real problems with real applications.
“We bump into walls and we figure out how to make it through. We also often hold internal presentations (called ‘firesides’) where our team members share what they’ve learned and where they struggled, as well as any new applications they developed with the rest of the company. Our team members take a lot of personal initiative in their education and the sharing of experiences helps us grow.” Wald explained.
He said they are also developing curriculum requirements for new blockchain-specific hires, but it will have to be an agile curriculum. “It’s constantly changing… six months in blockchain is like 10 years in a different industry,” he said.
Currently, Wald’s team is learning about many different blockchains, but the bulk of existing projects have been with Ethereum using Solidity, as well as Hyperledger, the IBM framework for healthcare clients. In some cases, blockchain is part of a larger application they’re developing. Other times, the project is solely to develop blockchain-specific elements. They do not conduct mining, arbitrage, or trading.
Wald’s hope is that the company can contribute their findings to open source solutions in order to help others deliver value to customers. Their lead engineer, Brian Zambrano, has even been commissioned to write a book on serverless design patterns. In his research for this book, Zambrano has learned more about what he wants to teach others about blockchain technologies.
For smaller businesses looking to branch into this technology, Wald recommends exploring open source communities, hiring good engineers, and pointing them in the direction of blockchain. He said it’s likely they’ll grow interested in the topic and become involved in the open source community, eliminating the need to invest in a blockchain consultant.
“A slow start is almost inevitable. For companies of any size, it’s incredibly important to define where you would use blockchain and why,” he said. “It does a very specific thing and works best when added to existing technology or used to solve particular use cases.”
The Benefits of Blockchain
As the new, talked-about technology, some company leaders erroneously think blockchain is necessary for all business applications, Wald said. But the trick, in his opinion, is finding and identifying the right use case.
“It is not one solution to all problems. You need to use it where it makes the most sense, where the technology will give you the greatest advantage,” Wald said.
His trick is to use a decision tree with clients to determine whether blockchain technology would make business operations, transaction flow, and the like better, no different, or worse. With new platforms slated to release this year, Wald said we will see blockchains used strategically in certain aspects of an application where auditing and transactions are needed, but not throughout the whole application or database.
When appropriate use cases are determined and a blockchain database structure is implemented, Wald has found data integrity over transactions to be the biggest benefit.
“Once a block is written or verified, it’s incredibly hard–if not impossible–to change that record. That relates to the blockchain being decentralized. It relates to how encryption is done. It also relates to the fact that new blocks draw their intelligence from previous blocks,” Wald explained. “So, for example, if you want to change block 95, it has a cascading effect where you also adjust all transactions that occur from that block into the future. It’s incredibly hard to hack because it’s easy to detect error.”
The ability to locate errors lies in the decentralization practice blockchain technology relies on. For example, the network could consist of thousands of people from all over the world or a small, private consortium of healthcare providers trying to keep medical records synchronized and protected. In either instance, the practice of decentralization removes one single party from ownership of the ledger and makes errors more pronounced.
“The ethos of it is that there is wisdom in the crowds,” Wald said. “It’s even more important when you look at international business and society, where there may be less regulation and more corruption, causing varying levels of trust in governing institutions. The decentralization allows for transactions with greater levels of trust.”
Many experts believe the decentralized practice lowers the risk of lost or damaged data and device corruption because it enables an audit trail without a single point of failure, making it easy to see where the human error occurred.
The Very team, Wald said, has seen more use cases where the benefits of blockchain outweigh the downfalls, but the downfalls do exist. For example, management of this type of database is expensive, validation of transactions within a blockchain can be slow, and these databases are usually read/write only, so you often can’t make edits to information. This is why some platforms find the use of blockchain appropriate and others don’t.
What is the Security Risk of Blockchain?
Due to the high level of checks and balances within blockchain, some may assume it automatically solves any and all security issues. But the truth is, it does not. When a blockchain is public, for example, the information listed is not protected. That’s why blockchain transactions often don’t use credit card information and some industries, like hospitals, don’t use public blockchains in order to comply with HIPAA regulations. (The blockchain frameworks these industries use, like Hyperledger, come with privacy measures built in.)
While blockchain technology has been around for 10 years and many experts believe it’s well designed and secure, there are parts of the blockchain ecosystem that have vulnerabilities, such as individuals mishandling private keys or the improper encryption of data.
“A lot of the security onus is on the application that’s writing to the blockchain,” Wald said, recommending companies use application-level encryption to enter data to the blockchain.
While many companies set up private or permissioned blockchains due to data privacy issues, Wald mentioned this can be counter-intuitive to the idea of having a massively decentralized blockchain with no single authority or point of failure. In this practice, the blockchain is not open to the public, but only to designated nodes who will be validating transactions.
What is the Future of Blockchain?
Wald said he predicts blockchain’s future will be outside of cryptocurrency.
“I believe a lot of industries will be transformed by blockchain,” Wald said. “It’s a lot like the opportunities we see with AI or machine learning. Massive operations will be disrupted but it will likely come with more surgical precision due to specific use cases. One industry in the process of being disrupted is voting.”
With blockchain voting, several venture-backed companies are using this technology to allow constituents to vote using their mobile devices. The concept is that individuals can vote in a U.S. election for a candidate, and it works because the information is being written to a blockchain to verify identities and remove the risk of fraudulent activity.
“You get greater participation and smaller margins for error… and voting has nothing to do with cryptocurrency,” Wald said.
Wald said he envisions this technology will affect the way companies handle supply chain accountability and hedge fund transactions and audit issues; that it will make for better efficiency in some industries and allow for more globalization in others. And he’s not alone in this thought.
“The coolest thing is the concept is really not difficult. Consider 3D printing: the hardware and software have so many intricacies and the end result is kind of unimpressive and not earth changing,” Wald explained. “Blockchain on the other hand, is at the other end of the spectrum. The concept is simple. There’s complexity in the operation but the idea of, ‘What if a ledger is not owned by a single company and is unhackable’ is a simple idea. It’s all about building real applications and helping real people in the world.”
This article was originally published on Experts-Exchange.com on January 25, 2018.