An interesting thing about Bitcoin (and it’s nothing to do with money)
How a ten-year-old technology is making digital transformation an achievable reality, today
The technology that’s behind Bitcoin and other cryptocurrencies (there are more than 1,500 of them) is an essential enabler of digital transformation. How? First, here’s a question for you:
What is money?
The truth is, money can be pretty much anything, providing that we all agree its value. The shekel, for example, which was first recorded around 3000 BCE, was agreed to be of equivalent value to a sack of barley. Suddenly, a conveniently-small metal disk could be exchanged for goods and services judged to be of equal value.
‘Value’ is the key word here. Because as soon as you have something portable and valuable – which, of course, includes enterprise data - you need to start thinking about security. And that brings us to blockchain.
A layman’s introduction to blockchain
Bitcoin works not just because we all agree that it has value, but also because it is secured through a technology called blockchain. Each block in the chain is an unalterable, permanent and publicly-accessible set of data.
With cryptocurrencies, the stored data records financial transactions between people and organisations, without identifying the sender or the recipient. When the chain is updated, everyone can see the new data and, because it is unalterable, they can rely on it being true, even if there is a deep mistrust between the two parties.
To use a cryptocurrency, you use two digital ‘keys’ (in essence, complex passwords). Put simply, your public key is the ‘address’ of your cryptocurrency account, and your private key - which only you have - lets you sign and authorise transactions.
It is the qualities of being verifiable, secure and shareable on a precisely controlled but world-wide scale, that makes this approach to data so useful for digital transformation. We’re back to value again. Digital transformation can be described as ‘a state in which an enterprise – or, more powerfully, a community of enterprises’ - becomes connected and able to unlock the hidden value of all available data.
Understanding the potential
Because blockchain can be used for any sort of data, it has the potential for sharing accurate, up-to-the-minute information with anyone who needs it, whenever they need it. What’s more, with the right implementation, you can decide what is shared and with whom.
There are already real-life commercial applications for blockchain and you’re going to be hearing a lot more about it in the months and years to come. Here are some of the current and emerging applications:
Competing suppliers can collaborate on the same project without exposing confidential information. Even if they don’t trust each other, they can trust the data because they know that it cannot be changed or deleted.
Health authorities can be sure that the medicines and equipment that they give to their staff are exactly what they are supposed to be, and that no unauthorised, counterfeit or unknown products are in circulation.
Supermarkets can use blockchain to provide a verifiable, unalterable and permanent record of everything they sell, including where it was sourced, when they bought it, where they stored it and when and where they sold it.
The military forces, and manufacturers in the aerospace and automotive industries can use it to make sure that no low-quality grey market components are in play.
Airline operators can use it to manage near real-time flight data, eliminating doubt by making sure that the same set of information is used to populate flight apps, web sites and gate monitors.
Governments can work with shipping companies, customs and border control agencies to remove manual processes and human error from the movement of goods and people.
In short, wherever you need to manage and share accurate and up-to-date information in order to realise its full value, blockchain will almost certainly be one of the enabling technologies.
What to consider before implementing blockchain
Although blockchain is a powerful enabler for digital transformation, and although its use in the private and public sectors is about to rapidly increase, it is only one of several important components that you need to consider as you embark on your journey to digital transformation.
There are many decisions to make. Consider teaming up with a firm of security specialists which not only understands how to implement blockchain but has a proven track record in your sector.
Unless you have full confidence in public domain blockchain solutions and are happy for everyone to see your data (encrypted or not), you need to consider additional measures to protect your data. This could include the hosting of private community blockchains on hardware security modules, such as those used by banks and other financial institutions.
You will need to develop and enforce policies and procedures that protect your ‘end point’ security. Public Key Infrastructure (PKI), which is already widely used to protect online transactions, is useful for ensuring that the end points are what they report to be. You also need to be able to authenticate the identity of the people who are using those devices.
The Public Key Infrastructure will almost certainly be part of your solution, but you should investigate how the true value of this can be realised by adopting additional services. Not all implementations are equal.
Not all information on a blockchain should be viewable by all people. More often than not confidentiality will require some data to be hidden from some stakeholders. Other key management protocols can be implemented to achieve this.
Take advice on what is achievable and what is advisable. Just because it can be done doesn’t mean it should be done.