Demystifying Blockchain and Key Trends

Authored By: By Purshottam Purswani, Chief Technology Officer (CTO), Atos India

Most conversations surrounding Blockchain so far have centred around Bitcoin, Cryptocurrencies and Financial Services. While these are the most commonly-known applications, Blockchain is capable of a lot more and can be applied to a vast number of different industries.

What is Blockchain?

Blockchain essentially provides a decentralized governance, enabling peers who share the same goal to trace and log events or data, without the need for the individuals involved to know and trust each other. Unlike centralized governance, it does not need a trusted third party and is by design, secured and scalable.

Peers are anonymously authenticated and access to data can be easily tailored. Beyond the application of Blockchain for Cryptocurrencies, the protocol is currently being used for several different applications around the world. For example, in Sweden, Blockchain is being implemented in the real estate industry to register and record land titles in a bid to digitize processes.

The NASDAQ is also using the technology for its own assets, transactions, and internal management system. In Estonia, NASDAQ is developing decentralized ledger technology (Blockchain) to improve proxy voting, company registration and public pension registration

What makes Blockchain unique?

• Distributed Ledger for Transparency: Every participating person, entity or nodes will have access to the entire database with no single party having full control. Everyone has equal rights to verify the content or record without involving an intermediary.
• Peer-to-Peer Transaction: Transactions happen at a peer-to-peer level. Once the transaction is verified and added into the block, it is then transmitted to all participating nodes/entities.
• A Single Version of Truth: Once the transaction is verified and added into the block, then there is no way to alter or modify the transaction record. This makes Blockchain the perfect technology for maintaining the accuracy and integrity of the transaction records forever.
• Less Friction in Operation: Elimination of intermediaries for authentication and validation.

Trends in Blockchain

• Decentralized Platforms

Blockchain enables the ecosystem to seamlessly share the value and profit/rewards without involving an intermediary. Since it allows a peer-to-peer interaction, whereby users can interact, transact or collaborate in the most secure and transparent way; platforms need to leverage the power and benefits guaranteed by Blockchain.

Blockchain-based platforms provide seamless transparency, authenticity and data integrity allowing users to engage in a peer-to-peer model and exchanging values/services without any intermediary. Users will be benefitted because of peer-to-peer secured interaction at zero or low cost. On the other hand, owners of these platforms will have better transparency in the whole ecosystem without adding any complexity.

Some examples of decentralized platforms are Lazooz (a collaborating cab sharing platform enabling private cars to share their vacant seats with other travelling in the same directions); OpenBazaar (allows buyers and sellers to enter into a deal with any kind of fees and or relying on intermediaries).

• Blockchain providing trust for Data Sharing Economy

It allows you to transact and interact in trustless mode (because trust is established by the reputation score in the Blockchain network). This allows you to share and monetize data (any data like customer KYC, customer browsing history, customer wish list, and alike) with external entities/vendors in a secured and within the compliance structure (established by Blockchain).

So, for example, a participant in a the chain network (let’s say a car comparison website) shares customer browsing history with car manufacturers and banks; then, using the shared data, cars manufacturers and banks approach the customer by SMS or email or call and give a personalized offer to help them in buying their dream car.

• Blockchain and IoT bringing transparency and M2M autonomous transactions in Supply Chain

Blockchain has already started disrupting the Supply Chain vertical due to its ability to solve concrete problems relating to traceability using IoT sensors for condition and location monitoring. Maersk has piloted the project for transforming containerized shipping to eliminate tracking and documentation issues.

IOTA (Blockchain without Blocks!) is an open source distributed ledger technology specifically designed for IoT to manage feeless transactions and data integrity. IOTA provides high scalability of transactions with minimum computation required.

By leveraging Blockchain, enterprises can:

• Secure your IoT ecosystem by securing your firmware or software distribution with the help of cryptography hashing.
• Eliminate human intervention, tampering, data duplication and data errors by storing and managing IoT data on Blockchain, providing end-to-end auditability and traceability.
• Automate tasks on the trigger of conditions (automated pay-out to the seller on material arrival, imposing a penalty to a logistics company in temperature of shipment rise above or below the threshold during transit).
• Facilitate autonomous M2M transactions without manual intervention (smart grids trading power at T&Cs and rates mentioned in Smart Contracts).

• Blockchain disrupting Banking and Finance

It is actively being explored by regulatory bodies like RBI in India for bringing transparency and security in Insurance claims processing, Letter of Credit, Clearing & Settlement, Trade Finance, among others. In fact, few banks in India have successfully done autonomous transactions for cross-border remittance, thus eliminating extensive paperwork and intermediaries. SBI (State Bank of India), has plans to go for aggressive deployment of Blockchain technology in its reconciliation, remittances, and trade finance operations in the fiscal year 2019.

Smart contracts are extensively used for automating business process operations as per configured conditions. For example, crop insurance claim pay-out would be automatically settled on claim intimation if the claim is validated with weather data.

Conclusion

Blockchain holds abundant promise for the industry verticals as far reaching as energy, insurance, media, politics, and transport; and it could be the ideal tool to overcome problems associated with centralized databases that can be easily hacked. Given its disruptive nature, industries, companies, and governments will need to adapt to this new approach; but it is also a highly secure and scalable, making it a highly viable technology for the long-term.