Blockchain after the hype – Part 4

Blockchain platforms offer several unique characteristics which go far beyond crypto currencies and the conventional methods of data storage and sharing. It is unfortunate that the hype around blockchain distracted the attention from those features. Now that the hype is over, we slowly start to see the real potential of blockchain platforms. Let us start with those characteristics and see which benefits they can provide in real (business) environments.

Conventional data methods and information technology infrastructure is based on the ‘onion method’ when it comes to providing cyber security. Several layers of security are built around the data and systems that provide access to that data. Like the layers of an onion. The database system will have some security features and assume that the infrastructure it runs on is protected by other measures. Layers provided by technology to keep data secure.

An APP offers for example a login option, but the developers will assume that the network is protected by another layer. The web browser can offer encrypted connections but is not responsible for what happens beyond that connection. The database behind a website is not handling the security demands of that website and the network connection.

Modern development and deployment methods push these concepts even further by advocating to use what is available and adding attributes or functions. Embrace rather than develop is a hidden message in for example the Agile Framework. Speed of demand changes and short release cycles to benefit from improvements as soon as possible all presume that security and privacy are handled “somewhere”, “somehow”.

Blockchain changes that entirely by providing not only Cyber Security by design. Blockchain takes security to the next level by integrating a set of security measures into the data itself. This is driven by the design assumption that the data itself needs to be able to thwart external attempts to manipulate the data and the assumption that such attempts will be made despite external security measures. Those design assumptions are very realistic when we consider that a significant part of the cyber security issues and data breaches are the result of human error. And an even more concerning share of those is caused by insider attacks. A person within the organization with access to the data.

Authorization, consistency, authenticity and validation of data have become just as important as the data itself. With blockchain’s set of safety and validation features built into the data and lack of dependencies on external security measures, blockchain offers these features. As part of the data!

Use cases for these specific features of blockchain are available in abundance. Anywhere and everywhere where data needs to be trusted as ‘true’, blockchain can become a guardian of the ‘technical truth’. Technical truth is not the same as factual truth, and many in the field appear to confuse these concepts. A factual truth depends on many factors, which can also change over time. “It is raining” might be a temporary factual truth at a certain moment and at a certain location but is not a universal factual truth for all times and all situations. Categorized properly, “It is raining” becomes a technical truth when combined with timestamp and location. The technical truth was created by combining a fact with a reach, and yet it still is not always a universal truth. “It is raining” at that location and at that time still does not apply to the inside situation. It didn’t rain inside the house, for example. On the other hand, the weather forecast isn’t a technical truth either, and it wouldn’t make much sense to put it on a blockchain platform.

A technical truth is a fact which applies to the conditions under which it occurred. Blockchain offers a wide set of unique features which makes it a reliable platform to store and maintain technical truth and protect it against external influences. Encryption based on industry class cryptography in combination with the consensus protocols and distributed ledger ensure that there is a network which upholds that technical truth, without depending on a single instance. Or even worse, multiple unsynchronized instances which all provide their own version of the truth.

Bringing security by design as part of the data and guarding technical truth together, we come a stronghold of blockchain platforms is does revolutionize our concepts of data handling and processing, and will continue to disrupt industries and organizations. Where we currently depend on registries and authorities to administer assets and mandates, blockchain can tokenize these. An asset as a token on a blockchain. Its title holder as a token on a blockchain. A transfer of title as a token on a blockchain. Replacing formal cadasters with a digitized ledger. Speeding up processes and eliminating centralized centers of power.

It is a powerful scenario, a script that would kick the digital transformation of governments and regulators into overdrive. The challenges are that such cadasters and registrar bodies are made mandatory by legislation, and those legislations are (not yet) ready to replace the centralized bodies with a digital decentralized version.

Moving away from the restrictions of legislation and regulations, blockchain can (and already is although still mostly in trial and prototyping stage) ease trade and registration of assets, entities and identities. The technical truth of identity and possession form ideal use cases for blockchain platforms. Especially because the by definition include multiple partners and, in most cases, require transparency. Blockchain platforms can offer the benefits of being the single source of data for all parties and at the same time provide controlled transparency to those who have an interest in the data. And that, as mentioned, with security by design integrated into the data itself!

When we look at complex data structures, we will quickly identify many use cases which include multiple partners. Complex Supply Chains are a perfect example of this. A t-shirt could involve 100 parties until it reaches the consumer, and not every t-shirt from a brand will always have the same parties involved. Having multiple suppliers along the supply chain has become a common strategic approach to prevent dependencies and increase the ability to respond to market developments.

Consumers and controlling bodies have focuses in on the fashion industry and its negative side effects down their supply chain. Blockchain platforms can (and some promising trials are already doing so) provide a fingerprinting backbone, in which each company along the supply chain adds a fingerprint for the final product on a chain. Where was the fabric created, by which company? Which dyes have been used? Are those companies certified and validated to provide fair and safe working conditions? Fingerprints on a blockchain can provide that information to consumer and authorities.

Digital fingerprinting can be utilized in many use cases where transparency is required. Quality Management systems can benefit from a chain of fingerprints to identify the source of issue and initiate pinpointed counter measures.

Cyber Security scenarios which benefit from digital fingerprinting with blockchain keep growing. Not only can we determine who has access to what in an immutable way, we can also determine who actually had access and when, even from where. With an immutable fingerprint! Smart devices which are out in the field as IoT can check the digital fingerprint of their current firmware and trigger an update when needed. Of course, only when the digital fingerprint of the new version is validated.

Manufacturers of connected devices can use digital fingerprinting to validate their devices before bringing them back into their own infrastructure, for example for service on an electrical vehicle. Insurance companies can use digital fingerprints to validate if the insured asset is manipulated or not. Blockchain platforms will expand the usage of digital fingerprints far beyond what we current know and see.

Blockchain platforms provide unique opportunities which can speed up the digital transformation of our society. This doesn’t automatically mean that they will happen. In many cases, there is regulation which hinders the swift takeover by blockchain. In other cases, the costs of blockchain platforms outweigh by far its potential benefits. And last but not least, there is a shift of power and with that a shift of financial interest needed to replace some of the conventional platforms and bodies with the (semi) decentralized blockchain, and those are not willing to hand over the key to their power and profits without a fight. In many cases we will even see that cadasters and registration bodies will simply replace their current platforms by blockchain platforms without reducing their total control over the data and the process.

In the next article, we will put these characteristics to the test in some real use cases and see which benefits they provide.

See also:

Blockchain after the hype – Part 1

Blockchain after the Hype – Part 2

Blockchain after the Hype – Part 3

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