There has been a lot of hype surrounding technologies such as blockchain and cognitive computing. In the case of Blockchain this buzz is well deserved as it has the potential to revolutionize the way business is done on the Internet.
As blockchain strategies gain traction and the technology matures, organizations are becoming increasingly aware of the fundamental way that business transactions will change. However, many people still have a hard time pinning down exactly what it is and how implementing can help businesses be more successful. In this blog, our goal is to provide a brief overview of the Blockchain technology, provide a couple examples of how it has been applied and provide you with several links to learn more information.
So what is the problem with how we do it today
Let’s start of by first framing the problem with most traditional business networks. First and foremost, no business operates in a vacuum. Each participant must keep their own ledger and asset transfers between businesses are slow, inefficient, and costly.
For example, lets’ take the example of a Car Leasing Business Network, as shown below. Without blockchain, this is how the business network would look like:
Note for more details on the entire case study, checkout https://www.altoros.com/blog/the-difference-with-blockchain/
In the traditional scenario you can clearly see the severe deficit of trust caused by the inefficiencies in record keeping and the ability of back actors to influences outcomes to benefit themselves.
we can already see several concerns such as:
- Multiple ledgers – making it difficult to figure out who owns what and when ownership gets transferred.
- This is EXPENSIVE and INEFFICIENT – due to duplication by almost every network participant along with adding several layers intermediaries adding costs to the services.
- Slow updates – As each participant has its own ledger, real-time synchronization isn’t possible
- Error-prone updates – Each participant has to rely on its own business processes to update their ledger and as there is NO central authority this will lead to errors.
Simply put, the Blockchain is a shared version of the truth for anything that can be captured in a digital format (e.g., stocks, music, e-book, contracts, securities, titles, etc.). The Blockchain relies on a digital ledger that maintains an ever growing list of data records, which are decentralized and tamper proof.
The best know example of this new database technology is Bitcoin. Here are a few of the possible applications of this new technology.
Another great example for the application of blockchain is real estate property around the world:
Imagine the number of legal documents that should be used that way. Instead of passing them to each other, losing track of versions, and not being in sync with the other version, why can’t *all* business documents become shared instead of transferred back and forth? So many types of legal contracts would be ideal for that kind of workflow.You don’t need a blockchain to share documents, but the shared documents analogy is a powerful one.”
Now if we take a look at our Car Leading example with blockchain involved, this is how the network would look like
The car leasing network gets some benefits with blockchain:
Shared ledger. The ledger is now an append-only distributed system of record shared across all participants in the business network.
Smart contracts. Smart contracts are business terms embedded in transaction databases and executed with transactions.
Consensus. All participants in the business network agree to network verified transactions.
In addition these benefits, the process has
- Shared records but administered in a centralized way
- Permissions. Viewing permissions are defined for each participant in the business network to ensure privacy.
- Efficiency. Transaction times and data synchronization is reduced from days to near real time. Overhead and intermediary cost reductions.
- Reduced risk. Risk of tampering and fraud is reduced with transaction certifications and signatures.
In the next post we will deep a little deeper into the how Blockchain works. IBM is a recognized leader in making blockchain real for business. We are helping many hundreds of clients on their blockchain journeys. Here are some additional links
- IBM Blockchain
- Real blockchain applications
- Blockchain chaincode for Java developers
- Understand the fundamentals of IBM Blockchain
“What is Blockchain Technology? A Step-by-Step Guide For Beginners”, retrieved 9-16-2017, https://blockgeeks.com/guides/what-is-blockchain-technology/