Where to Use Blockchain?

Transcript

Today we are talking about Block Chain. More specifically we are talking about where block chain technologies should be used within business applications. Full disclosure here, I am a bit of a block chain skeptic in this regard. I have had students and colleagues try and explain to me use cases where block chain is the correct technology to use, and I always find the explanations do not seem to know non block chain solutions to those same problems.

Let us start off reminding ourselves what block chain is. There are a few things that define it. 1) It is a ledger. (record of events) 2) It is a trust-less network based on cryptography. 3) It is distributed. Current state is agreed by consensus.

My technology background

Block chain is an distributed ledger. Somewhere in being distributed and being a ledger it seems to attract the qualifier “Immutable”. I realize after my time in this business, I am a database guy, so my heckles rise a bit when I hear people infer that a database is somehow unsecure. Of course, part of any record keeping system is that it represents changes in the world. Relational databases are particularly good at showing a picture of a set of objects at a point in time. They also log the transactions that got the database to its current state. We replicated data often: sometimes for high availability, sometime because different business processes overlap on some data. I dont think I ever heard anyone suggest gathering consensus, although we would generally measure the integrity of an overall system.

People that follow SSTC will know that I am an accountant by first profession. I have some experience with Ledgers. The notion of laying down transactions in a sequence has historically given us some confidence of the integrity of the balances. This is not new.

My Blockchain learning journey

In attempting to learn blockchain, the example that I examined was proving the chain of ownership of a diamond. The claim in the worked example, was that it modelled the chain of ownership from mine to current owner. To my eyes, it more accurately modelled the certificate of origin. There seemed a flaw in thinking. The certificate of origin is only loosely connected to the physical diamond.

The realization that I had, was that blockchain can be strongly linked with anything that can be uniquely represented digitally. It uses hashing. Hashing is a cryptographic technique to transform some set of bytes to some other set of bytes. A digital currency fits this very well. A certificate of origin fits this very well. The diamond itself less so.

Blockchain in a Digital World

In the purely digital world, this seems a very elegant way to assert rights over a digital asset. Indeed, non fungible tokens (NFT’s) seem to be a way of asserting ownership over intellectual property that exists in digital form. It is less clear what rights that ownership conveys. The previous mechanisms, Digital Rights Management (DRM) software, would ensured that the assets being distributed would not function without some key.

Blockchain spanning the Digital and Physical World

In the physical world many of the use cases that I have had proposed to me, either by students or by companies active in the field, seem to be reduced to serial tracking use cases. Serial numbers may be used in many areas. The Vehicle Identification Number for a vehicle is a good example. The VIN number is stamped on the vehicle and very difficult to seperate from it. In the UK the DVLA knows who the current owner is, and knows the history of the vehicle. If its mileage decreases by 10,000 miles at the next MOT, something is clearly wrong. Note however that this relies on DVLA maintaining that database. It does not seem to need a distributed ledger.

Most of my questions with students and companies in the field has not been, “How can we do this with block chain?”, but “Why is doing this with block chain better? ”. I think there is a rush to find problems most of which have solutions already in place. I am not saying we cannot build a better mousetrap, but presuming an answer seems bad science. The immutability argument often comes forward, stating that it is more secure, because no one person controls it. I think this is a cultural memory of the financial collapse in 2008. I think it has merit in some areas but I struggle to come up with examples.

One example that I recently saw was verifying the origin of French Wine being sold in China. A serial tag that would respond to Near Field was incorporated into the sealing of the bottle. To confirm the origin of the contents of the bottle, requires that the seal not be broken and the vinyard confirm it sealed the bottle through its public key. It was presented as a block chain example, but to my eyes the block chain adds a component and complexity that is not needed for the solution to work.

I hope people flood me with examples that are best solved through block chain solutions.

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Where to Use Blockchain?

Transcript

My technology background

My Blockchain learning journey

Blockchain in a Digital World

Blockchain spanning the Digital and Physical World

SSTC's Technology Advisory Services

Further Reading

Block chain itself

Non Fungible Tokens and Digital Rights Management

Business Applications of Blockchain Technology