In the past few years, blockchain has surfaced as one of the industry’s most overhyped and misunderstood technologies, alongside artificial Intelligence and the Internet of Things. Initially conceived as an underlying technology behind bitcoin and other cryptocurrencies, blockchain has been positioned as a panacea for a vast range of business and technology challenges, everything from IoT security to efficiency in financial markets.
This article features insights from industry expert, Anoop Nannra who is a founder of the Blockchain Business at Cisco. This innovation and incubation venture was created to explore both technical and business viability of enterprise scaled blockchain technology applied to existing and emerging business problems. The initiative covers markets opportunities spanning supply chain, mobility, IoT, and enterprise infrastructure. Anoop is also a co-founder and Chairman of the Trusted IoT Alliance, the only industry consortium focused specifically on the application of blockchain technologies to the Internet of Things.
Even now, as blockchain-based solutions are increasingly deployed in production environments, I still witness a lot of confusion and misconceptions about what this technology can and can’t do. In the simplest explanation, blockchain is a core technology that serves as a distributed ledger, allowing a shared set of computing systems to agree that a transaction between parties is authentic. These outcomes are recorded securely and permanently, providing a single source of truth for all parties involved.
That said, I thought it would be helpful to shed light on a few common misconceptions around the understanding and benefits of blockchain that our team has experienced to date:
Misconception #1: Blockchain doesn’t really relate to the IoT
This misconception couldn’t be farther from the truth. Blockchain can actually serve as the missing link for transformational IoT projects. Blockchain — combined with other technologies such as machine learning and fog computing — can advance business value. In an enterprise, where IoT data often crosses organizational boundaries and partner ecosystems, it is a big challenge for companies to ensure that this data is accurate, reliable and secure. Aside from that, it is even more difficult to reconcile the data, especially if it involves information from disparate sources that do not match. With blockchain technology, IoT practitioners can bring transparency and security to these decentralized transactions across operations and even borders, enabling all parties to look at a single source of truth.
Misconception #2: Blockchain IS BitcoinNope. As I said earlier, public versions of blockchain are actually used IN Bitcoin’s bookkeeping. In a way, Bitcoin and cryptocurrencies brought blockchain to the forefront, so it’s understandable that this misconception persists. However, Bitcoin (and other cryptocurrencies) is just one of many applications that can run atop a blockchain software platform. And there are applications for blockchain far beyond cryptocurrencies, including use cases in enterprise supply chains, healthcare and beyond. (More on use cases in No. 4, below).
Misconception #3: Blockchain networks are public and anonymousYes and no. Different kinds of blockchain networks exist, including both public and private networks. There are various categories of blockchain networks: some are public, some private, some permissioned some permission-less. Permission-less, public networks, like those used in cryptocurrency, allow users to remain anonymous as they track and verify transactions. However, large enterprises are more inclined to use private, permissioned blockchain networks. These networks allow known parties, like suppliers, customers and other partners to participate, as the company uses protocols to verify and assemble each blockchain. Private, permissioned networks also provide the added benefit of delivering thousands of transactions per section and offer granular control when managing who can access the data stored in the blockchain.
Misconception #4: Blockchain is only relevant for the financial services industryIt’s not surprising that the majority of discussions around blockchain focus on financial services applications (back to Misconception #2), but in fact blockchain technology can benefit many industries, and spans many use cases within those industries.
Healthcare. Take for example the healthcare industry. Every year, deaths occur because of medical errors stemming from incomplete pictures of patients’ medical histories. In the healthcare industry, patient data is siloed in various, legacy electronic health record (EHR) systems. This makes it difficult, if not impossible, for a doctor to gain a holistic view of the patient’s medical history and for patients to control access to their health data. By maintaining health records in a private blockchain network, medical professionals can request permission to access a patient’s record to serve their specific purpose and record transactions on the decentralized ledger. This can help doctors ensure they do not prescribe a treatment plan that will interfere with existing medications or conditions. With a single view of the truth, healthcare providers can improve patient safety and reduce risks.
Supply Chains and Manufacturing. Another example can be found in supply chains. The problem of counterfeit products infiltrating supply chains is estimated to cost U.S.-based semiconductor companies more than $7.5 billion a year alone. But companies are beginning to fight counterfeiting by implementing private blockchain ledgers throughout their supply chains. With a unique digital signature for each product or component, they can easily trace providence, chain of custody, and transfer of ownership for end-to-end visibility. I know this from experience because at Cisco we have spent the past couple of years developing a blockchain platform and application used in our own global supply chain.
Similarly, blockchain can improve food safety. Food supply chains can use it to quickly identify the origin and locations of recalled goods, rapidly mitigating the issue before it becomes catastrophic. In 2017, more than 20 million pounds of food were recalled. If a shipment of lettuce, for instance, is believed to be tainted with salmonella, manufacturers can trace it through the chain of custody and pinpoint where the contamination happened.
Automotive. My final example (though there are plenty more!) is in the automotive sector. In the last two to three years, OEMs have been increasing their explorations of blockchain. While much of that has been from a supply chain perspective, I’m now seeing use cases that cover data marketplaces and vehicle-to-infrastructure communication. Many OEMs are interested in new monetization models based on the data and data interaction that exist in and around vehicles. We have seen early models of this at the intersection of mobility and insurance, with driving patterns shared to an insurance provider’s cloud through an ODBII dongle. More recently, however, data marketplaces are emerging where OEMs and owners can more effectively monetize or extract addtional value from the data that they generate.
The Trusted IoT Alliance recently ran a global design challenge around Smart Mobility called the (P)ersonalized, (A)utonomous, (C)onnected, (E)lectrified Tour (PACE Tour). In this challenge, sponsors provided an Electric Jaguar that was blockchain enabled and driven from Barcelona to Berlin. At various stops along the way, hackathons were held where some of these use cases were prototyped and explored. In a blockchain future, an autonomous vehicle would express it’s identity to infrastructure to engage in a transaction. One of the solutions prototyped was the Jaguar expressing it’s intent to park in a parking garage. Only after the identity and current state of the vehicle was confirmed and verified, was the vehicle granted access to park. The state being verified was the current ownership status, theft status, funds in digital wallet. Only if these conditions were appropriately met, would the vehicle be granted access to park.
The Future of Blockchain: It's Bright!There are of course myriad other misconceptions around blockchain technology, like the idea that blockchain cannot be compromised (when this really depends on the quality of an organization’s security architecture).
At the same time, I can think of a dozen additional use cases where blockchain could add value and create a positive ROI. In fact, the global blockchain technology market, especially when paired with IoT, is expected to reach $7.59 billion by 2024, at a 37.2% CAGR. Given this forecast, I imagine the clouds of hype on one hand and misconceptions on the other will quickly fade as blockchain evolves into a highly valuable mainstream technology.