The promise of blockchain is often described as a, “transfer of trust in a trustless world.” The distributed ledger technology eliminates the need for centralized third parties to verify transactions, and all participating parties are anonymous. It is incredibly difficult to hack and less vulnerable to breaches, yet it is ironically a ‘lack of trust’ in blockchain that may be its biggest hurdle.
PwC’s Global Blockchain Survey 2018 found that while 84 percent of the 600 respondents’ companies are investing in the technology, 45 percent of respondents believe that lack of trust among users will be a top barrier to blockchain adoption. This lack of trust stems primarily from not fully understanding the technology, uncertainty surrounding regulation, and concerns about the inability to bring networks together.
This should be no surprise to CIOs though. Every day, in every business deal or potential partnership, there is an inundation of risk assessments, audits, data security assurances, compliance and regulation issues. The CIO is constantly working to build trust in the business, its networks, its data protection, security and privacy and effectively communicate these measures.
As many CIOs start analyzing if and how blockchain can transform their business, and begin making critical decisions on what blockchain models to use and how to implement, PwC shares a few key initiatives to bridge the trust gap:
Confront risks early
Plan to add cybersecurity, compliance, and legal and audit specialists to blockchain development teams. Involving from the start will enable you to build a framework that regulators and all your stakeholders will trust.
Consider privacy implications
Blockchain needs to fit into enterprise privacy strategies. GDPR, for example, requires that personally identifiable information be erasable. This has to be reconciled with the fact that data immutability is an important characteristic of blockchain.
Invest in data and processes
Traditional organizational processes, such as sales, manufacturing and shipping, are often suboptimal and siloed. Focusing efforts to streamline processes and data flows lays the groundwork for blockchain efforts.
If these key areas are effectively addressed ahead of time, blockchain can make a significant impact on businesses far beyond cyber money. In fact, PwC survey respondents also believe its impact will be more widespread across a variety of sectors including energy and utilities, healthcare, and industrial products.
This prediction is especially valid when considering smart contracts and their correlation with blockchain. Although blockchain and cryptocurrency, specifically Bitcoin, have been getting a lot of buzz and hype in the last 10 years or so, the term “smart contract”’ has been used since 1993. By definition, smart contracts are applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference. The emergence of newer technologies like Ethereum, a decentralized platform that runs smart contracts, finally gives blockchain more use cases beyond transactions.
When ACI Specialty Benefits was digitally transforming its infrastructure in 2010 to meet a growing demand for global employee benefits, it made a lot of sense to use blockchain to facilitate international payment processing in real-time. Sending money cross-border was not only slow and cumbersome it was expensive. By utilizing blockchain and smart contracts, ACI was able to set up its SaaS platform to accept payments in real-time, allowing its clients to have on-demand provisioning of resources.
Utilizing IBM’s ADEPT, or Autonomous Decentralized Peer-to-Peer Telemetry, ACI also implemented multiple blockchain protocols to provide a backbone to its BYOD scheme. This backbone has helped ACI eliminate the need of a central hub or “bridge” previously required between all devices, while also achieving significant cost savings by allowing devices to communicate with each-other autonomously and reducing the need (by ~3 orders of magnitude) to manage multiple software updates, bugs, or any other one-off needs.
There is no denying blockchain is making an impact, but no one is fully certain how it will all play out. Even though this makes for an incredibly exciting time to be a technologist, it’s vital to fully evaluate your business needs, core competencies and KPIs to figure out exactly how blockchain technology can support your goals. It’s easy to deploy blockchain technologies today but managing the network can be tedious based on your technical know-how. Luckily, due to its many use cases and growth within the marketplace, there are now BaaS, or Blockchain as a Service companies that can help ensure your business is using the right technology for your specific use case.