[ad_1]
With cryptocurrencies that have lost more than 80% of their market value from the highs of January, it is right to ask what it means for blockchain, the technology behind the turbulent crypto market. There is a difference, obviously. The true potential value of Blockchain does not consist in making – or losing – the quick gain, but in helping to solve some of the major challenges of the Internet with regard to authentication and security. But it may be difficult to identify that long-term value given the clamor surrounding the bitcoins and their currencies. It's time to go back to the basics of the blockchain.
A recent issue of the Economist included a special report on criptovalute and blockchain. The general conclusion of the Economist was that "Bitcoin was a failure as a means of payment, but electrifying for speculators". His evaluation of the blockchain was somewhat more positive. "For the blockchain, the jury is still out, … Regarding the potential of the technology, however, most attempts to use it remain uncertain … The advantages of blockchain are often oversold."
In 2016, blockchain made the list of the Top Ten Emerging Technologies of the World Economic Forum. In the same year, the blockchain made its first appearance in the annual Gartner hype cycles. Even the Economist was guilty of overselling when he presented blockchain on the cover of the October 31, 2015 issue with the tag "The Trust Machine: How Bitcoin Technology could Change the World".
Is there too much clamor around the blockchain? Absolutely, but not surprising. All potentially transformative technologies are oversold in the early stages. Remember the dot com bubble of the end of the years & # 90; Blockchain is still in its early stages of experimentation and adoption. There is still a lot of work to do on standards, platforms, interoperability, applications and governance.
But does the blockchain have the potential to become a truly transformative technology over time? Yes, even if the hype has made it difficult not only to fix the long-term strategic value of the blockchain, but also the key key points of today. And so ….
What is the blockchain?
- A distributed database or ledger that is shared by participants in an ecosystem on a public or private computer network.
- Every information in the ledger is safe because it is encrypted using public key cryptography, which can only be decrypted with the appropriate private key.
- Each participant in the network has an identical copy of the ledger in their computer; its content is only available for those with the appropriate private / public keys.
- New information can be added to a blockchain; it can not be removed or overwritten, thus creating a perfect check history of all transactions in a registry.
- Various consent protocols are used to validate a new block among the participants in the ecosystem before it can be added to the ledger.
- Logs can include smart contracts, meaning programs are automatically activated when a set of specified conditions are met.
Common myths and misunderstandings of blockchain.
Blockchain and bitcoin are the same thing. Blockchain was created about ten years ago as the public transaction register for Bitcoin. Bitcoin was the first application supported by blockchain, but now there are many others.
Blockchain is better / worse than traditional databases. Blockchain allows members of an ecosystem to securely share data even if all members are not completely trusted. But there are significant disadvantages, including performance and complexity. Whether the blockchain is right for a particular solution depends on the trade-offs between its benefits and its disadvantages.
Blockchain is 100% safe and tamper proof. In principle, a blockchain could be tampered with if there was consensus among its members to do so – hopefully a very, very rare event if ecosystem participants are carefully checked and if the consent protocols are correctly established. While the basic blockchain infrastructure is very secure, adjacent applications have been attacked and hacked.
Blockchain is a "machine of truth". Garbage, trash. Blockchain is only a means to securely share the data stored in it. As with any other database, blockchain alone can not guarantee if the data entered is actually correct and true.
Cases of use of key blockchain
The cases of use of Blockchain fall into two basic categories: record keeping, static registers of data on goods of great value and transactions, dynamic registers of the exchange of tradable goods.
The cases of use of record keeping include long-term protection of data on valuable physical and digital resources, keeping track of information about the identities of people and smart contracts executable based on pre-defined conditions.
Transaction use cases include the monitoring of data relating to frequently traded goods, digital payments in near real time and emerging digital assets.
Strategic value of the blockchain
A recent McKinsey analysis of over 90 discrete use cases in 14 major areas revealed three fundamental insights into the strategic value of blockchain.
Blockchain does not need to be a disintermediatore to generate value
The disintermediation of public and financial institutions was in fact the original objective of the Bitcoin and Bitcoin blockchain. But the public blockcoin of Bitcoin, without authorization, is just a type of blockchain architecture, one without central authority, where anyone can join, read, write and engage. Authorization blockchains are hosted on public servers, are anonymous and highly resilient, but suffer from low scalability and high power consumption due to their use of job testing or evidence of stake protocols.
Most business use cases are based on authorized private blockchains, which are hosted on servers and private networks, and only authorized participants can join and control which data is shared, with whom and when.
As in the case of the Internet and the World Wide Web a few decades ago, an important part of the excitement for blockchains is that, once again, we are developing a potentially transformative platform based on open standards. Blockchain protocols could become universally accepted open standards for records, transactions and the management of reliable identities between companies, governments and individuals.
In the short term, the strategic value of blockchain is mainly in cost reduction
Over time, blockchain technologies will enable transformative business models and new revenue streams. But its initial impact will be to predominantly drive operational efficiency and reduce the costs and complexity of interactions between institutions that maintain business relationships around the world, such as record keeping and transaction reconciliation. Supply chain management, financial services, government and health care are likely to capture the most value in the short term.
"One of the most promising and transformative use cases is the creation of a distributed and secure digital identity, both for the identity of the consumer and for the process of knowledge of the commercial client, and the services associated with it. , the new business models that this would create are a long-term possibility due to current feasibility limits ".
Feasibility on a scale will probably be between three and five years
According to McKinsey, the feasibility of implementing a blockchain-scale solution depends on four key factors:
- Common standards are essential, – this is an important limitation in the ability to scale blockchain.
- Technology must advance, – the relative immaturity of the blockchain limits its current vitality.
- Resources must be able to be digitized – this is essential to improve record keeping or transaction via blockchain; for physical resources, it requires enabling technologies such as IoT and biometrics.
- The paradox of coopetition must be resolved: "The main advantage of Blockchain is the network effect, but while the potential benefits increase with the size of the network, the complexity of coordination also increases".
Finally, the report recommends that companies follow a structured and disciplined approach in implementing blockchain strategies:
Focus on specific and promising use cases. "Identifying value through a pragmatic and skeptical assessment of impact and feasibility at a granular level and focusing on addressing the real weaknesses with specific cases of use in certain sectors".
Optimize the blockchain strategy based on market position. "Capture value by adapting strategic approaches to the blockchain to their position in the market, taking into consideration measures such as the ability to shape the ecosystem, set standards and address regulatory barriers".
Irving Wladawsky-Berger has worked for IBM for 37 years and was a strategic advisor to Citigroup, HBO and Mastercard. He is a member of MIT and Imperial College and is a regular contributor to the CIO Journal.
