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Blockchain is a misunderstood technology that I see direct to solve the wrong problems. According to a 2018 Gartner study, only 1% of CIOs report that their companies have attempted to implement blockchain. For further adoption, David Furlonger, vice president of Gartner, notes: "It is crucial to understand what the blockchain is and what it is capable of today."
What's the problem with blockchain?
My team consults and implements data management solutions, so the question of how to use blockchain has emerged frequently. The problem for me is that too many teams focus on solving data management problems with blockchain. This is a challenge because blockchain performance usually pales over the data processing capabilities already present in most companies when viewed side-by-side. We immediately learned these challenges when we experimented with blockchain prototypes.
Cryptocurrencies offer good examples of challenges in data processing to be expected when blockchain projects grow, since they are the biggest blockchain implementations right now. & Nbsp; A piece of opinion from MarketWatch known one of the most popular Bitcoin clients supports only five to seven transactions per second compared to 25,000 per second processed by Visa. Consensus mechanisms integrated into the blockchain significantly limit data processing rates compared to traditional databases.
Not only is blockchain data processing slower, but it also seems to be less energy efficient, a concept explained by a recent & nbsp;Economist article (Paywall). Indeed, a recent BBC article notes that the validation of cryptocurrency data (ie crypto-mining) in Iceland is on track to consume more energy this year of all Icelandic families combined.
The reason why technology teams are struggling to figure out where to use blockchain is understandable. What is the point if blockchain is slower, more difficult to implement and less efficient than standard data management software?
Could blockchain remove the operational friction?
Anyone who has tried to make a purchase, such as a car or a house, can appreciate how complex a two-party transaction is to complete a large-scale transaction. Funds must be verified, disclosures must be made in writing, title searches must be done and so on. All that legal documentation and bureaucratic discussions only serve to ensure that two or more parties follow what they have already agreed to do.
Critical questions must be answered whenever large sums of money or legal risks are involved.
• & nbsp; Does this party legally own the resource I'm trying to buy?
• Will this party actually pay me what they say they will do?
• & nbsp; How can I make sure that this group distributes the goods once I have given them my money?
Often, these questions must be solved by multiple third parties. The problem here, in my opinion, is a lack of trust between the parties. In the current operating model of many companies, data management and approval processes are performed by third parties. This creates an operational overhead when it is necessary to involve this additional part to ensure that each request is valid and that the records are accurately maintained. A large number of excesses and operational intermediaries could be removed from many industries if there was a way to verify property rights and then apply follow-through on payment and delivery.
It is here that focuses on Blockchain distributed consent it could come into play. Typically, data in a blockchain is replicated and archived among the participants. The updating of this data requires the approval of the majority of participants, who verify that the requested modification is valid and allowed according to the programmed rules of the blockchain. Participants within each blockchain implementation act both as users and as data controllers, which essentially eliminates the need for excessive intermediaries and other bureaucratic nonsense to arbitrate transactions.
I believe that the value of blockchain is the automation of trust between the parties. This is the main purpose of the blockchain. Blockchain is not just a more elaborate version of a database. It can significantly reduce the operational friction required to validate ownership, identity and contractual terms by allowing participants to interact directly with each other without anyone in the middle providing verification.
When I look for places to implement blockchain, I do not think the question is where data flows or data management can be made more efficient. This is where we can remove the need for trust-based overload. Brian Behlendorf, executive director of Hyperledger, summarized everything perfectly from Barron when he said, "Blockchain is not a technological solution to a technological problem, it's a technological solution to a political problem."
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Blockchain is a misunderstood technology that I see direct to solve the wrong problems. According to a Gartner study in 2018, only 1% of CIOs report that their companies have tried to implement blockchain. For further adoption, David Furlonger, vice president of Gartner, notes: "It is crucial to understand what the blockchain is and what it is capable of today."
What's the problem with blockchain?
My team consults and implements data management solutions, so the question of how to use blockchain has emerged frequently. The problem for me is that too many teams focus on solving data management problems with blockchain. This is a challenge because blockchain performance usually pales over the data processing capabilities already present in most companies when viewed side-by-side. We immediately learned these challenges when we experimented with blockchain prototypes.
Cryptocurrencies offer good examples of challenges in data processing and we expect blockchain projects to grow, since they are the biggest blockchain implementations right now. A piece of MarketWatch's opinion noted that one of the most popular Bitcoin clients supports only five to seven transactions per second compared to the 25,000 per second processed by Visa. Consensus mechanisms integrated into the blockchain significantly limit data processing rates compared to traditional databases.
Not only is the processing of data in blockchains slower, but it also seems to be less energy efficient, a concept explained by a recent Economist article (Paywall). In fact, a recent BBC article notes that cryptocurrency data mining (or crypto-mining) operations in Iceland are on track to consume more energy this year than all Icelandic families combined.
The reason why technology teams are struggling to figure out where to use blockchain is understandable. What is the point if blockchain is slower, more difficult to implement and less efficient than standard data management software?
Could blockchain remove the operational friction?
Anyone who has tried to make a purchase, such as a car or a house, can appreciate how complex a two-party transaction is to complete a large-scale transaction. Funds must be verified, disclosures must be made in writing, title searches must be done and so on. All that legal documentation and bureaucratic discussions only serve to ensure that two or more parties follow what they have already agreed to do.
Critical questions must be answered whenever large sums of money or legal risks are involved.
• Does this party legally own the resource I am trying to buy?
• Will this party actually pay me what they say they will do?
• How can I make sure that this group delivers the goods once I have given them my money?
Often, these questions must be solved by multiple third parties. The problem here, in my opinion, is a lack of trust between the parties. In the current operating model of many companies, data management and approval processes are performed by third parties. This creates an operational overhead when it is necessary to involve this additional part to ensure that each request is valid and that the records are accurately maintained. A large number of excesses and operational intermediaries could be removed from many industries if there was a way to verify property rights and then apply follow-through on payment and delivery.
It is here that focuses on Blockchain distributed consent it could come into play. Typically, data in a blockchain is replicated and archived among the participants. The updating of this data requires the approval of the majority of participants, who verify that the requested modification is valid and allowed according to the programmed rules of the blockchain. Participants within each blockchain implementation act both as users and as data controllers, which essentially eliminates the need for excessive intermediaries and other bureaucratic nonsense to arbitrate transactions.
I believe that the value of blockchain is the automation of trust between the parties. This is the main purpose of the blockchain. Blockchain is not just a more elaborate version of a database. It can significantly reduce the operational friction required to validate ownership, identity and contractual terms by allowing participants to interact directly with each other without anyone in the middle providing verification.
When I look for places to implement blockchain, I do not think the question is where data flows or data management can be made more efficient. This is where we can remove the need for trust-based overload. Brian Behlendorf, executive director of Hyperledger, summed up everything Barron said when he said: "Blockchain is not a technological solution to a technological problem, it's a technological solution to a political problem."
