Blockchain Evangelist & Cryptocurrency Proponent.
Blockchain has been a buzzword for the last couple of years arising out of the hype from Bitcoin. No doubt, the technology is promising as it allows for trust less-consensus between multiple parties based on peer-peer networking and secures hashes that cannot be altered by design.
As Governments and Private Sectors embark on the Digital Transformation journey, increasingly Blockchain is a part of conversations for providing immediate consensus, real-time information sharing and smart contracts, which can trigger payments based on preset conditions. However, in order for this technology to succeed, the biggest challenge is around identity verification and the ability to prove ownership in the digital world.
We at Go4 Blockchain empowering organizations to transform their businesses using Blockchain technology.
First, let us study some quick facts:
· People generally first hear about Blockchain through cryptocurrencies such as Bitcoin. However, Blockchain — the distributed ledger technology that underpins Bitcoin — has been increasingly adopted by businesses for a wider range of uses beyond digital currencies.
· The requirements of Blockchain for business are largely different to the public variant: the identity of participants must be known; permissioned Blockchains require no “proof of work”; and the scope of permissioned Blockchains is different.
· Enterprise Blockchain applications can be described in terms of the assets, participants and transactions that are to be shared in the business network. Taken together, these components run on distributed processing systems, that governs how Blockchain applications run.
· Smart contracts — the codification of the business rules that implement transactions — are effectively stored procedure calls that are run in multiple nodes on a network and whose outputs are agreed upon by all network members through a process of consensus.
· There is a challenge in mapping the assets, participants and transactions of a Blockchain solution to the technical realities of such a Blockchain processing system. Hyperledger projects hosted by The Linux Foundation aims to solve this problem.
Bitcoin was the first mainstream application of Blockchain and was introduced in a 2008 whitepaper by Satoshi Nakamoto. Since that time, use of Blockchain has increased dramatically and the term has somewhat evolved into a catch-all term for distributed ledger applications, which is the definition I will adopt here.
Blockchain applications have grown in popularity — both public (usually anonymous) networks and permissioned (business) networks. While both frameworks have valuable uses, the requirements of Blockchain for business are largely different from the public variant, for three broad reasons:
1) Businesses tend to operate in regulated environments, and requirements such as Anti Money Laundering (AML) and Know Your Customer (KYC) require that businesses understand the identity of the participants with whom they are transacting. While Bitcoin is all about anonymity (or rather, pseudonymity) where you can see the set of transactions but it is nearly impossible to infer who was involved in them, businesses usually require the total opposite: privacy, where users know and can trust the identity of participants in the network, but not necessarily the transactions that were completed.
2) In pseudonymous Blockchains, it is important to prevent untrusted participants from corrupting the network. Today, Bitcoin and other public Blockchains typically use a concept called “Proof of Work” to remove incentives for fraudulent behaviour by adding an artificial cost to transactions, which is represented by electricity consumption. Transaction validators prove they are genuine by revealing to the network their answer to computationally difficult cryptographic puzzles, which is a somewhat intelligent solution to the problem of trust but hugely inefficient use of processing capability. Permissioned Blockchains require none of this because participants are known and trusted. Business network participants stand to lose either reputationally or financially if transactions turn out to be invalid.
3) The scope of permissioned Blockchains is also different. Public Blockchains such as Bitcoin was originally designed around the peer-to-peer payments use-case, but businesses require ledgers that can be used to describe anything of worth. Business networks also tend to be smaller, closed systems (think about the scope of a supply chain network, for example). This is different from non-business Blockchains, which are typically open to anybody with a computer.
It is possible to illustrate these requirements by looking at the way business networks operate today. Wealth is generated by goods and services that flow over a business network, with the transfer of these goods and services recorded as a sequence of transactions on a ledger. Ledgers are extremely useful systems of record, as they describe all inputs and outputs of a business and consequently, their financial position. Ledgers have been around in various forms since the 1400s or even earlier.
Blockchain for business aims to model these basic tenets of business. Today, organizations own their ledgers and the business rules that dictate the flow of goods and services around the network. With business Blockchains, both the ledger and the business rules are shared within the business network, thereby removing much of the friction (and therefore cost) associated with doing business.
APT — Assets, Participants and Transactions
Enterprise Blockchain applications can be described in terms of the assets, participants and transactions that are to be shared in the business network:
· Assets can be anything of value that can be shared or transacted, from tangible assets such as cars, houses or diamonds, to intangible assets such as securities, intellectual property or even reference data. Cash is also a type of asset.
· Participants are the actors in a business network who need to share transaction information. Participants are usually businesses but could also represent people, regulators or other stakeholders.
· Transactions describe what can be done to the assets as they move around the business network.
Taken together, these components run on distributed processing systems, that governs how Blockchain applications run. Smart contracts — the codification of the business rules that implement transactions — are effectively stored procedure calls that are run in multiple nodes on a network and whose outputs are agreed upon by all network members through a process of consensus.
There is a challenge in mapping the assets, participants and transactions of a Blockchain solution to the technical realities of such a Blockchain processing system. It can manifest as a high cost of implementing a Blockchain application, given that significant effort needs to be spent implementing the logic that defines the business objects and smart contracts in a form that makes adequate use of the services that Blockchain provides.
When it comes to enterprises level Blockchain implementation. Hyperledger hosted by LINUX Foundation — an open source project and IBM Blockchain Platform is one of the finest choices.
Hyperledger was set up in December 2015 as a collaborative effort to advance cross-industry open-source Blockchain technologies for business. It is the fastest growing project in Linux Foundation history and the Hyperledger umbrella currently includes several technologies, from Blockchain frameworks such as Hyperledger Fabric and Hyperledger Sawtooth types of tools that provide services such as monitoring, identity, development and deployment. It also offers Hyperledger Composer for modelling purposes.
Hyperledger Sawtooth is a modular platform for building, deploying, and running distributed ledgers. Distributed ledgers provide a digital record (such as asset ownership) that is maintained without a central authority or implementation. Support both permissioned and permissionless Blockchain networks.
Hyperledger Fabric is a Blockchain framework implementation and one of the Hyperledger projects hosted by The Linux Foundation. Intended as a foundation for developing applications or solutions with a modular architecture, Hyperledger Fabric allows components, such as consensus and membership services, to be plug-and-play. Hyperledger Fabric leverages container technology to host smart contracts called “chaincode” that comprise the application logic of the system. Hyperledger Fabric was initially contributed by Digital Asset and IBM, as a result of the first hackathon. Only support permissioned Blockchain networks.
Blockchain’s advantageous tech has the potential to transform the Internet as we know it. There are challenges because of tech’s immaturity, but the increasing investments and R&D promise a bright future. It’s not an easy road, as many companies can be reluctant in implementing blockchain. But blockchain can help with that by providing conditional information based on what needs to be shared. With more enterprises trying to join consortia to work on blockchain proof of concepts and pilots, it’s won’t be long before large-scale projects are introduced. Blockchain has emerged as a disruptive technology and it’ll be an exciting journey for this tech as it takes the world by storm.
Blockchain has a huge amount of potential. IBM believes that Blockchain can do for transactions what the internet did for communications and information flow, and therefore, we expect the effects on business will be profound and positive. And as Blockchain practitioners, we can make this happen!
The author is a Pakistani Blockchain Evangelist and Cryptocurrency Proponent. Founder & CEO of Go4 Blockchain & Blockchain Strategist of NAi Tech. Board Advisor to ICOs and Supporting Blockchain’s NGOs & Associations worldwide.
Follow him on Twitter — @mahsankhan92 or read more about him — https://www.about.me/mahsankhan
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