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Blockchain has its benefits, but can it live up to the hype?

Tamlin Magee | March 10, 2016
A variety of businesses are now experimenting with the technology.

Blockchain can also make transactions irrevocable, increasing the accuracy of records as well as simplifying back-office processes. See also: Blockchain is set to take the tech world by storm - here's why

And because it is digital, almost any document or asset can be expressed in code and then expressed in a ledger entry, Deloitte says, making the technology widely applicable.

Blockchain: Who is developing blockchain systems?

A number of initiatives have cropped up recently to help push blockchain into more mainstream usage. This typically means creating private networks for shared systems of records.

In September 2015, nine financial companies joined the R3 consortium to invest in blockchain in the finance sector: Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, Goldman Sachs, JP Morgan, RBS, State Street, and UBS. Just two weeks later they were quickly joined by another 13 - turning the consortium into a who's who of big financial interest - with Morgan Stanley, Deutsche Bank, HSBC and Societe Generale just some of the members.

Meanwhile, some financial heavy hitters like JP Morgan and Deutsche Borse Group, were joined with technology giants like Intel, Fujitsu, IBM and Hitachi in putting their collective muscle behind The Linux Foundation's Hyperledger project.

Hyperledger intends to advance the blockchain project by setting open standards collaboratively, so a network of businesses can agree on using one, decentralised public ledger.

IBM, meanwhile, has launched its own blockchain-as-a-service - available to developers on the cloud so businesses can begin experimenting with use-cases with a fully configured blockchain available immediately.

And that same Deloitte report highlights Ethereum - now available on the Microsoft Azure platform - which is a framework for supporting internet-of-things applications with transaction processing.

Blockchain: Challenges

But we should be careful not to view blockchain as an all-fixing panacea.

IBM's Jerry Cuomo believes there are people out there who are fundamentally misunderstanding the best uses for the technology.

"We sometimes get confused with the technology - for example we can use blockchain to replace a distributed database," Cuomo says. "But that's a terrible use of blockchain."

"There are great databases out there; this is not one of those purposes. You wouldn't apply a blockchain design pattern to solve a database problem."

"Blockchain makes sense when you're bringing businesses together with this consensus," Cuomo says. "The technology is important, but without building out that business collaboration? It's kind of missing the point."

Despite the promise of the positive noise being made about blockchain, it's clearly still early days.

Real-world use-cases are emerging, but the technology is only beginning to find its feet. Both banks and vendors who are invested in blockchain seem to be adopting a wait-and-see approach while at the same time enthusing about the possibilities.

It may just be that the collaboration that's so fundamental to the core of the technology is what drives its success, as businesses begin to network with one another - and begin to understand how the distributed ledger can help each of them.

 

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