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FAQ: What is blockchain and how can it help business?

Lucas Mearian | April 26, 2017
The distributed ledger technology has enormous potential for firms that figure out how best to use it.

For example, IBM Watson Health and the U.S. Food and Drug Administration are exploring the use of blockchain for secure patient data exchange, including sensitive electronic medical records, clinical trials and data culled from mobile devices and wearables.

While it's still early days, de Crespigny noted that more vendors are producing business-specific products, "which is really what's needed."

How can it help those industries? Blockchain eliminates huge amounts of recordkeeping, which can get very confusing when there are multiple parties involved in a transaction, according to Saurabh Gupta, vice president of strategy at IT services company Genpact. "Blockchain and distributed ledgers may eventually be the method for integrating the entire commercial world's record keeping," Gupta said in an email to Computerworld.

Genpact, for example, just released a service for finance and accounting that leverages blockchain-based smart contracts to capture all terms and conditions between a customer and an organization for an order.

Accenture recently released a report that claimed blockchain technology could reduce infrastructure costs for eight of the world's 10 largest investment banks by an average of 30%, "translating to $8 billion to $12 billion in annual cost savings for those banks."

The Bank of England is considering ways that it can use blockchain for payments, clearing and settlement.

In another example, Acronis introduced blockchain technology in its True Image 2017 data backup software. The blockchain platform is used as a data certification and verification element -- a type of electronic document signing or notary service.

Are there drawbacks to using it? The same thing that makes blockchain attractive, its distributed nature, also makes it a potential security threat. In the enterprise, centralized control can translate into security. With blockchain, which is decentralized,  the technology works best when information sharing is a necessity across multiple, often disparate, parties.

Central control, as in a single administrator, can also be a double-edged sword since a single point of control is also a single point of failure, according to Serguei Beloussov, CEO of Acronis. While Beloussov himself believes blockchain is secure, he has several computer scientists on his staff that believe it's not -- and say it can be penetrated.

Then there's Satoshi Nakamoto. That could be one person's name or a pseudonym for a group of developers -- no one appears to know for sure. But Nakamoto holds 1 million bitcoins, or the equivalent to $1.1 billion. That has led some in Beloussov's company to speculate that the whole thing could be a giant Ponzi scheme, though there's no evidence to indicate that.

Has the encryption ever been broken? No. "That's not how this sort of thing will get broken. It'll get broken because of some insecurity in the software," said Bruce Schneier, a cryptographer and security expert. Schneier was referring to the fact that there are many versions of blockchain, such as Ethereum, a custom-built platform that was introduced in 2013 by then 19-year-old developer Vitalik Buterin. Additionally, vendors such as Microsoft and IBM have introduced blockchain capabilities in their software and services.

 

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