The blockchain technology market is projected to see a 61.5 percent compound annual growth rate through 2021 according to MarketWatch
20 Aug, 2017VENTUREBEAT.COM
The blockchain technology market is projected to see a 61.5 percent compound annual growth rate through 2021 according to MarketWatch. And we’re seeing companies from across the spectrum — from finance, logistics, and manufacturing to research, computing, and insurance — looking to roll out blockchain projects. But what, exactly, is the appeal of this technology?
In general, there seem to be three driving factors:
1. Gartner’s prophesied digital mesh — the increased blending of people, devices, content, and services — grows more corporeal daily. The way people interact with businesses is evolving, as is the way businesses interact with each other. This blurring of traditional modes of communication and exchange is driven by digitalization and necessitates new business processes and models to cope with an increasingly connected world. Blockchain technology addresses these changes.
2. The new business models required to support this digital mesh are increasingly being built around decentralized networks. Third-party intermediaries and old B2B exchanges that reduce speed and agility don’t apply anymore. We’ve been consistently moving away from central clearinghouses, as partnerships and collaborative engagements at every level become more direct and peer-to-peer. Blockchain technology addresses these changes.
3. Peer-to-peer transactions still require security. There is a need for new technical capabilities to support security and integrity for decentralized networks, and to do so persistently. Blockchain technology addresses these changes.
If you’re not already familiar with the blockchain model, this section’s for you. Broadly, blockchain works by consensus and may optionally include smart contracts (code within the network). There is no central authority or data store, and the chain is distributed across a peer-to-peer network of nodes and participants. During processing, transactions are added to a “block.” The block is replicated to all the participants that need to validate the transactions. The validated block is then added to the “chain.” The chain is key to the system’s value. Any block will contain a reference to its preceding block via a cryptographic hash. If anyone surreptitiously manipulates the content in a block, that hash will no longer be valid. This creates a kind of append-only data structure and tamper-proof audit log. In many ways, blockchain may be thought of as a decentralized data management platform and asynchronous, global publishing layer that provides:
There are many use cases for blockchain in the enterprise: securely managing product provenance (the journey of an asset from raw material to manufactured goods), consumer contracts (insurance claims, real-estate transactions, utilities), and transaction exchanges (financial, health, energy, government). But blockchain isn’t appropriate for everything.
For some blockchain applications, significant questions still need to be resolved, including:
In short, there are bidirectional interactions and integration points between enterprise systems and a blockchain to consider. A map of which might look like this:
Tools and technologies are emerging and being extended to help introduce blockchain into a larger operational fold. But even with an appropriate integration strategy, not every problem requires a blockchain! Here are some issues to consider:
While it isn’t magic and it doesn’t suit every use case, blockchain does present an interesting model for trusted exchange and collaboration in our increasingly networked and digitized world. The only sure way to determine if it is applicable to your organization’s needs is to experiment with it yourself.