When Amazon Web Services introduced Blockchain back in April this year, to compete with the growing number of vendors on the market, it became clear that the big enterprise players were keen to jump on the Blockchain-as-a Service (BaaS) bandwagon.
SAP also recognized this need and got on board with a BaaS called “Leonardo” which is based on Hyperledger and available in the SAP Cloud Service. Since this is a cloud service, it requires no on-premises software or hardware and is accessible from any device. Leonardo is a blockchain cloud service and supports the IoT in a single ecosystem. SAP HANA Blockchain service (coming soon) will offer a custom solution for enterprises depending on their specific needs.
A growing number of startups are also starting to embrace blockchain because it offers a realm of possibilities for both businesses and consumers, ranging from a whole new monetary system and method of facilitating international payments to a distributed ledger and data source that applies to many other business essentials such as supply chain, logistics, crowdfunding, etc. There are many possibilities for blockchain, and both companies and consumers are still figuring it all out. But for now, we are off to a good start.
What Exactly is Blockchain?
Blockchain is a technology that was created by the anonymous person (or group) using the pseudonym “Satoshi Nakamoto” in 2008. Although there were previous efforts in this area by other potential “creators,” it was Satoshi who brought Blockchain to life. Blockchains are distributed ledgers that rely on internet-connected, individual computers and open software across the globe, to verify individual transactions and maintain a continually growing list of records referred to as blocks. Since the process works with a series of blocks, it is aptly named blockchain.
Each newly created block receives a timestamp which connects it to the previous block. These blockchains are crowd validated and therefore resistant to any alterations as at least 50% of participating computers must confirm any given block. Crowd validation makes blockchain an exciting, safe, and verifiable solution for any transaction.
In summary, blockchain allows us to build applications where multiple parties can record transactions quickly and efficiently without needing a trusted, central authority to ensure that transactions are secure and verifiable. This decentralized validation is made possible by the establishment of a peer-to-peer network that gives each participant access to a shared ledger where independently verifiable transactions are recorded.
“Blockchain-as-a-service (BaaS) provides the easiest, lowest-risk gateway to experimenting with distributed ledger technology in the cloud.” – SAP
Blockchain-as-a-Service (BaaS) is set to play a crucial role in the IT sector going forward. According to a recent Gartner report; “as of February 2017, “blockchain” was the second most-searched-for term on Gartner.com, having increased in volume by 400% in the last 12 months.” In the same report, David Groombridge, research director at Gartner, said that “blockchain resolves the problem of a lack of trust between counterparties” which sums up why it’s so popular. It makes the whole process of business transactions more efficient and protected.
A recent report by IBM stated that “91 percent of surveyed banks are investing in blockchain solutions for deposit-taking by 2018 to protect against start-up non-banks.” These investments show just how much of an impact blockchain has made on the financial sector. Banking isn’t the only industry that can benefit from blockchain. Other industries are beginning to take notice, such as academia, music, areas, and cybersecurity – for a start. The point is that blockchain is about to become a regular part of our lives.
Why Do We Need Blockchain?
Business transactions take place every second on a daily basis, for example, orders, account tracking, payments, and more. Each participant often has their own ledger which means that their version of the truth may differ from other participants. Having multiple ledgers like this is a recipe for disaster as it can result in errors, inefficiency, and fraud. The difference in using blockchain is that all members share a universal version on the truth so it’s possible to see all transaction details end-to-end which reduces those vulnerabilities.
The reality is that ordinary transactions are complex and blockchain provides a way to bypass that unnecessary complexity. Here’s a brief comparison:
Issues with standard transactions:
- Each participant has their own ledger which increases the chance of fraud or human error.
- The process can become paper-laden, meaning a high frequency of delays and potential losses for stakeholders.
- The reliance on intermediaries for validation can create inefficiencies.
Benefits of blockchain transactions:
- There is a one single, shared, tamper-evident ledger and transactions can’t be altered once recorded.
- There is no need to track disparate ledgers.
- All network members have access rights so that confidential information is kept that way and shared only on a need-to-know basis.
- Before adding a new transaction to the network, all parties must give a consensus.
- Speeds up processes: Elimination or reduction of paper processes which makes the transactions more efficient.
- Security: Transactions require a consensus from all members of the network and validation before they are permanently recorded. Transactions cannot be deleted by any members, not even system admins.
Where Can We Use Blockchain?
The possibilities surrounding blockchain are endless. Let’s look at a few popular uses of blockchain and another few you may not have thought of.
Using blockchain means that you don’t have to build your own identity infrastructure - i.e., identity cards, badges, etc. These can all be replicated so how do you verify them? With blockchain, you can store your identity details in Ethereum's open blockchain, and this can be verified by anyone who queries by simply opening blockchain.
Storing records in paper ledgers makes them accessible to tampering. You can’t tamper with blockchain data. See what I’m getting at here? If someone starts messing with your records in blockchain, the chain is broken and you’ll know straight away.
Healthcare organizations are examining the use of blockchain to improve data sharing in healthcare. Securing medical data with blockchain could improve the wellness of patients, lower admin costs, significantly reduce fraudulent billing, and manage credentials.
Right now, you probably use Google Drive or Dropbox to store your documents, files, etc. The issue with this is that you’re trusting that those companies won’t look at your data or disclose it to any third party. Blockchain data is different. It’s decentralized and stored on different computers on a high encryption network. So basically, your data is locked away in a distributed vault that you – and only you – can access, quickly and at a lower cost.
Blockchain is an immutable data source for tracking goods through their lifespan. It tracks from raw material to the field and uses smart contracts to facilitate transactions between customers and dealers.
Blockchain networks allow multiple parties to transact directly without a central authority involved. Eliminating a central authority makes the whole process more efficient when it comes to clearing cross-border payments, settlements, and other financial transactions that usually require an intermediary.
Smart contracts based on blockchain can auto-approve trigger payments and claims which removes the need for manual intervention. Eliminating involving additional people could potentially automate claims management processes and heavily reduce fraud by verifying customers, claims, and policies.
Blockchain and Content Management
A CMS manages and distributes digital content. As we’ve seen, the blockchain introduces a new approach to storing, securing and managing digital data of all kinds through the introduction of its immutable, distributed ledger. For content that is regulated (e.g. subject to GDPR) or proprietary and monetized (such as an e-book), the idea of a blockchain-enabled CMS is appealing because it infuses the dissemination of content with an element of control and accountability. For the same reason that blockchain works so well in the healthcare, financial, notary and legal professions, a blockchain style CMS to manage the creation and display of content suitable for those industries is equally as desirable.
The Future of Blockchain
Blockchain is fast becoming recognized as the ledger system of the future. If you’re going to get on board, then you should do it now. This technology has vast potential that is being pushed even further by the high profile companies, research institutions and governments who continue to heavily invest in it.