Blockchain hype exposes areas to be wary about
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Blockchain hype exposes areas to be wary about

Everyone is talking about blockchain but it still causes a lot of confusion. John Young, senior director and CTO of architecture and business evolution at Avaya, shares his views on everything from hype, to industry implications, to what businesses should be wary about.

 

Blockchain still causes a lot of confusion in the industry – what is the most important thing for companies to understand?

Blockchain is essentially a shared, distributed ledger technology that supports a publicly auditable record of immutably stored transactions. It can be used to dramatically transform business processes and the way in which different types of digital assets are managed. Although Blockchain has tremendous potential, it is still a nascent technology that is complex in nature and requires a multitude of different technology skillsets to properly deploy and support.

 

What is the hardest area to explain and how do you tackle it?

From a technical perspective, it can be challenging to understand the mechanics of decentralised consensus algorithms within a public blockchain. In everyday life, transactions are often expected to be deterministic in nature; a central authority, such as a bank, decides whether a transaction has successfully been completed. In the case of decentralised consensus, the rules for validating individual transactions are well understood. Each party within the network effectively has their own copy of the blockchain ledger and participates in the validation of individual transactions. For consensus algorithms such as Proof of Work, an individual node must validate the individual transactions and solve a computationally expensive hashing problem before being able to include the validated transactions within a new block on the blockchain. The process of gaining consensus on validated transactions is therefore probabilistic in nature. The notion of gaining consensus across a distributed, untrusted network when no central authority exists is a new concept to many individuals.

Read an interview with the author of ‘Blockchain For Dummies’ and download the first chapter as a PDF. Check out: Blockchain For Dummies: What you really need to know

When discussing specific consensus algorithms (e.g. Proof of Work) within a public blockchain it can be helpful to draw a distinction between the process of validating transactions and the computational steps that are performed in order to prevent Distributed Denial of Service (DDOS) attacks or cryptocurrency fraud.

 

The benefits of blockchain have been talked up a lot over the last 18 months, which bits do you think are hype?

Although Blockchain is an exceptionally powerful enabling technology, some of the initial market exuberance resulted in blockchain technology being touted as a proverbial “silver bullet”. The technology is still nascent. Organisations that are assessing the use of blockchain for use within their operations, need to realise that the actual deployment of this technology is complex in nature and requires a multitude of different technology skillsets.

Some of the initial market hype was arguably due to inflated expectations about the capabilities of blockchain. As an example, the security benefits associated with blockchain were possibly overstated in some respects. Use of cryptographic algorithms that mathematically hash the data/information that is stored onto the Blockchain yields a resounding security benefit. The immutability of blockchain data also represents a key security benefit. Once a transaction has been committed to the blockchain a single party cannot reverse it, nor can someone tamper with it. Security concerns do however exist regarding the use of Smart Contracts (e.g. programmes executed on the Ethereum Blockchain). Design or programming errors that may inadvertently be introduced into Smart Contracts can result in some very severe security vulnerabilities. These types of flaws can and have been exploited by bad actors in order to compromise the Ethereum Blockchain. 

 

How is blockchain technology transforming Avaya’s emerging suite of mobile-centric network services?

Blockchain technology has the potential to transform the design of our mobile centric solutions as we build use cases with our customers. These emerging network services will support a seamless end-to-end digital experience for mobile callers as they interact with the enterprise's contact centre and its mobile web. Avaya believes that there is a strong natural alignment between many smartphone-centric use cases and the use of blockchain.

If we look at identity and access management for example, the identity record for a mobile caller can be securely and immutably stored on the blockchain and then subsequently referenced by third parties to conclusively validate that identity. An identity record can be created by mathematically hashing multiple types of identity information that are available from the smartphone. Biometric data (e.g. facial, voice, finger print etc.) can be natively provided from many of these devices. In this way, the solution can support multiple factors of authentication. Data that uniquely characterises the device can also effectively be used to bind the user to their mobile device and provide a further level of confidence. Avaya believes that there will be a very natural alignment between upcoming mobile-centric network services and the use of blockchain technology.  

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What are the implications of blockchain for identity management?

Blockchain is a highly suitable technology as the foundation for an identity management solution. Such a solution must protect confidential identity data from unintentional disclosure. It must conclusively authenticate an asserted identity and it should only authorise access to the relevant data. Finally, the solution must preserve ownership of the identity. An identity should not be so tightly bound to a service provider that it loses portability for the identity owner. 

Blockchain can be used to immutably record the data that is needed to support these requirements. This data can be based on rich forms of biometric data (e.g. facial recognition, voice, finger print etc.) and device-specific information. The resulting identity record for an individual or organisational entity can be securely and immutably recorded on the Blockchain and then referenced by third parties when it is needed for validation purposes. In reality, the validation of identity is required for both parties that are involved in a transaction. An enterprise will require validation of a customer’s identity, and the customer will require validation of the enterprise identity. From an authorisation perspective, such a solution can also be used to “tokenise” sensitive information. A token that represents the information is shared with the third party rather than share the actual information. In this way the confidentiality of information is preserved. A blockchain-based identity management solution can also enable the identity owner to retain complete control over their identity information.

 

What do you think it will mean for software licensing?

The transactional nature of software licensing represents an excellent opportunity for the application of blockchain technology. The management of software licensing continues to grow in complexity due to an increasingly diverse set of business and operational factors. Multiple parties exist in the supply chain and typically include the software vendor, distributors, business partners, OEM partners and customers. The integrity of software licensing transactions can come into question due to a general lack of end-to-end transactional transparency. Without a single source of truth, the opportunity can arise for views of these transactions to diverge and become inconsistent.

Blockchain can serve as the foundation for a decentralised peer-to-peer, publicly auditable software licensing subsystem. All relevant parties within the supply chain can have common access to their respective licensing transactions. The blockchain address of the hashed software licensing transaction and the location of the original transaction record can be shared with each member of the supply chain for future use.

 

When it comes to blockchain, what should organisations be wary about?

The vast majority of commercial blockchain initiatives are only at the Proof of Concept (PoC) stage. The technology is relatively unproven and can therefore incur some risk to the enterprise. Depending on the use case, additional considerations such as transaction latency, which can be particularly important for banking and financial uses, and scalability of the blockchain implementation are important.

Privacy is another important consideration. In a public blockchain environment, there is a level of pseudo-anonymity that exists when users conduct transactions. Identity is not explicitly published on the blockchain, however it is possible for participants to deduce identities. Additionally, when Smart Contracts are deployed within an Ethereum Blockchain, all participants on the blockchain can have access to the contract logic and associated contract data.

It is also important to carefully understand the various issues related to blockchain governance. From a cryptocurrency perspective, we have seen multiple occasions when a divergence, or what’s called a “hard fork”, in the blockchain has been enacted; either in response to a high profile “hack” or if cryptocurrency miners do not agree with the blockchain developers.

 

How do you think the current division between public and private blockchains will play out?

Many enterprises and organisations are naturally inclined to adopt private or permissioned blockchain infrastructures because of the added level of control, privacy and improved transaction performance that they afford. A key difference between a public and private/permissioned blockchain is related to who is permitted to join. Today, a natural alignment exists between the demands/requirements of an enterprise and the additional flexibility that is afforded by a private/permissioned blockchain.

Public blockchain infrastructures ultimately have the potential to become much more prevalent and impactful to different areas of the economy and society at large. Blockchain technology needs to mature and to be proven. It will be equally important for standards to be created and for regulatory entities to fully understand blockchain, gain confidence in it and achieve alignment with it.

 

What do you think blockchain will really mean for organisations short, medium, and long-term?

In the short-term, many organisations will typically gain their first exposure to blockchain through the use of Proof of Concept (PoC) initiatives. The natural progression will likely be to augment an existing business process with Blockchain technology in order to achieve increased fidelity/integrity of the associated business data and an improved level of transparency of it.  It is common for existing business processes to suffer from data inconsistencies or from a lack of data transparency throughout the business process. These issues can be particularly pronounced in supply chain scenarios where multiple parties use their own data repositories rather than a single source of truth. These types of improvements can also lead to improved levels of customer satisfaction.

In the longer-term it is possible to leverage blockchain technology to transform business processes by introducing additional levels of automation. These steps can ultimately lead to significant reductions in the end-to-end duration of processes and their associated costs. 

 

Is there anything else you’d like to share?

The wide spread adoption of blockchain technology will require a fundamental mind-set change within industry and society at large. Cultural adoption may yet prove to be the larger gating factor. The concept of relying upon a decentralised network for the execution of transactions will be an entirely new concept. Some will embrace it, while others will resist.

Blockchain technology will continue to mature and industry will increasingly gain confidence in the technology. This will simply take time, but it will most certainly happen. In many vertical markets or industries, the way of doing business remains as it has for countless years. If we look at the Real Estate market as an example, the process of selling a home still involves a large number of manual steps. Deployment of blockchain and the use of Smart Contracts can revolutionise the nature of these transactions. One of the main challenges will be for the associated regulatory regimes to catch-up and become aligned with what blockchain technology can actually enable.  

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