Advice from a CISO: Blockchain is still searching for its tipping point
Security

Advice from a CISO: Blockchain is still searching for its tipping point

CISOs are the business leaders everyone is talking about. But what do they have to say? Mike Turner is Chief Information Security Officer at Capgemini and shares his views.

Digital business depends on digital trust. If organizations cannot trust the data on which they increasingly rely, they cannot compete. It’s the CISO’s job to establish data integrity. Integrity builds trust and dependability. But the CISO must also persuade departments to behave in a data-centric way to ensure the potential of digital is maximized. And he or she must also establish a bond of trust between the organization and its external stakeholders, such as customers or third party suppliers, to help guarantee that data is secure and accessible only to the right people, on demand.

Ultimately, the CISO sets the culture of data governance. With the right culture in place, trust in the organization’s digital tools and services will follow.

New report looks at blockchain in 2018. Check out: Catch me if you can: A c-suite guide to blockchain

Trust is the reason why blockchain is on every CISO’s shopping list. The most interesting activity is in financial services and logistics, where large incumbents are partnering with startups to change the way they record and process transactions. NASDAQ for example is working with Chain.com, to provide technology for processing and validating trades, while Bank of America, JPMorgan, and Standard Chartered are trialing blockchain as an eventual replacement for the more manual elements of trade processing.

Using blockchain to digitize processes is particularly effective among logistics firms, and many are trialing innovative solutions to cut inefficiencies. A digital blockchain ledger can replace complex systems of paper based records and have a big effect not only on trust but also on effectiveness because it enables third parties to access and manipulate the same data in real time. Done well, organizations can create more intelligent, more responsive supply chains.

But there are reasons why these innovative experiments aren’t being commercialized as rapidly as some proponents suggest they should. For CISOs the high level of security inherent in a blockchain is attractive. But there are practical barriers to consider.

The first is scalability. A finance-focused Blockchain can handle around seven transfers per second. That may sound fast, but actually it’s quite slow when set against the requirements of the global financial system. The problem is processing power. Every node in a blockchain network carries the same data. With multiple nodes that’s quite a lot of information being carried over the network. Imagine waiting hours for critical credit checks, or days to validate a currency trade. Quantum computing, which promises not only greater power but more efficiency, could address the problem. But quantum computing is even less commercially sophisticated than blockchain. It could be many years before the technology takes off.

There are issues around storage, too. Within a blockchain everything is stored everywhere and the data is appended every time a change is made. That means blockchains can reach data limits quite quickly. On the plus side, the cost of data storage is falling, and there could be options to archive or even delete. But questions remain over the suitability of these workaround solutions. Can they keep up with the scale of a widely adopted Blockchain economy?

The final issue is energy consumption. It’s difficult to generalize on the issue of how much power is required to mine blocks in a chain. Some analysts estimate that a single Bitcoin transaction consumes enough energy to power 10 US households for an entire day. What we do know is that mining is relatively inefficient because of the burden of proving that the next block in the chain is unique, not vulnerable and not flawed. The process requires lots of compute power, most of which is wasted.

There is plenty of appetite for a blockchain revolution. The biggest banks have innovation labs trained on developing solutions to the problems outlined above – their ability to compete depends on it. And while businesses in almost every vertical are attracted to digital’s promise of efficiency and effectiveness gains, blockchain’s ability to inject trust, at scale, to an organization’s most valuable digital services will ultimately change the face of commercial transactions. It may be a while however before we reach the tipping point.

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