Any discussion of digital currencies such as Bitcoin and Ethereum will likely also touch upon blockchain, one of the pivotal underlying technologies of all modern cryptocurrencies. Blockchain is more than just a system of record for monetary transactions, though: As a distributed, decentralized and immutable ledger, it also has potential applications for data storage and management solutions, logistics tracking, and automatically enforced contracts, among other use cases.
Blockchain implementation: Key considerations before getting started
We looked at blockchain basics in a previous entry, but to briefly recap: It is a digital ledger consisting of "blocks" (i.e., proofs of work/verifications of activities) linked together in a "chain" by unchangeable time-stamped hashes, which are viewable by all approved nodes in a particular network. It is perhaps best understood in contrast to a database – whereas a database is centrally managed by a specific person(s), a blockchain is decentralized, with no exclusive manager. Despite their differences, the two serve similar purposes in informational management.
At its core, a blockchain is a piece of software written in a programming language such as Java. It can be created internally, borrowed from a core repository like GitHub or used as part of a well-established platform like Ripple. Implementing it requires a roadmap similar to the deployment of traditional business apps like CRM, ERP and VoIP, with steps for:
- Identifying a use case and an accompanying project scope.
- Compiling a proof of concept, showing the blockchain actually works.
- Rolling it out in a field trial making limited use of customer-facing data.
- Putting it into full-fledged production across the organization.
It sounds like a straightforward process, but it's one that many companies have struggled to complete as of early 2018. The nascent blockchain development community is part of the reason why. Plus, there's the challenge of moving blockchain beyond its typical application in cryptocurrency and optimizing it for new use cases like data storage solutions.
"Whereas a database is centrally managed by a specific person(s), a blockchain is decentralized."
Would-be blockchain adopters have to decide early on if they will work on blockchain implementation internally or with the help of vendor and external developers. Collaboration is often necessary to get the right mix of supporting infrastructures and user interfaces for turning the abstract design principles of blockchain into tangible benefits.
Use case: Blockchain for data management
Reviewing every blockchain use case is outside our scope, but we can focus instead on how it might affect data management. This is a promising application, since it doesn't demand much in the way of actual equipment (unlike other potential uses in supply chains, which might necessitate sensors).
For example, a blockchain could serve as the new system of record for transactions such as property transfers and incorporation services. Automatically triggered "smart contracts" might also be useful for sharing limited data between public sector organizations when certain conditions are met. All of these use cases would reduce paperwork and possibly improve the experience of engaging with government bureaucracies.
Automation and data integrity are integral to the appeal of blockchain for such data processing. Distributed ledgers could even be taken a step further and be incorporated into the actual physical storage of data. Unlike typical data storage solutions that rely on centralized collections of disks and other media in data centers, a blockchain-based alternative might utilize the drives of the nodes on the network and automatically take advantage of used space and computing power.
Blockchain is one of the technologies to keep an eye on through the end of the 2010s. Like cloud computing before it, blockchain could transform from a relatively obscure concept into a ubiquitous feature of both enterprise and consumer products. At Paramount Software, we are excited about the upcoming possibilities and we're ready to help you get an early start on your blockchain projects through our IT staffing services and data storage solutions. Contact us today to learn more!