As blockchain technologies start to move up the hype curve, it’s only a matter of time before customers start asking IT service providers how and when what amounts to a new way of storing data will be relevant to them.
Pioneered as a means to create an immutable ledger to keep track of transactions involving Bitcoin digital currency, distributed databases that time-stamp data to create a system of record are now being developed for use in a wide range of applications. At the IBM InterConnect 2017 conference this week, Everledger CEO Leanne Kemp described how the startup company is leveraging a blockchain database that IBM has exposed as a service to keep track of where diamonds are shipped.
Blockchian databases and their uses
A blockchain is a distributed database that maintains records called blocks. Each block has a time stamp and a link to a previous block that in effect create a ledger that can be easily shared. By using a ledger to track where legitimate diamonds are being sold, Kemp says it will become much more difficult for diamonds that were illegally mined by a warlord to find their way to market. Naturally, that time stamp concept can also be applied to everything that needs to be shipped to a customer, ranging from food to manufacturing parts.
But it doesn’t just stop there. Blockchain databases are already being incorporated into IT products and services, including security and data protection applications. Because each block of data has its own time stamp, it becomes simpler to secure and recover data.
It will, however, require access to a significant amount of processing horsepower to apply the cryptography required for a shared distributed database based on blockchain technologies to be secure. Because of that issue, most applications based on blockchain technologies are primarily going to be exposed as some form of cloud service. In terms of overall size, a new report from Research and Markets forecasts that annual revenue generated by blockchain applications in the enterprise will reach $19.9 billion by 2025.
The bigger challenge, however, may be getting multiple organizations to collaborate around that service. Distributed applications based on blockchain databases require a level of collaboration that many organizations, from a cultural perspective, may not be mature enough to implement. Fundamentally, blockchain applications require a level of trust between organizations that many may not be comfortable with when, for example, a supply chain incorporates multiple rival organizations. For that reason, IT service providers that embrace blockchain applications may find themselves navigating issues that go well beyond merely how the underlying technology works.
The good news is that the opportunity blockchain technologies represent is potentially massive. In theory, every system of record could be anchored by a distributed database based on blockchain technologies. That transition might take the better part of a decade to fully play out, but it's clear that IT service providers will soon need to develop some expertise in blockchain databases, which are likely to be employed across a broad range of both existing and unimagined applications.