Blockchain is at an interesting stage of development, as trials move beyond the finance sector into other industries and use cases.
The technology has already been making headlines with the introduction of cryptocurrencies, and more recently technology for cross border transactions, micro-payments and automated settlement.
I first started to look at blockchain technology for applications in the Internet of Things (IoT) supply chain a few years ago, but we have seen mainstream interest increase significantly in 2019.
For most people though, the first question is still “what is it?”
The core components of blockchain are a distributed immutable ledger, network consensus and smart contracts.
Information on the blockchain is split across several secure and trusted databases that form the leger. For a transaction to be approved, all the databases need to agree that this information is correct.
In financial services, that might be when two people want to undertake a trade; the blockchain leger confirms that they both have the assets they claim to have in order to transact.
The advantage of a blockchain is that there is no ‘central authority’ needed (like a bank) and so costs are lower and transactions can take place quicker.
It becomes more complex when the two people/ objects trading don’t know each other (are on different blockchains). That’s when you need a smart contract in place as a bridge to set out the standard terms of trade, so that transactions remain fast and frictionless.
With the recent roll out of 5G and the growth of the Internet of Things, there is interest in the potential of blockchain to automate use cases around autonomous vehicles, devices and smart city services, as well as to power other industry-specific shared economy business models.
Recently, there have also been a number of initiatives to use blockchain to power digital identity and to bring new liquidity to assets by tokenising them on the blockchain to create digital twins. These twins can be fractionalised and transacted on new marketplaces.
For example, rather than lease a commercial building to raise finance it will be possible to sell fractions of it to a range of small investors using blockchain technology.
The blockchain is a perfect fit for digital identities because it allows many different issuers to coexist and interoperate in a transparent, secure, and device friendly fashion.
Network infrastructure has the potential to play a key role in decentralised solutions.
There is much discussion about the role of our industry to act as a point of accessibility and to leverage mobile penetration to bring blockchain to the mass market with examples such as these digital identities.
At its core, blockchain has the potential to improve the automation of any use case that crosses organisational, individual and geographical boundaries. For that reason alone we can expect it to be a key technology for the digital societies of the future.
I recently met with Dr Daniel Bergström, Senior Researcher in Distributed Computing at Ericsson Research to discuss the potential of blockchain in telecoms and IoT. You can see that conversation here:
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