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Enterprise (Permissioned) Blockchain; Hardly a Revolution Yet

By Avivah Litan | March 05, 2019 | 0 Comments

Blockchain winter and disillusionment has surely set in.  But if you break the technology and enterprise use cases down, some aspects of blockchain serve a solid achievable purpose, though I would hardly call it a revolution. In the short term, at least, the primary benefit being achieved in enterprise permissioned blockchain is that it supports a “shared single version of the truth” across multiple entities and organizations, where no single entity is in control.

That’s the conclusion of our research note that my colleagues David Groombridge, Andrew Stevens and I just published (Refer to “Assessing the Optimal Blockchain Technology for your Use Case”). We found:

  • Organizations across all sectors primarily use permissioned blockchain for shared record keeping and asset tracking, because it provides an immutable tamperproof audit trail.
  • Ledger technology, distributed or centralized, is sufficient to support immutable data audit trails that enable a single version of the truth. Centralized ledgers are suitable only when a trusted company is in technical control of data management.
  • Compliance, provenance and asset tracking demand reliable audit trails of notable events that are relevant to what is being audited or regulated.
  • Blockchain’s decentralized public consensus increases trust across multiparty business value chains. But few enterprises make use of this key blockchain innovation.

Hardly a Revolution Yet

A 2018 Gartner survey of consultancy firms (Refer to “Blockchain Trials across Industries show a Market in Transition” ) found that shared record keeping, asset tracking and provenance recording are the main permissioned blockchain use cases among the survey participants, as organizations use the technology to support compliance, brand protection (such as flagging counterfeits or identifying infected food lots) and other use cases that need a single shared version of the truth based on immutable data and audit trails.

Our research found that nearly two-thirds of the POC projects we examined were solely using blockchain for recording data on permissioned or public blockchain platforms. (An update to our 2018 survey is currently in the field and we expect to release the updated results in the next couple of months).

In summary, from a technology point of view, blockchain’s DLT and associated data security components are the features organizations most commonly embrace today as they discover a more secure, improved, and reliable method of conducting business as usual.

Most organizations will need more time to imagine more disruptive use cases enabled by decentralized public consensus, a hallmark of blockchain technology, and to develop the business processes and technology to support them across their partners and value chain. Until such time, using DLT for a shared single version of the truth across multiple entities, where no single entity is in control, is proving its value, and promises real benefits for permissioned blockchain network participants.  Our latest research note documents a few case studies where this is starting to happen in data security, data privacy, and pharmaceuticals.

Decision Tree

Our research note presents a decision tree to guide users through blockchain technology selection. The first of three sections to this decision tree is presented below.

Figure 1: Decision Tree for Ledger Technology

 

This figure is based in part on a diagram in NIST’s “Blockchain Technology Overview,” which we have expanded on and modified. Source: Adapted from NIST

Digital Transformation

Blockchain DLT gets really interesting when integrated with other technologies like IoT networks. Integrated Blockchain and IoT networks supports use cases that require the integration of physical world events with electronic multi-party interactions that need to be based on a single shared version of the truth.  Adding AI models to the mix can help manage these transactions, for example in inventory routing and optimization, or detecting counterfeit or unauthorized transactions.  All together, these integrated tools can cut costs, drive new revenue streams and improves customer experiences.

Stay tuned for upcoming research in this area, which demonstrates the positive impacts that the use of Blockchain DLT integrated with IoT networks can have on multi-party transactions that need to work off of a single shared version of the truth, for example in the food and pharmaceutical ecosystems.

We may not witness a blockchain revolution in the enterprise for at least 5-10 years, if that, but we will likely see blockchain playing its part in digitizing business across entities who want equal access and potentially equal control over new processes.

Personally, I am hoping I can go to the grocery store in five years and know that the ‘organic’ romaine lettuce I am purchasing is truly organic, which farm it comes from and that it is not infected with pathogens that cause food poisoning.

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