Blockchain: The Next Disruptor?
Blockchain as we know it today has been around for almost a decade, but many still don’t really know what it is. Despite the confusion, there are thousands of startups in the space, corporates across the globe are experimenting with it, and venture capitalists are making big bets.
Blockchain’s impressive numbers
*as of June 2017
**the largest blockchain alliance in the world
Additionally, Harvard Business Review predicts blockchain is the next great disruptor, estimating it’s more likely to change business than big data or AI over the next decade.
Here’s a high-level overview of the technology, why it matters for all stakeholders in the business ecosystem, and some highlights of emerging platforms in the space.
What is blockchain?
Simply put, blockchain is a decentralized, distributed ledger that can facilitate the transfer or recording of any type of cryptographically validated data. This can mean the transfer of money, property, cars...anything that has value.
Why does blockchain matter?
Public blockchains like Bitcoin and Ethereum are probably the most well-known platforms out there today, but several private blockchains are growing in popularity.
Why is this technology so popular? Private blockchains enable users to control who can join the chain and what data or transactions particular stakeholders can view, making them incredibly attractive to corporations. With public blockchains, by contrast, anyone is allowed to join and participants can view all data and transactions on the chain.
Additionally, transferring assets or recording any type of transaction requires the use of a third party to verify and validate it (i.e., a bank or auditor). All participants keep their own records or ledgers of these transactions, adding expense and/or inefficiencies to the system:
- Third parties and intermediaries charge a fee for their service.
- There can be delays in executing transactions, since multiple ledgers must be checked and reconciled.
- There’s a duplication of effort to maintain several different ledgers.
However, the blockchain, in theory, can ameliorate all of these issues, making it a prime technology to disrupt the business ecosystem.
While the financial services industry has been a focal point for the technology so far (outside of cryptocurrency and bitcoin), it has a seemingly endless number of use cases across nearly every industry. Here are but a few: transferring assets, storing and maintaining health records, verifying identity, recording claims, and managing and counting votes. The blockchain not only facilitates these transactions and processes faster and cheaper, but also does the job more securely as well.
Blockchain’s high-impact areas
Private blockchains are still in early stages, with many startups and corporations still on the cusp of releasing commercial solutions or products. As a result, it’s hard to tell which platforms or companies are fact and which ones are fiction. However, SU completed a blockchain project with a major IT corporation recently, and we’re pleased to highlight a couple of our favorite startups in the space thus far.
R3 built a platform that allows financial institutions to build blockchain products and solutions. Its platform, Corda, can be thought of as an operating system for financial institutions. The distributed ledger platform can be used by developers to build apps for banks. Corda also empowers entrepreneurs to develop software-based solutions to address myriad issues and bottlenecks in the financial industry.
Like most other blockchain platforms in the space, the technology gets better the more people use it, and the company has been very dedicated to that effort. For instance, R3 actively trains users via videos and hackathons.
The company has been successful in creating one of the largest blockchain consortium’s in the world, counting many high-profile organizations within the ranks. Some of these companies include Bank of America, Barclays, BNY Mellon, Credit Suisse, and Deutsche Bank. Additionally, R3 raised $107 million in May 2017, the largest distributed ledger investment to date.
Evernym created an open-source, distributed ledger for the sole purpose of identity management. This platform is an attempt to ameliorate the primary problem with digital identity: it’s siloed. Essentially, every organization must become digital identity and security experts, since the burden is on them to know who they’re actually dealing with and to keep all private information safe. As you can imagine, this is both expensive and inconvenient.
Evernym’s solution allows anyone to create a sovereign identity, meaning the owner has pure control and ownership. The company then combines these sovereign identities with verifiable claims, which enable any person, organization, or thing to interact directly with any other person, organization, or thing, with both trust and privacy.
With sovereign identities, a different key identifier is created for each entity someone interacts with. For instance, every interaction a person has with his or her bank will use that one specific key identifier, and vice versa.
Claims can also be made using sovereign identities. Some are self-asserted, while others are claims made by other entities. The former would be a person stating his or her birthdate or name, while the latter could be a claim from the government about a driver’s license, which can then be used to prove someone’s authorization to drive. Claims can be bundled together and are cryptographically verified to ensure security.
Let’s consider this example, using a story about a person named Jane. If Jane wants to apply for a job, she can use specific parts of her claims (self-asserted or ones made from other entities) to confirm her identity and other necessary information, without disclosing the full claim. For instance, she may choose to include a claim from the government confirming her address and age and from her school to confirm her degree.
To do this, Evernym uses a zero-knowledge proof algorithm. Another important point about this process is that it’s non-correlatable. This means if the employer knows someone in local government, the two parties can’t collude to use the information received from the employment application to uncover additional information about Jane that the government may have.
Claims can also be public or private. Public information, like a university’s address, is not confidential information and as such would be stored on Evernym’s public ledger. However, Jane’s phone number is not public information and would be stored in Jane’s private ledger. Data stored on a private ledger are tracked with the time and order in which they were written, and hashes of this data can be written to the public ledger periodically to provide evidence of Jane’s information.
Corporate innovation and tech scouting at Singularity can help enterprises to not only identify the best and most innovative startups and companies in any space or industry of interest but also provide our expertise and insight about what to do next.
Sources include: IBM, Medium, TechCrunch, ResearchGate, and Blockgeeks