The reputation of blockchain has taken a beating recently. Following months of hype during which it was proposed as the solution for everything from world hunger to the Irish border question, the technology’s sheen is now a little tarnished. In a recent article the BBC’s technology editor Rory Cellan-Jones recently described his conversations checking out claims from eager vendors that the government was adopting their technology; “Once I have got in touch with those departments, I’ve been met with weary sighs and suggestions that Whitehall’s enthusiasm for blockchain has been somewhat exaggerated.” Headlines such as “Blockchain is just a very slow database” don’t help.
Now that we have got beyond the initial breathless excitement, however, it’s time to consider the real potential – and sticking points – of the technology. Blockchain has already proved itself as a concept and more applications are already underway. The supply chain is a case in point: the significant growth in complexity and the various innovations, such as the emergence of personal computers in the 1980s, have changed the way the supply chain is managed. Globalisation is another factor adding to the intricacy; chain of command is essential. In the global supply chain industry, products pass through the hands of numerous suppliers and authorities. When every party is contributing to the blockchain ledger, all goods transported around the world will be accompanied by a record which can verify authenticity and ethical sourcing at every stage of the journey.
A recent report from Cap Gemini showed that while only 3 per cent of organisations are deploying blockchain at scale, 87 per cent are in the early stages of implementation or carrying out proof of concept projects with the technology. And governments, while not necessarily committing to its adoption, are certainly looking into it. In Dubai, as part of the Government’s Smart Dubai Initiative, IBM has recently launched a government-backed blockchain platform service that will allow businesses in the country to test, build and launch blockchain-based products.
A lot of power
Nonetheless, the sheer size of a distributed platform that is constantly updated in real time inevitably requires a great deal of processing power – and indeed electricity and speed is an issue. By definition Blockchain technology is decentralised; it uses a peer-to-peer network approach that involves many separate elements working together. But while this collaborative approach is hugely beneficial in creating trust, it negatively affects processing speeds and hinders Blockchain’s widespread adoption in industries like banking.
To help solve these issues and increase blockchain’s adoption across multiple industries, Hyperledger – an open source collaboration initiative established by the Linux Foundation to ‘advance cross-industry blockchain technologies’, is supported by blue chip member businesses including IBM, American Express, Intel, Deutsche Bank and Accenture. The project has brought together many of the biggest organisations in the technology, banking and finance, Internet of Things, and manufacturing and supply chain fields, to work together to develop a legitimate, standardised enterprise-grade blockchain solution that will allow secure transactions to take place at scale.
Bringing in the big guns
Part of the solution may be a hybrid approach that incorporates an element of centralised technology that can take care of the heavy lifting. Big global banks are currently able to carry out over 12 billion encrypted transactions per day because of the speed, scale and security provided by a single mainframe. The same technology may be the key to success for Blockchain.
Mainframe technology underpins 87 per cent of all credit card transactions and four billion airline flights each year. The technology is considered so reliable that 57 per cent of enterprises with a mainframe run the majority of their business-critical applications on the platform and, according to Forrester, this is set to rise to 64 per cent by 2019.
By hosting blockchain on mainframes, businesses can take advantage of their sheer computing power that comes with this – not to mention the cryptography, security and reliability. It also means that the hosted blockchain can be integrated with an organisation’s existing transaction data and systems already running on their mainframes.
It’s still early days for blockchain. We can expect to see many trials, both unsuccessful and successful, before we fully understand where the technology is heading. But wherever it goes, it will need underpinning with a solid mixture of powerful processing power and high transmission speeds if it is to respond at a rate that will be acceptable for our global institutions. By bringing together centralised technology in the form of the mainframe, in a distributed model, it may just be possible to have the best of both worlds.