Challenges to Enterprise Blockchain Systems

Blockchain provides a series of capabilities that can change some of the well-established architectures in our digital world.

The decentralised, autonomous, trusted and secured capabilities of the blockchain could redefine the foundational patterns of enterprise wide applications. While the principles of blockchain are well-understood, IT enterprise solutions, until now have lacked practical implementations that validate its functionality at an enterprise wide scale.

The blockchain opens a new set of opportunities that were not possible before. However, in order for blockchain solutions to be embraced in companies, they will have to develop a series of key capabilities to get past traditional IT compliance practices.

How to adopt the blockchain in companies:

The process of adopting blockchain solutions in companies is far from trivial. Like many other technology trends, blockchain solutions will have to develop a series of company-ready capabilities to be adopted in mainstream business covering management, operations or compliance. The following list includes some of the key core capabilities required to adopt the blockchain in companies.

• Development Platform: The blockchain is a very complex architecture modelled in terms of transactional exchanges. To mitigate that complexity, a programming framework and language is required that will allow IT developers to build general-purpose applications against the blockchain.

• Monitoring Tools: To be adopted, the blockchain community should produce solutions that can actively monitor the health of a blockchain network and recover from unexpected failures. This capability will allow companies to monitor the runtime behaviour of blockchain solutions.

• Private Cloud Deployments: Facilitating the deployment of the blockchain in private cloud topologies using mainstream company IT infrastructures is a key element to facilitate the blockchain solutions. Meaning, the blockchain should work seamlessly with technologies such as Docker, VMWare vCloud, Open Stack among other mainstream infrastructure platforms.

• Standards: When companies start adopting blockchain solutions, the need to have standard protocols will become increasingly relevant. Standards will help facilitate the interoperability between different blockchain platforms while also enabling important security and compliance requirements.

• Interoperability with Well-Established IT Platforms: Like any other enterprise software trend, blockchain solutions will be required to integrate with established enterprise platforms like databases, line of business systems, etc. Enabling that interoperability will be essential to power the adoption of blockchain solutions in the enterprise.

10 Scenarios that can be Redefined by the use of Blockchain Technology

Decentralised IoT

Internet of Things (IoT) is becoming one of the most important trends in modern enterprise software. While many IoT platforms are based on a centralised model in which a broker or hub control the interaction between devices, this model has proved to be impractical in scenarios where devices need to exchange data between themselves autonomously. This specific requirement has been the fundamental principle behind decentralised IoT platforms powered by a trusted ledger of exchanges between smart devices fundamental to power real-world IoT solutions.

The blockchain provides fundamental capabilities of decentralised IoT platforms such as secured and trusted data exchange as well as record-keeping, acting as a general ledger, keeping a trusted record of all the messages exchanged between smart devices in an IoT topology.

Keyless Signature

Public Key Infrastructure (PKI) has been one of the fundamental technologies powering data signatures. PKI models rely on a central authority to stamp and validate signatures on a data payload. While PKI models have been incredibly successful, the dependency on a central authority presents serious limitations for large-scale scenarios and is also vulnerable to attacks involving quantum computation.

The characteristics of the blockchain can help to overcome some of the limitations of PKI models with a keyless security infrastructure (KSI). A KSI model uses only hash-function cryptography, allowing verification to rely only on the security of hash functions and the availability of a public ledger commonly referred to as a blockchain.

Data Archiving

Archiving historical data in a secure and trusted manner has been a permanent challenge for companies. EMC have become one of the most iconic enterprise software companies in history by providing robust storage and archiving solutions. More recently, cloud platform vendors such as Amazon have provided alternative data archiving solutions. However, in both cases, data archiving solutions rely on a centralised storage model, which has limitations in areas such as security and privacy.

Decentralised and autonomous data archives models, such as the ones provided by the blockchain, can be an interesting alternative to centralised data storage solutions. This model will eliminate the dependency on a centralised authority and will allow distributed and trusted storage across nodes in a blockchain network. More importantly, using the blockchain as a data archive will allow any nodes to validate the authenticity of the archived data without relying on central hub.

Decentralised B2B Auditing

Business-to-business (B2B) exchange models are one of the foundations of modern commerce. In those scenarios, transaction tracking, auditing and reconciliation processes are essential capabilities of B2B processes. Traditional B2B platforms enable these capabilities by providing centralised transaction tracking models that will be used by the different B2B endpoints to log relevant events of a specific transaction. These centralised tracking models have proved to be impractical to address many of the typical challenges of B2B transaction tracking processes in areas such as auditing and reconciliation.

Leveraging the blockchain as a decentralised, secured and trusted transaction ledger could be a more effective model to address the challenges of B2B transaction tracking solutions. Using the blockchain, each party in a B2B process could autonomously track the events related to a B2B transaction without the need to rely on a centralized authority. Additionally, the security capabilities of the blockchain will facilitate the implementation of more sophisticated reconciliation and auditing processes.

Legal Proof of Existence or Proof of Possession

Validating the existence or the possession of signed documents is an incredibly relevant element of legal solutions. The challenge of traditional document validation models is that they relied on central authorities for storing and validating the documents, which presents some obvious security challenges, but also becomes more difficult as the documents become older.

The blockchain provides an alternative model to proof-of-existence and possession of legal documents. By leveraging the blockchain, a user can simply store the signature and timestamp associated with a document in the blockchain and validate it at any point using the native blockchain mechanisms.

Distributed File Storage

Cloud file storage solutions such as Box, Dropbox or One Drive are becoming regular citizens of modern enterprise environments. Despite its popularity, cloud file storage solutions typically face challenges in areas such as security, compliance and privacy in order to be adopted in enterprise environments.

Those concerns are all rooted behind the fact that enterprises need to trust a third-party cloud system with their confidential documents.

Security Trade Settlement

The centralised nature of Exchanges is essential to successful trade bond and equities. However, the settlement process is incredibly expensive and slow, averaging two or three days per trade settlement.

The blockchain offers an interesting alternative to traditional Exchanges as a decentralised ledger that can keep records of transactions without relying on a central authority. The query capabilities of the blockchain will allow the settlement of trades in minutes or even seconds and at a fraction of the cost of the current exchange traded solutions.

Anti-Counterfeiting

Counterfeiting remains as one of the biggest challenges in modern commerce. Segments like luxury goods, pharmaceutical or electronics are constantly affected by counterfeiting. As a result, the demand for anti-counterfeiting remains one of the hottest topics in the digital commerce world. Unfortunately, most solutions in the market require a trust in the third-party authority, which introduces a logical friction between merchants and consumers.

The decentralised and security capabilities of the blockchain can enable an interesting alternative to traditional anti-counterfeiting platforms. In that sense, we can envision a model in which brands, merchants and marketplaces are part of a blockchain network with nodes storing information to validate the authenticity of specific products. In this model, brands do not have to trust a central authority with their product authenticity information and can rely on the security and decentralised trust models of the blockchain.

eGoverment

Governments all over the world are investing deep resources to digitize many of their existing processes. Many of these processes deal with sensitive information that requires sophisticated levels of traceability, privacy and security. Inevitably, the digital collaboration process relies on trust on centralized authorities.

The blockchain capabilities provide a robust option to enable the digital collaboration between government agencies and citizens. In this model, different government agencies can store records in blockchain nodes so that it can be accessed and verified by other government parties and citizens in a secure and trusted way.

P2P Commerce

Traditional ecommerce business models are based on the presence of a centralised entity that control activities such as order processing, inventory management, catalogue access, etc. In order to buy and sell goods, ecommerce marketplaces need access to sensitive user information such as credit card information, user profile data etc. This information often becomes the target of cybersecurity attacks and many other security and regulatory challenges.

The architecture of the blockchain can enable the first effective peer-to-peer (P2P) ecommerce network in which buyers and sellers can interact directly without the need of a central authority. The absence of a central marketplace eliminates many of the restrictions of ecommerce models such as fees, regulated transactions, etc.

Summary

Blockchain represents one of the most important advancements in computer science of the last few years. The ability to enable decentralised, secure, trusted and highly scalable architectures opens the door to a new group of enterprise software solutions on a large number of industries. Blockchain-powered solutions have the opportunity to challenge some of the fundamental architecture principles of enterprise solutions in areas such as security, data storage, trust, etc. Similar to Bitcoin, we should expect to see spectacular platforms in the enterprise software space powered by the blockchain to come soon.

Dee Singh Kothari is a senior partner in Kothari Partners Ideas expressed and/ or methodologies in this article are solely of the authors. The author nor Kothari Partner’s accept any liability for the incorrect application of these ideas either used by companies, employees or other individuals alike.

At Kothari Partners, we have worked with various UK and overseas listed and PE/ VC backed clients across various industries to consider how their business and finance services can bring them both cost reductions and performance improvement. Our approach is to help our clients understand their current situation, identify the value and decide on the scope, vision and set of strategies for what they could achieve for their business. We help plan their implementation and support them and deliver the solution/ change needed, so it is properly and permanently embedded in their organisation. We aim to help past and future clients by delivering high-quality work to their organisation, generate real efficiencies and free up time to support better business decisions. For a confidential discussion please free to contact us, via our corporate website: https://www.KothariPartners.com