Is the Blockchain Hype Blockchain Technology?

Image Source: everis.co.uk

Blockchain owes the popularity of its existence to Bitcoin and cryptocurrency. It is the excitement of cryptocurrency and the promise of wealth and independence that has generated a tremendous amount of public and corporate interest—and the hype surrounding blockchain. Undoubtedly—the swing of Bitcoin price reaching $20,000 in late 2017, now hovering $10,000 has created the hyperbole around blockchain and all of its promises.

In the past few years, industry has discovered blockchain as a technology that could work to solve business issues in nearly all aspects of industry from fintech, to healthcare, from manufacturing to supply chain, and to the preservation of art, contracts, and to transferring of money across borders.

Indeed, blockchain appears to be the panacea for all that ails industry, and therein lies the hype. But is it warranted? Or is it time to take stock in sober trends and real world use case application of blockchain that can truly impact business just as the internet promise to do in 1994.

Yessi Bello Perez, writing for  The Next Web  noted the apparent stagnation in blockchain development projects: “Similarly to what they were saying four years ago, blockchain technology supporters claim it has the potential to transform industries, making each and every one of them more transparent, and efficient.”

What is Attractive About Blockchain?

Image Source: medium.com – The common issue at the moment everyone wants in but will use Blockchain for what exactly?

Blockchain has found an audience in industry leaders, corporations, and government. Issues such as bad actors hacking into, and stealing consumer and constituent data by international hackers and governments such as North Korea or accusations of Russia meddling in American elections has caused a great deal of concern.

It is the ability of blockchain’s distributed technology that supports the pillars of transparency, immutability, and accessibility on a public, distributed network. “What makes blockchain different is the fact that the history of the changes—past transactions, for example—are immutable,” says Stuart Burns in ComputerWorld.   “Essentially, the historical entries become read-only and unchangeable.”

Blockchain uses a code value, called a hash, to protect data. It allows for new blocks of data to be added much in a “chain of blocks” of data. Any attempt to alter the data will be reflected on the hash, and discoverable. It is this code, the hash value that if broken, makes tampering evident for all to see.

Blockchain technology has the promise to disrupt data management, add to the Internet of Things, trace products and inventory to meet supply chain demand for following a products from its source to market, or to use the features of immutability with contracts. However, with all of these promises, there remains issues that need to be resolved.

Challenges of Blockchain Development

Chris Skinner observed in The Finanser : “It’s just a healthy reality check that came from ANZ, who are joined by Bank of America, the World Bank and many others in saying blockchain is useful but complicated.”

Indeed it is complicated. “Setting up and managing blockchain is a complex process that requires skilled design,” writes Burns. While industry is clearly interested in the promises of blockchain as way to provide solutions to operational and marketing issues, there remain a number of significant issues. Burns highlighted these.

Scalability. Blockchain has scalability issues. The nature of adding chains to a blockchain in a distributed environment adds a verification programming load. “Verification of blocks can take several minutes, which makes blockchain inappropriate for real-time transactions.”

New platforms will need to be created to look for alternative approaches of verifying the integrity of a blockchain transactions. Currently, all blockchain platforms have some limitations in the ability to scale—recognized by the industry. An effort to develop new distributed processor workload platforms, with the objective to accelerate processing times allowing blockchain to scale—exists.

Legacy Processes. A KPMG paper, in 2018, looked at the ability of blockchain to integrate into existing legacy processes—warning that organizations will “need to be aware that their legacy systems may not be designed to interact with blockchain systems.” The paper continued to recommend a comprehensive review of interoperability and integration, Burns reported.

Privacy. Another blockchain challenge is in the area of privacy of financial transactions. However, concerns for privacy can also be extended to any areas where privacy is expected or mandated by law, such as dealing with protected patient health care information.  Moreover, as Americans, we have an expectation of privacy in our Bill of Rights Fourth Amendment:  “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated …”

Clearly a challenge for blockchain, which is based on a public and transparent system. Protection and privacy of data is antithetical to “classic blockchain ethos.” According to PwC, Burns reports, there continues to be “hurdles that lie ahead include understanding whether or not the public ledger can be hacked.”

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Conclusion

Is the hype warranted? Perhaps. Are the promises and potential of blockchain distributed ledger technology real? Given the amount of global efforts, the number of existing minimal viable products, and use case scenarios, clearly—IT and technology are on the leading edge of a technology that has the promise to deliver.

If all the naysayers of Bell Telephone and AT&T at the turn of the 20th Century had their way, we wouldn’t be able to talk to our cousins across the pond, let alone have an internet. All new technology is met with challenges. It is the human challenge to overcome all challenges and obstacles.

 

Samuel H. is an author, writer and speaker with over twenty years in the educational technology sector.

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