When was the last time you heard that blockchain is the solution to the world’s myriad problems, that it could help end poverty and terrorism, reverse climate change, or improve data security?
It can’t be too long ago, considering #blockchain and related terms are buzzing on social media and the internet. In Google searches, the term “blockchain security” has been on the rise since 2016.
According to a HubSpot report, #blockchain and its cousins, such as #bitcoin, #ethereum, #cryptocurrency, #ico, and #crypto, were among the most popular hashtags on Twitter in 2017 and 2018.
Despite all the buzz, though, a majority of people and businesses don’t fully understand what blockchain is and where the technology fits in their business ecosystem.
“There is hype around the use of blockchain technology, yet the technology is not well understood.” – U.S. National Institute of Standards and Technology report
What is blockchain? Here are the basics
Blockchain is a database that stores information. But unlike traditional databases that store data and are controlled centrally, blockchain stores the data in a decentralized database.
This means that data is stored on nodes (servers, laptops, or other computing devices) on an interconnected network. When someone attempts to add or change data, the nodes receive the information, and verify and validate the new data. This change is then timestamped, and the details (who requested and who made the change) are recorded on the database.
The network consensus approach uses protocols such as “proof of work” to validate transactions at each node and record data incorruptibly.
A key characteristic of blockchain is that it eliminates the need for a central authority, as all the governance is done by a distributed network of nodes or peers.
Blockchain use cases in data security
Blockchain’s encryption, immutability, and decentralization attributes make it a great choice for securing data. Blockchain-enabled data security methods help ensure confidentiality, integrity, and availability of information.
The table below highlights some of blockchain’s data security use cases in different industry verticals.
|Financial services||Business process optimization: Blockchain improves the efficiency of clearing and settlement systems, trade finance systems, and the management of customer identities (Know Your Customer, or KYC, records).
Payments: Cryptocurrency is one of the most popular applications for blockchain, and many central banks are toying with the idea of issuing digital currencies.
|Healthcare||Electronic medical records: Blockchain helps record and manage sensitive information, such clinical trials data and electronic medical records, while ensuring compliance with regulations such as HIPAA.|
|Government, real estate||Land registration system: Blockchain allows establishing the authenticity of land transaction records to eliminate fraud practices such as land grabbing.|
|Retail, manufacturing||Supply chain management: Blockchain-based supply chain systems improve customer trust by recording and authenticating every step involved in the procurement/preparation of an item.|
|Utilities (energy)||Energy trading and supply-demand management: Blockchain is used to record surplus and deficit of utilities and manage contracts of sale of utilities between two parties.|
|Media and entertainment||Securing digital rights and payments: Blockchain-based public digital database helps store, secure, and tokenize intangible assets such as music compositions. This helps solve problems around content access, distribution, and monetization for artists.|
|Information technology, security services||Key management: Blockchain-based key management systems help secure encryption keys and may replace incumbent Public Key Infrastructure (PKI). PKI is a centralized system and therefore, vulnerable to single-point failures.
IoT security and DDoS mitigation: Blockchain makes sharing of unused bandwidth to absorb malicious traffic easier. Read more about preventing DDoS attacks here.
While we can imagine numerous ways in which blockchain can improve data security, one survey reveals that only 3% of organizations are deploying blockchain at a scale. A vast 87% of the organizations are only toying with blockchain proofs of concepts, while only 10% have piloted blockchain at at least one site.
Some real-world blockchain examples
- Everledger helps improve diamond authenticity: Everledger, an emerging tech business, has created a blockchain-based registry to track and store data about a diamond’s origins, cutting and polishing processes, and artisan’s certifications and contributions.
- Walmart and the food blockchain: Walmart has partnered with IBM’s FoodTrust, a blockchain platform, to record details such as an item’s procurement source and its in-transit time in the supply chain.
- Ethereum blockchain and digital music: Artist Imogen Heap teamed up with Ujo, a music distribution company, to release the first song on Ethereum blockchain. Storing and distributing the song on a blockchain database allowed the company and the singer to enjoy absolute control over how they are paid for licensing and downloads.
Sourcing and distribution details of different food items in IBM FoodTrust (Source)
Should you jump on the blockchain bandwagon?
With so much buzz around the technology, it’s only natural to want to experiment and implement it. But while blockchain holds promise, its current form has several limitations.
Limitations of blockchain
Some challenges you may face in implementing blockchain:
- Size of data and network: Two things common across organizations are that they generate, store, and process large volumes of data, and they have small or midsize networks. The size of your network is important because, if your blockchain is not well distributed, it becomes vulnerable to attack. Also, storing large amounts of data on blockchain systems is costly and complex.
- Computing power: Blockchain uses massive amounts of energy, especially while executing the “proof of work” step involved in adding a new block to the database. To put it in perspective, Bitcoin blockchain’s annual computing power consumption is sufficient to meet the electricity requirements of almost 6.77 million U.S. households.
- Immature governance structures: Unlike the internet, which has many governance structures (aka protocols) in place today, the blockchain has almost no structures to govern it. This makes it almost impossible to regulate the database.
However, institutes, such as MIT, and tech titans are working on solving these challenges, such as by developing green blockchains that consume less energy. These and other changes could make blockchain more attractive in the future.
When will this technology mature? The blockchain timeline
Here’s what Gartner’s “Hype Cycle for Blockchain Technologies” (full content available to Gartner clients) postulates as the timeline for blockchain to reach mainstream adoption.
- 2019 – Passing through disillusionment: The hype around blockchain is slowly waning as most applications remain stuck in the experimentation or pilot phase.
- 2021 – Sliding out of disillusionment: There will be more pragmatic use cases and advances in blockchain and interest in blockchain will continue to grow.
- 2023 – Blockchain becomes technically scalable: The technology will have some concrete examples to prove its viability. It will support trusted private transactions, and permissioned blockchains will integrate with public blockchains. These technology improvements will also support the development of governance and operating model requirements for blockchains.
- 2025 – Increased business value: Business value added by blockchain to be slightly more than $176 billion.
- 2028 – Fully scalable, both technically and operationally: Blockchain technology is expected to be fully mature and within the reach of most businesses by this time.
- 2030 – Huge jump in business value: Business value added by blockchain to surge to over $3.1 trillion.
For the present, we recommend that you follow a “wait-and-watch strategy.” Keep an eye out for blockchain applications, use cases, and other developments, but also check with your investors, partners, and consultants before betting your money on it.
While you familiarize yourself with blockchain and its proof of concepts for data security, we strongly recommend that you implement some tried and tested data security solutions, such as data loss prevention, encryption, endpoint protection, and network security.
Visit our IT security software directory page to check out a complete range of security solutions available.
For more information on blockchain and other IT security resources, check out these articles from GetApp:
- Blockchain uses cases in finance and accounting
- What is blockchain? Hear from 4 small business owners
- Data protection technologies you must consider now
Note: The applications selected in this article are examples to show a feature in context, and are not intended as endorsements or recommendations. They’re obtained from sources believed to be reliable at the time of publication.