Early in my current role leading formal architecture for DLT Labs™, I had an experience that challenged me in an unexpected way. At roughly the same time my colleagues were coalescing around a strategy to provide blockchain solutions to enterprises, I came across a blog post questioning the whole idea.
This post is my journey from the doubt planted by that blogger, to growing acceptance, and ultimately to excitement about the value — now proven — that distributed ledgers are bringing to real enterprises, not in five years, but right now.
I learned about blockchain from the same perspective as many, which means I viewed it as a technology suited mainly to a World Wide “Wild-West”. That is to say, a world where no one can be trusted without spending the equivalent of Sweden’s electricity budget on ongoing mutual verification (or the equivalent pending potential improvements like Proof of Stake).
With that as context, the writer’s arguments seemed persuasive: an enterprise using distributed ledgers internally must be inefficient or terribly dysfunctional. Within a normal enterprise, he claimed, technologies that existed long before blockchain should be sufficient.
Enterprise blockchains can ensure internal departments are on the same page when it comes to shared data
My first steps toward belief in enterprise blockchain came from casual discussions with my colleagues in technical leadership here at DLT Labs™.
If we think of blockchain as the combination of four main concepts (cryptographic tamper-proofing of data, robust replication, consensus-based change validation, and totally distributed control), then how should we view systems that embrace a subset of those four?
True, you can’t implement a viable worldwide cryptocurrency on a system that has a central administrator, but you can help two internal departments who have had trouble with record-keeping disputes get closer to a shared view of reality.
Whether or not you call that blockchain is semantics, but it is doing what classic blockchains do: bring parties to agreement on data without the need for a referee. Just in a less adversarial context.
For another example, consider the use of a distributed ledger platform primarily for data replication and auditability. Sure, you could send a stream of business data updates to an auditor using traditional replication and a data hashing strategy.
But using a distributed ledger platform gets you all of that out of the box, plus all of the future potential of the platform, such as later giving auditors the ability to securely add their audit notes to the data.
Building on that last note, what about the value of a system that could most easily evolve into a blockchain in the classic vein? For example, a system for which the data is held in-company today, but with a plan to share control among consortium partners in the future.
Or, a system with centralized authority over business rules today, but consensus based rule changes in the future? You can only get this by starting with a distributed ledger platform — or you can resign yourself to a complete teardown and rebuild when the time comes.
My colleagues call all of these uses of blockchain platforms “blockchain” (actually we usually talk about “distributed ledger technology”, the superset of technologies that includes blockchains and gives the company, DLT Labs™, its name).
And why not?
It has the potential to achieve real benefits today, relatively simply and flexibly, with this technology at its heart making it possible. And modern componentized DLT platforms go a long way toward mitigating the potential efficiency costs of leaving some features dormant.
But while all of this was convincing in theory, it still fit into the “growing acceptance” category for me. I still wondered if the idea would work in the real world, where enterprise decision makers might still be viewing blockchain from that original Wild West perspective I once had.
You can guess from the “excitement about proven value” claim from earlier, that enterprise blockchain not only found companies willing to give it a try, but the empirical results have surpassed all expectations:
How Enterprise Blockchains can help companies in the real world
First, the word “blockchain” itself seems to provide a powerful shorthand for all those technical virtues like tamper-proofing which would be cumbersome to discuss one-by-one.
Cryptocurrencies may have had their challenges, but there is apparently a deep reserve of confidence in the power of blockchain technology, itself. That confidence seems to create a willingness between otherwise skeptical transactors (company departments, suppliers, customers) to give shared data a try.
Second, the extent and business cost of problems that can be solved by the movement to shared ledgers is proving surprising as well. We’ve seen relatively modest projects reveal data errors with eight-figure expense implications shortly after implementation of the enterprise blockchain, just because two business partners were finally looking at the same numbers instead of separately relying on their own calculations.
There probably could have been non-distributed ledger paths to that particular discovery, but the parties never dared try those paths: it is enterprise blockchain that gave them the confidence to consider cooperating on data.
And even better, it is the enterprise blockchain’s shared ledger that will keep the same problem from arising again. This means an increase in trust going forward.
And that, in essence is what I now consider to be one of the main arguments for enterprise blockchain at this point in time, and the reason I called the technology a “cooperation machine” in the title.
Enterprise blockchains create and foster trust
Trust (or distrust) is a sliding scale.
On one end is the mandatory total fear of internet strangers. Near the other is the “I know they wouldn’t wrong us on purpose” relationship of business partners whose interests generally align.
For every point on that continuum, enterprise distributed ledger solutions are showing they can bring just the right amount of added confidence to create trust, without forcing the acceptance of entirely new partnership models on the players.
Increased trust means increased efficiency and ultimately greater competitiveness for all involved. An example of one such enterprise blockchain is our own DL Asset Track platform, which is secure platform that can record transactions and digital interactions in a transparent, robust, auditable, and efficient manner:
So that is the exciting point in the journey we’ve reached so far. But I expect the journey ahead will be no less exciting. I can see DLT Labs™ helping more and more clients discover the cooperation that is possible within the departments and partnerships they already have.
I can further envision the imagination that will spark in those clients, leading to new businesses and partnerships which they would have never thought would be possible.
Author - Kenneth Carpenter, DLT Labs™
About the Author: Ken is DLT Labs’ Enterprise Architect, leading formal architecture policy and processes for the company since early 2018. Prior to his immersion in distributed ledger technology, he designed and managed actuarial systems for a leading US life and health insurer.