Mention blockchain to an audience and almost immediately someone will be thinking bitcoin.
Is it any wonder than that getting enterprise blockchain out the door is something many organisations have been struggling to do since 2018.
There have been lots of ideas floating on how blockchain can facilitate business, arguably lots of proof-of-concepts to prove the technology’s value, and a few consultants claiming that enterprise blockchains have been in production since 2019 – just that no one wants to talk about it.
The R3 report, Blockchain: 2020 Vision, points the blame on complexity as the problem when it wrote:
Complexity is the enemy of adoption. For blockchain / distributed ledger technology (DLT) to be practical and scalable across many different organizations, each with very different goals and pre-existing technologies, underlying platforms need to strive for simplicity in terms of deployment, operational management and user experience for node and network operators.
FutureCIO spoke to Alex Medana, co-founder and ceo of FinFabrik, a Fintech company that uses blockchain primarily as a platform for investors and asset owners.
Setting the record
Medana said fundamentally a blockchain is a database – how you record and share data is what gives the blockchain its unique properties.
“A blockchain as a chain of blocks, and any time a transaction is made, it is a change of state, that creates a truth-like piece of data because it cannot be tampered with, it cannot be changed in the blockchain,” he explained.
He also acknowledged two approaches taken with the blockchain: permissioned (access is limited to an identified group of people) and permissionless (it is public).
In explaining the difference between a blockchain and DLT, he noted that in a blockchain, the data recorded on it is immutable, it can tracked its history or record in the blockchain.
“In a distributed ledger you don’t have that. You distribute the data into the network. It acts as a validation mechanism for a transaction,” he elaborated.
He also made it clear that smart contracts are nothing more than “if, then” programmes. He goes on further to explain that specific to capital markets, which is the focus of FinFabrik, DLT is more applicable as you might have a central authority that distributes the data within a permission network.
“Permission means we know each other,” he added.
Prepping for blockchain
Medana pointed that a lack of understanding of blockchain or artificial intelligence means “game over”.
He reasons that these technologies will disrupt a business, maybe just now but maybe in the future.
“You need to understand the attributes, the risks, the consequences of not doing anything. You need to talk to someone, search websites, but above all, you need to do something,” he suggested.
He also agreed that as emerging technologies, there are still many unknowns about these. So an option is to start small so that any failure will have minimal impact or consequences.
“We are in the beginning of a journey, and you cannot take too much risks,” he added.
He also recommends that leadership understands where the organisation’s architecture is today – what has been invested and why. In circling back on experimenting with blockchains and AI, starting small helps to contain unintended consequences that may arise as a result of something new.
Either way, “let’s agree that we are changing the industry,” he concluded.
Other ideas he shared during the interview:
- Possible use cases for blockchain in financial services: 2:49-5:49
- Too few commercial deployments of blockchain today: 5:49-8:18
Editor’s note:
Medana makes some bold predictions about when and where commercial applications of blockchain and DLT will become more visible to the industry.
