A Blockchain Primer

Now that we’ve gotten our “sea legs” around the idea of blockchain in business applications, I am confronted with an even more daunting challenge than that of merely learning to utilize and develop with the technology. The consistent opening question to nearly every conversation: “So what is blockchain anyway?”

Give yourself a minute to answer for yourself and see how you do.

Some of you might reply … “it’s the technology that powers Bitcoin.” That will of course earn you a nod and possibly stop further questions because everyone is supposed to know what Bitcoin is by now. Such an answer will not leave your audience enlightened.

Some may suggest other “features” of the technology like, “An immutable ledger” or “a business network” or a “public ledger” or “internet of value” — whatever that means. All of these are accurate … but not terribly transparent. Other options … “it’s like Google Docs” … “a row of safes”,

In my own struggle in answering the question, I started to evoke the concept of CRUD … “You know how most computer programs have the fundamental ability to Create, Read, Update and Destroy? — Well Blockchain is like that but without the Update and Destroy Part.” This usually got blank stares, which would lead to … do you remember those old accounting ledgers where you couldn’t erase something, you could only cross it out? …. Well Blockchain is like a massive shared ledger where everyone’s copy is kept up to date.

Let’s face it … blockchain is really hard to define in a simple all-encompassing way.

And then it hit me. Maybe there’s a better way to explain blockchain by thinking about the “why”. Why would we use blockchain?

Blockchain is meant to be used by multiple — possibly competing — entities that are interested in collaborating to solve a bigger issue. It is a useful technology for currency or global shipping or in our case — workforce management. Where most technology seeks to replace or improve a specific business process. Blockchain solutions seek to improve entire economic models. The difference is significant, both in effort to launch and in scale.

Blockchain applications don’t make sense for a single organization to run their own — presumably they would just use existing technology and databases for something that is entirely internal. Blockchain is the technology of collaboration. It utilizes rules to establish trust, and transparency to enforce compliance.

Then it occurred to me. Blockchain is trying to model an entire economic system.

Let me try this oversimplification and see if it helps:

Let us say that there are traditionally two levels of software or software “programs”: 1. Applications and 2. Platforms.

For sure we could boil that down further to functions within an application, and some definition of everything in between … but if we allow Applications and Platforms …. then Blockchain is a legitimate third or new scale in this model.

So if we think about things as growing in scale … you have Applications → Platforms → Blockchain

Applications are generally used to automate a specific activity or task. I have an application to communicate (messaging) and an application to edit videos … and any number of applications of “apps” on my computer and phone.

Platforms generally allow multiple organizations to leverage similar capabilities — usually to automate a group of activities or a “process”. A Learning Management System is an example of a platform, as is a CRM or ATS or any of the number of multi-functional platforms that we use throughout our working day.

Blockchain makes sense when multiple (sometimes competing) organizations seek to collaborate around and across processes and business functions. Blockchain technology is attempting to automate and digitize entire business systems or economic models. A key difference in automating an economic model or system is the need for rules within an economic model; something that Blockchain (via Smart contracts) is well-positioned to manage. This is why blockchain works for currency and for managing the distribution or exchange of goods. Historically, these multi-entity systems have been managed by government or some form of controlling body that oversees and enforces the rules -or acts as a proxy to ensure that an agreement is followed. Blockchain technology is constructed in such a way that enforcement is built-in … validation is built-in … trust is distributed to all of the members and transparency enforces governance.

Alright … so maybe this isn’t the silver bullet of explanations, but for me it is a bit of a revelation … and an easier means of identifying when blockchain makes sense and when it does not.

If it helps, use it!

In summary:

Applications = Functions

Generally a company might use an application to automate a specific function — like customer communication and messaging.

Platforms = Processes

Platforms allow multiple organizations to leverage similar capabilities, usually to automate a process — like a learning management system.

Blockchain = Systems = Collaboration

Blockchain is the technology of collaboration. It utilizes rules to establish trust, and transparency to enforce compliance.