Blockchain Can Drive Incredible Private Side Value
Public use cases get most of the media headlines, but let’s not ignore the current value blockchain brings to business
There is a lot of hype and speculation associated with the word blockchain. The most bullish of predictions envision every facet of our interconnected world relying on blockchain to keep things secure. This world boasts institutions with no “middle-men” and is filled with fully decentralized systems where everyone coexists perfectly. But just how appropriate or outlandish are these predictions? There may be no groundbreaking public-facing decentralized application that blows the world away but that shouldn’t matter. Even if all of the promising public-facing blockchain projects fail, blockchain still provides incredible value to industry.
With a private chain, the protocol and rules surrounding the system are entirely up to the deployer. They determine who can make use of the infrastructure, the speed of the system, and weigh the pro’s and con’s of blocktime configuration based on need (trading off fault-tolerance for latency). A public blockchain is better used when it is not preferable to give someone the power to decide who can use the infrastructure, the speed of the system, and how to configure blocktimes. For widespread public facing decentralized microeconomics, you will need a public chain. You want it to be as hard as possible to change things. But at the business or consortium level, you don’t need that level of stringency.
With this in mind, there are many areas a business can easily get away with using a private chain. Private chains are much faster and relatively easier to manage than public chains. Compared to non-blockchain methods, a private chain still offers immense security, known identity management, and cryptographic auditing while supporting many B2B use cases. Using a private chain allows companies or consortiums to avoid many of the headaches (technical, and practical) that public chains also carry.
This is why big companies like Amazon, Microsoft, and IBM are looking at Blockchain as a Service (BaaS) utilizing private chains. The goal being to provide tools to allow companies to use blockchain in business. Private enterprise blockchains are generally used internally by individual companies. They allow someone in the company to have full, individual control, which makes it centralized, but it still offers some cryptographic guarantees. Consortium blockchains are more of a hybrid model that garnish some of the trustless nature of public chains, but still require at least some central oversight. Consortium chains are generally used between different entities trying to play nice with each other either inside a supply chain or some other microeconomy.
Private blockchains don’t have as many of the technical barriers that public blockchains do. You see many providers considering where they can use blockchain inside of ecosystem-level applications, instead of relying on a third party. Blockchains allow for a clear set of rules that each moving piece has to follow. And allowing all users in the ecosystem to have a shared copy of the whole truth gives everyone assurance. The nature of blockchain makes it difficult to change rules and can require multiple parties to come to an agreement before something takes place, even on a private blockchain. Think of it as a government for computers.
Consider health records for insurance providers and medical institutions. If one switches insurance providers, getting medical information transferred over can be a troublesome and slow process. If insurance providers had a blockchain-based system between each other, this would be less of an issue. Insurance Provider A could immediately let Insurance Provider B access information about a patient as long as that patient gave their digital signature and satisfied whatever other requirements were needed. Blockchains manage who gets access to what. It may sound small, but at scale, this has the potential to save insurance providers and end users an incredible sum of capital. Even mobile giant China Telecom is considering moving mobile data top ups to the blockchain. Everledger is a another great example. Using Hyperledger’s framework, they have made a system that tracks a diamond’s authenticity from the ground up. You can see the stone’s entire journey, recorded in a trustless manner, allowing Everledger a more streamlined process of determining diamond authenticity. No more need for messy audits and less room for malice. When considering private vs. public blockchains, Ethereum founder Vitalik Buterin said back in 2015:
“The idea that there is ‘one true way’ to be blockchaining is completely wrong headed, and both categories have their own advantages and disadvantages.”
-Vitalik Buterin, On Public and Private Blockchains
Furthermore, IT Downtime costs North America alone around $700 billion a year. It’s safe to say that for some companies, the integrity of software updates is imperative. Blockchain helps verify with certainty that the correct code is being downloaded. In addition to secure orchestration of software updates, a blockchain-based database also means that there would be no central point of failure in the system.
Whether you are talking about sharded databases or ecosystem level applications, if mission-critical information is involved, there should be no central point of failure in the computer network. Blockchain-based systems mean that, even if one part of a system goes down or is attacked, the integrity of the rest of the system is not at stake. Any company that has multiple databases with critical information at stake will see the immediate benefit of this.
The potential for companies to use blockchain as a security tool within their existing solutions is immense. It is a major reason why our company, MIMIR Blockchain Solutions, remain primarily committed to building critical infrastructure for the public side of blockchains. We also recognize the large breadth of companies looking for help with blockchain-based enterprise and consortium plays. Most of the technology we build will go toward helping both our private and public aspirations, which allows us to operate in both spheres efficiently.
The public-facing side may end up being more groundbreaking and disruptive in the future, but private blockchains capture value that can be offered to businesses today.
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This piece was created by: John Licata, Michael Putnam, and Mustafa Inamullah
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