Recap from OST LIVE with Nate McKervey, Head of Blockchain and DLT at Splunk — The Potential of Blockchain in Enterprise Solutions

Nate McKervey, Head of Blockchain and DLT at Splunk, joined us on Episode 32 of OST LIVE. We discussed the potential of blockchain and the possibilities of DLT enterprise solutions. Splunk Inc. is a San Francisco based company that turns machine data into answers with the leading platform to tackle the toughest IT, IoT and security challenges.

In February 2016, Nate decided to focus on understanding distributed ledger technology and dedicated his career to learning blockchain. He now runs product and strategy at Splunk, focused on leveraging blockchain technology to improve existing products and services. Nate is also part of she265.io, a program for students at UC Berkeley, dedicated to increasing the diversity and breaking down barriers to entry in the blockchain space. As a physicist, he’s worked towards advancing Quantum Key Distribution systems that allow for secure cryptographic communication based on laws of physics and math.

Bridging The Gap

Originally from the ideas of Richie Etwaru, there have been four major gaps in modern history. The knowledge gap was closed with the invention of the printing press. The power gap was closed with the invention of the steam engine. The distance gap was closed by the internet. Now, the trust gap will be closed by blockchain and distributed ledger technologies. People in each one of these time frames in which the gap was closed didn’t even know the gap existed until a solution to the gap presented itself. Nate believes this is where we are right now, closing the trust gap using blockchain technology.

3 Opportunities That Blockchain Brings to Enterprise

Blockchain for enterprise introduces new business models, increased efficiency and increased security.

First, blockchain can increase enterprise security by providing data integrity. Nate explains how data attacks have evolved. Initially, attacks were data breaches in which someone gets a copy of data and sells it, such as the Equifax and Ashley Madison hacks. This data doesn’t stay valuable for long because companies have the ability inactivate accounts, such as freezing credit card numbers that have been compromised. Attackers have evolved to ransomware attacks, in which they hold the data in demand of payment from the victim. However, enterprises that keep data backups and that are able restore systems quickly are not vulnerable to ransomware attacks. Attackers have now evolved to data tampering in which they alter data without the victim knowing in some cases. The 17th director of the U.S. NSA and second commander of the U.S. Cyber Command, Michael S. Rogers claims that data tampering is second only to an attack against critical infrastructure in terms of damage that can be done. Blockchain can help prevent data tampering and provide a reliable record of changes to data.

Second, blockchain can transform the business model of enterprises. Nate says “What makes an organization successful is not just the product or service, it’s the business model and the advent of technology that enables new business models that disrupt old ones.” Wikipedia disrupted the encyclopedia business using the world wide web. Uber disrupted the taxi business with a smartphone. Airbnb disrupted the hotel business. Although it may not sound feasible that a decentralized operating model could disrupt something like Amazon, Uber disrupted the taxi business without owning any taxes. It’s not far fetched to imagine that a storage organization can disrupt the storage market without owning any storage. It is a big move for enterprises to change the business model that’s been working for decades, but it is important for enterprises to pay close attention to technologies capable of disrupting their business model. Nate suggests not to assume a businesses is immune to disruption and to hold off on pouring all resources into blockchain today, rather consider engaging in proof of concepts and assess the potential impact of blockchain.

Third, blockchain can increase efficiency in data consensus. Today, enterprises are operating on core business systems that track business data such as cash purchase orders, payroll and contracts. The data is critical when dealing with other organizations such as customers and partners. Partners and vendors also have their own system of record and copy of the same data. They all update their own system of records, all of which could be tampered with or lost altogether. This causes a problem when there’s a disagreement between systems because businesses have different methods of reaching agreements. Reaching an agreement involves resources such as lawyers and time which increase costs. Nate says that blockchain could increase accountability and transparency across the network and it will result in a dramatic reduction in friction because it closes the trust gap between organizations.

Coming Up Next on OST LIVE: Maria Paula

Maria Paula is the organizer of the ETHBerlin and ETHMagicians communities, hosting blockchain hackathons and Ethereum meetups. Maria also manages External Relations at Golem. She will be joining us on Wednesday, November 7th at 10am New York / 4pm Berlin / 11pm Hong Kong. Subscribe to our YouTube channel or listen to the audio format on anywhere you listen to podcasts, including on iTunes, TuneIn, and Spotify. We’re also now available on Alexa! Simply add “OST LIVE” to your flash briefing.

About OST

OST blockchain infrastructure empowers new economies for mainstream businesses and emerging DApps. OST leads development of the OpenST Protocol, a framework for tokenizing businesses. In September 2018 OST introduced the OpenST Mosaic Protocol for running meta-blockchains to scale Ethereum applications to billions of users. OST KIT is a full-stack suite of developer tools, APIs and SDKs for managing blockchain economies. OST partners reach more than 300 million end-users. OST has offices in Berlin, New York, Hong Kong, and Pune. OST is backed by leading institutional equity investors including Tencent, Greycroft, Vectr Ventures, 500 Startups.