Five use cases for Blockchain Data Management
Once you remove all the hype around Blockchain technology, you are left with two unique and revolutionary breakthroughs. The first is the ability of two parties to participate in transactions without the need for a trusted third party. The second is the ability to create tamper-resistant data entries that cannot be redacted, repudiated, or disputed.
Blockchain’s trustless transactions have gained the most initial attention since they form the basis for its disruptive potential in currency and finance. The impact of Blockchain’s second core capability — tamper-resistant and reliable data — has gained less attention. However, it’s arguably at least as fundamental: since the emergence of digital storage in the 1950s, we’ve always had to accept that what is written today can be over-written tomorrow. Blockchain allows us to be sure — for the first time — that was is written will endure. This has sweeping implications across computer science, industry, and society.
In particular, I believe that the immutable storage provided by Blockchain technology will revolutionize Legal Document Management, Accounting, Intellectual Property, Government, and Information security.
Legal Document Management
The use of a Blockchain to authenticate legally significant documents is an obvious consequence of it’s immutable and tamper-resistant storage. The timestamp, integrity, and ownership of documents can be incontrovertibly proven by Blockchain records. This has clear implications for wills, deeds, contracts, court papers, legal correspondence, or any other document that may need to be relied on in a legal setting.
Today, the date and veracity of legal documents are generally established through mutual agreement or a third party — a notary, e-signature vendor or email provider. None of these methods is totally reliable, and many are relics of the pre-digital era. Storing a proof of a document’s existence on a public Blockchain provides incontestable proof of the document’s existence on that date and optionally can provide proof of document ownership as well.
We’ve seen in the past how technology can rapidly disrupt legal rules of evidence — Fingerprints, DNA and Private Key encryption have all become universally accepted as reliable and in some cases, superior forms of evidence. Given the cryptographic certainty provided by the Blockchain, it’s only a matter of time before Blockchain evidence becomes legally recognized: already China’s Supreme Court has ruled in favor of Blockchain as evidence, and the majority of US states have legislation passed or pending on Blockchain technology.
Given the cryptographic certainty provided by the Blockchain, it’s only a matter of time before Blockchain evidence becomes legally recognized
It may be some years before Blockchain proofs can be used routinely to prove the integrity and ownership of legal documents. However, it’s not too early to start anchoring documents to the Blockchain now. Legal documents that are locked on the Blockchain today can be used to settle legal disputes in the future.
Accounting
The global cost of accounting fraud is estimated to be more than $3 trillion per year.
Accounting fraud will no doubt remain a significant problem so long as human beings are involved in the preparation of accounts. However, according to Deloitte, Blockchain technology may be a game-changer for accounting: reducing fraud, and improving the efficiency of the accounting process.
According to Deloitte, Blockchain technology may be a game-changer for accounting: reducing fraud, and improving the efficiency of the accounting process.
That Blockchain might have an impact on accounting is not surprising given that the Blockchain itself was developed as an accounting system for bitcoin, and as such it has successfully managed the accounting for 200 Billion dollars of cryptocurrency.
An accounting record that is secured on the Blockchain can be rendered immune from malicious tampering or backdating. For instance, the state of the accounts at the close of a financial period could be anchored to a public Blockchain. Any attempt to alter existing entries, add new entries, or backdate subsequent entries would be immediately detected. As a consequence, an organization could attest to the correctness of its books by providing cryptographically irrefutable evidence of the state of the books at a point in time.
Intellectual Property
Attempts to prove the existence of prior art in intellectual property disputes have always been fraught with difficulty. The digitization of modern art and intellectual property has made the problem more acute, since digital creations can be seamlessly duplicated, and the ownership and apparent date of creation easily modified.
The Private Key Infrastructure (PKI) does allow digital creations to be signed. However, PKI signatures do not include a reliable timestamp, and therefore it is not possible to determine which of two signed digital assets was created first.
By combining PKI with Blockchain technology, we can provide a complete digital intellectual property rights solution. PKI allows a digital asset to be signed, and by placing that signature on the Blockchain, we effectively sign and date a digital asset.
By combining Private Key Infrastructure (PKI) with Blockchain technology, we can provide a complete digital intellectual property rights solution.
Government
Governments are the ultimate arbiters of our legal and intellectual property systems and regulate most aspects of financial accounting. They are therefore already invested in all of the Blockchain solutions outlined above. However, governments have additional unique incentives for the use of Blockchain.
Governments are the custodians of public records that ultimately regulate our society. Banks may perform transactions between businesses, but it’s the government that authorizes the financial institutions and corporations. These authorizations pervade society at every level — birth and death certificates, licenses, approvals, corporate records, and virtually every other activity in our civilization is backed by some form of public record managed by the government.
Currently, the source of truth for these public records are a mix of paper documents and digitized records. As digitization becomes more prevalent, it is essential that these digital records be immune from incorrect modification.
Blockchain is the perfect technology for securing and certifying public records.
Linking public records to Blockchain entries does not eliminate all possibility of fraudulent activity, but it does severely limit the scope of such fraud. For instance, Blockchain proofs would prevent the alteration or falsification of issue dates for licenses, prevent the creation of fraudulent birth records in the distant past, and prevent many other types of abuse. Blockchain is the perfect technology for securing and certifying public records.
The linking of Blockchain certification to public records also provides additional trust and transparency in government processes. Digital licenses that are backed by the Blockchain are more readily transferred across boundaries and can be validated independently of the agency which issued them. Governments across the globe are at different levels of Blockchain maturity, but few are completely ignoring its potential. Estonia leads the way with digital identities and licenses backed by Blockchain. Dubai hopes to become the first city fully powered by Blockchain by 2020. The US Department of Homeland Security is looking to Blockchain to issue digital documentation and prevent counterfeiting.
Security
Gartner estimates that worldwide Information Security spending will exceed $124 Billion in 2019. Information security is an arms race between the black hats (attackers) and white hats (defenders). In this arms race, new technologies are rapidly adopted on both sides. Blockchain is becoming a key technology for the defenders of digital security.
Blockchain is becoming a key technology for the defenders of digital security.
In particular, the immutably of Blockchain records creates many opportunities for the hardening of secure systems, both in preventing and limiting the chance of a breach and in reacting and responding when breaches occur.
For instance, the integrity of security and event logs are essential in detecting and remediating attacks. A Carbon Black threat report found that in 72% of cases, Incident Response professionals had encountered destruction of logs as a mechanism for concealing a Security Incident. Blockchain-backed logs can be made immune to such destruction.
As well as using Blockchain to protect Security Incident and Event logs, immutable Blockchain storage can be used to track and audit changes to access control and authentication configuration and to detect and prevent attempts to tamper with or destroy customer data.
Obstacles to Blockchain Adoption
All of the use cases outlined above are powerful and probably inevitable, given the revolutionary capabilities of the Blockchain and the strong business drivers for the solutions. However, there are some obstacles facing enterprises that want to adopt these solutions.
Economics and Capacity
Only public Blockchains like Bitcoin and Ethereum offer the strong guarantees of immutability and integrity that make these use cases compelling. However, the economics and capabilities of these public Blockchains are not suitable for directly storing large amounts of data. For instance, it would cost more than 10 million dollars to store 1GB of data directly on the Bitcoin Blockchain. Consequently, most solutions involve storing the data concerned off-chain and storing only digital signatures (hashes) on-chain. Hybrid Blockchain databases that allow economic storage of Blockchain-based data are only now becoming available.
Regulation
Governments are only just coming on board with legislation and regulation that recognizes Blockchain. Regulations relating to privacy are particularly important. For instance, how do we reconcile the GDPR Right to be Forgotten with immutable storage?
Legal Recognition
As noted earlier, there have been some court cases recognizing that Blockchain data constitutes legal proof. However, legal recognition is still limited to selected jurisdictions, and we haven’t yet seen a high-profile precedent-setting court case that puts Blockchain proofs on par with other evidentiary technologies such as DNA. It’s probably only a matter of time, but some organizations are reluctant to take a leap of faith ahead of widespread legal recognition.
Blockchain data management is a game-changer
I’ve outlined a set of compelling use cases for Blockchain as a mechanism for implementing immutable and tamper-resistant data storage. Blockchain is poised to have a major impact on Legal Document Management, Intellectual Property, Security, Government, and Accounting.
There are technical and regulatory obstacles to overcome. However, data anchored to the Blockchain today can be used to achieve a competitive advantage in the future when the regulatory obstacles are overcome. Therefore, forward-thinking organizations are developing Blockchain Data Management solutions now.
ProvenDB integrates MongoDB with the Bitcoin Blockchain. Immutable versions of database state are anchored to the Blockchain, delivering an unparalleled level of data integrity. ProvenDB allows MongoDB developers to build high-performance applications that include cryptographic proof of data integrity and provenance without having to understand blockchain programming complexities.
