Blockchain: harnessing the power of distributed ledgers

The disruptive potential of Blockchain technology 

 Whatever you think of Bitcoin, and whether or not you think the cryptocurrency will endure, one thing is certain, the underlying ‘blockchain’ technology it depends on to support its peer-to-peer digital cash has the potential to become as disruptive as cloud computing, social media, or the world wide web itself.

Simply put, blockchain is a technology that creates a secure, virtually tamper-proof, accessible distributed ledger of entities, which can be financial, legal, physical or electronic. Rather than being held centrally and managed by a single authority, blockchain enables a ledger to be distributed over a large network of users – in Bitcoin’s case the consumers of its cryptocurrency.

Blockchain ensures that changes to the ledger are applied to every copy of the ledger, while advanced cryptography is used to maintain its integrity, ensuring its security and accuracy across the entire network.

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Significant benefits

For Bitcoin this brings significant benefits. It does not face the costs or complexity of maintaining a central ledger. There is no need for a central IT infrastructure, the operations, network and management resources to run it or a facility to house it. There is no need for physical and virtual security. Plus, resilience is inherently built into a distributed ledger model. 

Given these benefits it is not surprising that both commercial and government organisations are sitting up and taking notice. But with such a complex and expansive subject, it’s understandable that there is uncertainty about how to act.

Time to experiment 

At Sopra Steria we recognised the disruptive potential of blockchains a while ago and have been closely monitoring the developments taking place for some time. Over the past year we’ve been actively facilitating and participating in a global community of leading thinkers in the application of blockchain technology.

Adoption of the technology is at a formative stage and it is yet to be exploited on an enterprise level. It is also debatable whether existing protocols such as Bitcoin are capable of scaling to accommodate the volumes of transactions and interactions that would be needed. Plus, as with any new technology, there is an issue of building trust  prior to mainstream adoption.

However, we firmly believe now is the time to embrace the technology and experiment with it.

Simplifying the complex

 Financial services is clearly the obvious candidate for distributed ledgers. Keeping track of trades and the associated payments, for example, is a complex and time consuming process involving multiple institutions. Blockchains offer the opportunity to simplify and accelerate this substantially. Ledgers updated in near real time also have the potential to help streamline existing back end systems. Ecosystems of companies transacting all kinds of goods, from raw materials to pharmaceuticals and sophisticated machinery can benefit from new ways of proving ownership and the origin of goods and services. Government is also a prime candidate for deploying distributed ledgers and the UK Government Scientific Adviser has recognised this, producing a report that suggests distributed ledgers could “help governments to collect taxes, deliver benefits, issue passports, record land registries, assure the supply of goods and generally ensure the integrity of government records1.

Creating the right environment

Whilst we believe experimentation is vital, it is also our contention that to be successful it should be carried out in a controlled and managed environment. To ensure results are not compromised ,organisations need to select the best infrastructure, the most appropriate blockchain engine for their use case and make sure the correct governance is in place in terms of authentication, security and data quality. At present there are many different techniques and tools being tried, as well as competing intellectual property. With our expertise and experience of blockchains, Sopra Steria can help you create the right managed environment for your organisation.

"In summary, distributed ledger technology provides the framework for government to reduce fraud, corruption, error and the cost of paper-intensive processes. It has the potential to redefine the relationship between government and the citizen in terms of data sharing, transparency and trust. It has similar possibilities for the private sector1."

 
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1 Source: Distributed Ledger Technology: beyond blockchain. A report by the UK Government Chief Scientific Adviser.