Is now the prime time for blockchain?
As COVID-19 has disrupted supply chains worldwide, Brian Behlendorf, executive director of Hyperledger, told Karen Webster that the pandemic has spurred a shift in thinking about new use cases for permissioned blockchains.
Increasingly, firms seek accountability and visibility into suppliers, vendors and transactions in real time.
And despite the impact the pandemic may be having across other parts of the tech sector, Behlendorf said that there’s relatively less risk of blockchain-focused R&D budgets being scaled back or pilots being canceled.
“We’ve passed the point where people feel like they need to do a proof of concept with the technology,” he told Webster, adding that it’s not just early adopters embracing blockchain.
He pointed to blue chip companies such as Honeywell, which said earlier this year that it was tracking $1 billion in airline parts over blockchain, which has been built on top of Hyperledger fabric.
Blockchain had faced reputational challenges, he said, with its initial association with bitcoin and other cryptos, but blockchain has moved beyond misconceptions that it exists simply as the rails for bitcoin.
Blockchain’s movement into the mainstream has required the development of use cases where cryptos are not front and center — but where immutable records are essential.
The Emerging Use Cases
One application of blockchain that is gaining traction, Behlendorf said, lies with better verification of products as they are assembled and sourced across supply chains. He offered the example of firms sourcing personal protective equipment (PPE) from Chinese companies.
Blockchain, he said, offers a form of getting to “know your customer” — not just on a financial level, but on the ability to deliver goods and services as advertised. Within verticals such as healthcare, he added, there’s the additional value seen in being able to process claims and contracts quickly (which can benefit, say, healthcare companies).
Blockchain, he said, helps companies “not only from a money laundering and antiterrorism point of view, but also can establish whether an entity is reliable provider of these goods.”
With a nod toward how blockchain might be used in a world forever transformed by the pandemic, he said there have been conversations in the space about developing “immunity passports.” The COVID-19 Credentials Initiative — a consortium roughly 70 firms — debuted, focusing on immunity credentials through digital certificates.
Those certificates would offer proof that individuals have recovered from the coronavirus, have developed antibodies or have been vaccinated.
“This is on top of what has been a sea change in developing digital identities — and doing them one step better than just logging in with Facebook or with Twitter,” Behlendorf told Webster,
Hyperledger, he said, has been working across several blockchain projects to build distributed digital identity networks.
Asked whether there are issues tied to scalability around blockchain, Behlendorf noted that “scalability on permissioned blockchain networks is a very different thing than on public blockchain networks.” He said that across public blockchain, only a couple of dozen transactions can be completed per second.
On private networks, that transaction rate can climb into tens of thousands. That increased transaction rate can be boosted by a technique known as sharding, where large databases can be split into easily managed components.
“There are ways to batch things,” he told Webster. “There are ways to design your apps to treat the blockchain as a precious resource rather than as a data lake.”
One way to improve scalability is to bring more trained professionals into the fold who can build blockchain applications to handle the loads that are expected, said Behlendorf. He noted that Hyperledger has been investing in offering training courses and a certification program (currently for Fabric and Sawtooth) to help build out trained workforces.
“There are a lot of things that a systems architect could learn, either formally or in a computer science course, or kind of informally on the job around ‘architecting’ ordinary databases that apply to blockchain as well,” he added.
He told Webster: “If I were a programmer looking for a job, I would pick up these skills, to pick up a certification to make myself more attractive to what are pretty high paying jobs.”
Blockchain, he said, is on a trajectory that can be likened to the growth of the internet itself. In the future, he said, all supply chains and meaningful payment instruments — including digital currencies issued by central banks — will use distributed ledgers.
Regulators will need time to develop a comfort level with blockchain technologies, he said. And as for the contention by some observers that blockchain seeks to replace financial services, he told Webster that a more accurate term may be that blockchain seeks to “upgrade” financial services, reducing costs and boosting trust between far flung financial firms and payment ecosystems.
Once people get past the stigma that blockchain is out to replace finance as we know it, or promote crypto as a replacement for fiat and central banking, he told Webster, “they realize there are prosaic applications and we’ve been using distributed ledgers for a long time. They’re just called double entry bookkeeping.”
Blockchain, he said, exists as a form of “multi-way bookkeeping.”