Blockchain - What's in a Name?

Most CxOs and senior level executives do not want to entertain any conversation that has something to do with Blockchain. “Can this system be designed without blockchain? Come up with options” is the usual response for those system architects, who are brave (or foolish) enough to suggest a blockchain based architecture for a multiparty business process that is ridden with inefficiencies every step of the way.

It is important to keep an open mind about these directives though. Imagine yourself in their shoes. Look at Blockchain with a fresh pair of eyes. If you are not well entrenched in the domain, you will be forgiven for thinking that blockchain is a synonym for bitcoin. Of course, there is an element of truth there. Blockchain owes its existence to bitcoin. However, the two are not the same. Bitcoin is just one use-case of a blockchain ledger. There are a hundred thousand other use-cases that tread miles away from any cryptocurrency paradigm.

Thanks to the negativity around cryptocurrencies, which mainly stem from the volatility of their value in the marketplaces, most people have an opinion that it is a shady, illegal affair to deal with them. Unfortunately, those sentiments creep into the underlying technology of blockchain as well.

CxOs are smart. (Otherwise they would not be CwhateverO’s, would they?) So, in an hour, you can easily explain to them the fundamental difference between blockchain and a cryptocurrency. However, when was the last time you got your CTO for an uninterrupted hour? By definition, they are incredibly busy and the challenge with blockchain is – it is supremely difficult if not altogether impossible to design an elevator pitch that solidly, effectively and unambiguously drives home the point we want to communicate.

The sad truth is – in some cases, blockchain is the Swiss army knife we need – especially if the business process, which is a royal pain in the you-know-where, transcends organizations and gets into the murky world of “I don’t trust you. I don’t trust your data.” conversations among the participants.

I have a simple solution though. Don’t call it blockchain. Call it Distributed Ledger Technology. DLT.

In fact, it is not a new solution. There are many, including yours truly, who believe that we could do with a better representation of what blockchain signifies – a truly de-centralized, distributed system of record that is immutable and trustworthy. The name Blockchain is a result of the bitcoin/Ethereum implementation of this technology where transactions on the ledger are bunched together as blocks and linked to other blocks creating a well-defined and clear chain of blocks that anyone can verify at any point in time.

The problem with this is – not every ledger groups the transactions into blocks. Some of them simply have an ever-increasing array of transactions – No blocks. Just transactions which are linked together so that you always know a transaction’s successor and predecessor. You still have a chain of transactions but no blocks. Corda is a great example of this paradigm.

I know what you are about to ask. Yes, Corda is not a blockchain ledger. It is a distributed ledger. In fact, Corda is slightly tricky because it is actually peer to peer. Nevertheless, don’t make the cardinal sin of referring to Corda as a blockchain especially when you are in the vicinity of R3’s offices in Moorgate London. You will be subjected to a 3-day intensive course on “Corda – What is it”. In the highly likely event of that happening, hell does not break loose though. You will learn a lot about Corda and even programme your first smart contract based distributed app in Kotlin (or Java). Congratulations, you can now put Corda Development on your resume and land those insanely paying jobs halfway across the globe. You may need one anyway after that disastrous blockchain meeting with your CTO!

But I digress. Blockchain is not the right term for this technology. It is not even a technology if you ask me. (Don’t do that by the way, don’t ask me about my views on technology for your own peace of mind). I would say it is an architectural pattern. It is a datastore that is distributed and everyone who is privy to a transaction on the ledger has an identical copy of the transaction. So, if you modify that price of your product from 100 dollars to 1000 dollars because you can, the others on the network have a copy that says it is 100 dollars. Before you ask, the hash does not match now. Hence your update is rejected. Sorry!

Any implementation of such a distributed database – with a process that takes permission from most, if not all, of the participants on the network before inserting a record in the database is called a, ahem, a “distributed ledger”. This process of getting a buy-in from everyone is called the consensus process.

Over the years, (I mean, since 2008 – it feels like a millennium already since Satoshi Nakamoto talked about this), whether the distributed ledger used blocks or not, popular parlance made the whole paradigm “Blockchain”. There is nothing wrong with it. It is a catchy single word with a simple spelling. It has since then, caught on like wildfire. It has become a fashion statement these days to just utter the word.

“Blockchain”

A sort of religious cult has formed around Blockchain. The followers, in some cases, have taken it to the extreme, likening it to sliced bread, swiss army knife, Netflix and God help these souls – web 4.0

Taking a cue from Mastercard – “If there is sky above and ground below, all you need is a blockchain!” For anything and everything, blockchain has become the “solution”. The weary CxO’s have been subjected to the abject misery of sitting through presentations after presentations on blockchain as some sort of a messenger of God that can solve world hunger, inequalities, racism, global warming and of course that supply chain data inconsistencies.

That aura around blockchain is its nemesis. The moment someone utters the word Blockchain, heads start shaking. It has become too esoteric for anyone to consider it seriously.

The media or the press covering this technology is not helping either. They project it as a cryptocurrency technology (it is more than that). Given the way cryptos are behaving these days, you can’t fault a person for not wanting to have anything to do with blockchain!

We need to clearly demarcate these two. A distributed ledger is useful in several contexts. One of them of course is a cryptocurrency. However, it makes perfect sense in a number of enterprise scenarios where a few organizations working together need access to a common but private database that they all can access and grow and which is not in the control of any particular organization.

A classic example is the supply chain of a big retailer. For a product to land on a supermarket shelf, several organizations must work together – The manufacturer of the product, the transportation partner, the warehouses, the insurer, the financier etc. If they all can check where the product is in the supply chain at any given point in time and can process those handoffs automatically and instantly – thus paving the way for instant contract settlements – think of the number of hours saved. Think of the savings from reduced or zero arbitration costs.

PwC’s latest report on the market potential of distributed ledger technologies pegs the supply chain track and trace pie at a little less than 1 trillion USD over the next decade. That is just one use-case for DLT. Any process that crosses organizational trust boundaries, where there is an element of distrust between the organizations, and the presence of low value manual verifications steps at each step of the way is an ideal candidate for a DLT based overhauling. Don’t let a word derail all those opportunities.

Call it DLT. Call it distributed ledger. It may not be as sexy as “Blockchain” but it is surely more relevant, more accurate, benign, boring, dependable, immutable and trustworthy.