Almost exclusively linked to cryptocurrencies until 2016-2017, blockchain technology was born of a desire to create a virtual currency: the Bitcoin (the first block was created on the 3rd January 2009). Other blockchain applications have emerged and grown, making this technology more concrete, and relevant to meeting needs and creating opportunities. A growing number of companies throughout the world are now beginning to see the benefits it offers.
Traceability is one of the applications of this technology that have been developed. A blockchain is by nature an unchanging and highly secure record; any information recorded in it becomes inalterable and remains accessible as long as the blockchain exists. First, there was ‘public blockchain’, so called because all of the information in the record can be accessed by all users. Then, in 2016, ‘private blockchain’ appeared. This is an extension of public blockchain, with two new ideas:
- Access subject to strict rules (the term ’permissioned blockchain’ is used);
- This makes it possible to carry out transactions that cannot be seen by all participants; only those involved in the transaction.
Whereas public blockchain was highly B2C-oriented, private blockchain has found a role in B2B applications.
Is a private blockchain still a blockchain?
Being private does not mean that a blockchain is no longer distributed or traceable, nor that the data it contains becomes “modifiable”. On the contrary, because a private blockchain generally has fewer participants than a public blockchain, it can implement consensus mechanisms that offer tighter security. It also enables the creation of a consortium (the group of nodes involved in validating transactions is a sub-assembly of the blockchain) and, therefore, the creation of governance in order to establish rules for its operation and use.
Here is an illustration with two examples of applications:
- A company formed of several entities wants to draw on the benefits of a blockchain to monitor its manufacturing processes and store official documents, but does not necessarily want to share access to its data with other companies. It deploys an internal blockchain, with the number of nodes it needs to ensure it is resilient. It can choose a consensus mechanism that is oriented towards being “failure-proof” rather than “fraud-proof”. This is based on the assumption that the company is unlikely to carry out an attack on itself.
- The companies within a group have shared interests and would like to carry out transactions between themselves through commercial agreements. In this case, it is in their interest to choose a consensus mechanism that is able to detect fraud attempts, and each company will represent a node of the blockchain. It will be possible to share some data in a transparent manner, while other data will remain private. For example: company A signs a contract with company B to order products; B signs a contract with C for their transport; A, B and C establish a contract to oversee the Order-Manufacturing-Delivery cycle. In this way, A does not know the prices for transport between B and C, while C does not know the prices of parts ordered by A. As for companies D, E, and so on, they have no visibility of these contracts. Similarly, if a new company wants to join the blockchain, this will have to be approved by a majority of the parties already present. Consensus also applies in this case.
What are the applications of private blockchain?
Blockchain offers clear benefits when it is necessary to demonstrate the origin, authenticity and history of data. Furthermore, the use of smart contracts enables the establishment of a contractual framework for the execution of business rules. This idea may seem puzzling, because it is no longer a signed document but the code contained in the smart contract that serves as proof. There are many potential applications:
- Production chain (traceability of all the production stages for an item)
- Distribution chain (compliance with commercial contracts, prices, delivery deadlines, etc.)
- Storage of official documents (diplomas, accounting documents, deeds of sale, etc.)
- Insurance contracts (compensation paid out when specific conditions are satisfied)
- Traceability (origin of meat in a lasagne dish, etc.)
- Internet of things (location of goods in transport, compliance with the cold chain, etc.
Blockchain is amazing! Can we use it for everything?
Not all projects are compatible with blockchain. Seeking advice from experts and using questionnaires are excellent ways to determine whether or not a project could benefit from being developed in a blockchain.
As with any architecture, blockchain has advantages and restrictions that must be considered when looking at a new project:
- It is not a database. It grows constantly (storage can be a problem)
- It forgets nothing (GDPR compliance can be difficult to implement)
- It often requires exposure to the Internet (network security is therefore an important consideration)
- It means that the data it contains must be shared with others (you must give up exclusive ownership)
- It requires specific skills (which means training)
- It is not natively designed to interact with an IS (you will need to set up middleware)
- It is a relatively young technology (development and integration tools lack maturity, which means that complementary development will once again be required)
However, we are seeing the emergence of BaaS (Blockchain as a Service) solutions developed by some major publishers (such as Microsoft Azure, IBM and Oracle), which help address some of these restrictions. Gateways enabling interoperability between several blockchains are also beginning to be developed.
Blockchain has demonstrated its reliability and robustness in the long term; it has a bright future ahead of it in the business world and many potential applications. Hosting solutions are growing in number (AWS, Microsoft, IBM, Oracle, etc.), and it is now commonplace for companies to consider this architecture when looking at new projects. So let us embrace innovation!
SQLI is here to help with your projects, from initial studies to the run phase, with its expertise and experience in both technical and operational areas. We can also help you with the Proof of Concept, based on a use case, in order to ensure that a blockchain fully meets your needs, and prepare for the development of your teams’ skills.
Technical architect SQLI