‘Decentralisation’ is a concept that has captured the attention of the media and industries worldwide. And it’s not without good reason. Blockchain technology is poised to disrupt a slew of legacy infrastructures that are systemically plagued with problems pertaining to transparency, ownership, security and resilience.
It’s traditionally been an uphill battle trying to integrate new technologies into existing enterprise infrastructures – as a general rule for established businesses, it seems they are deterred by the idea of making any drastic changes to their existing processes. Beholden to their shareholders, the risk of any problems arising from a change encourages a more conservative and ‘safe’ approach. In the case of software, it’s easy to understand this logic – the digital realm has no shortage of attack vectors that can be exploited by malicious parties to siphon sensitive information. Moreover, data protection laws are hardening, resulting in increasingly costly penalties for the mishandling or insecure storage of data pertaining to consumers.
In an era rampant with data breaches, however, it has become clear that the old systems are far from perfect, and ridden with critical issues that are impossible to reconcile – we’re repeatedly building houses on quicksand when we should be replacing the foundation they stand on. As we approach a future of IoT, particularly at the industrial level, it’s imperative that we ensure data passed between interconnected devices is kept secure.
The blockchain offering achieves this by leveraging encryption and taking powers that have traditionally been yielded by a single centralised party, and distributing them across a network of nodes whose powers are derived from the consensus of the majority. This topology is often described as trustless, as any two parties wishing to transact do not need to have faith in a single entity. In this manner, a range of different tools are available for individuals or parties to interact with one another.
Smart contracts are often deemed to be the ‘killer app’ – these are portions of code that operate on top of a decentralised network, and can effectively govern the interactions between entities in the network. The use cases for these can range from simple betting contracts that pay out a given number of tokens to a party depending on the outcome of a football match, to forming the basis for fully-fleshed out decentralised applications.
It would be false to say that distributed ledgers are ready for enterprise use as is, however: as every node stores a copy of the existing blockchain, the storage of files larger than a few kilobytes is feasibly unsustainable (the costs are extortionate). There’s also the privacy concern to consider – anything stored on-chain is publicly viewable. To mitigate these risks, businesses would need to consider using a protocol that combines on-chain smart contracts to govern access to off-chain documents (that need to remain confidential).
Businesses stand to gain a lot from adoption of such protocols. Eliminating the counterparty risk associated with transmitting files through third-party systems is paramount as the rate of cybercrime continues to climb. Blockchain technology provides a means, not only of protecting a businesses’ own data within the organisation, but also in its synergistic endeavours with other companies.
Michael Smolenski is the CEO and founder of Lightstreams, a blockchain based network with an authorisation protocol for controlling access to data.