Over the next two years, enterprises are expected to ramp up their efforts to test blockchain technology as part of a new method of establishing trust in a digital economy.
New research from consultancy Deloitte LLP shows a "trust economy" is now developing around person-to-person (P2P) transactions enabled by blockchain technology and not dependent on more traditional methods such as credit ratings or guaranteed cashier's checks.
"Rather, it relies on each transacting party's reputation and digital identity – the elements of which may soon be stored and managed in a blockchain," Deloitte analysts said in a report.
For individuals, the "trust" elements could include financial or professional histories, tax information, medical information, or consumer preferences. Companies could maintain reputational identities that establish their trustworthiness as a business partner or vendor.
Blockchain is a public electronic ledger – similar to a relational database – that can be openly shared among disparate users to create an unchangeable record of their transactions, each one time-stamped and linked to the previous one. Each digital record or transaction in the thread is called a block (hence the name); it allows either an open or controlled set of users to participate in the electronic ledger. Each block is linked to a specific participant.
Blockchain can only be updated by consensus among participants in the system, and when new data is entered, it can never be erased. The blockchain contains a true and verifiable record of each and every transaction ever made in the system.
As a peer-to-peer network, combined with a distributed time-stamping servers, blockchain databases can be managed autonomously to exchange information between disparate parties. There's no need for an administrator. In effect, the blockchain users are the administrator.
In the trust economy, an individual's or entity's "identity" confirms membership in a nation or community; ownership of assets; entitlement to benefits or services; and, more fundamentally, as evidence that the person or entity exists, according to Deloitte.
Blockchain doesn't simply solve data access or sharing issues; it also solves a confidence problem.
In the peer-to-peer trust economy, an individual user – not a third party – will determine what digital information is recorded in a blockchain and how that information will be used. Blockchain users, according to Deloitte, will work toward creating a single, versatile digital representation of themselves that can be managed and shared across organizational boundaries.
With that kind of identity, users may record:
In short, as a repository of valuable data, blockchain can provide individual users with unprecedented control over their digital identities. Mean while, companies are expected to find varied uses for the still-emerging technology.
"A lot of companies are interested in enterprise blockchains, and one of the big killer apps is supply chain management," said Vipul Goyal, an associate professor in the Computer Science Department at Carnegie Mellon University (CMU).
"For example, as goods move from one place to another or one part of a company to another..., companies are interested in using blockchains to keep track of how goods are moving and where they are," said Goyal, who is CMU's Cryptography Group.
Private or "permissioned" blockchains can also be created within a company's four walls or between trusted partners and centrally administered while still offering control over who has access to information.
"It's the freedom of feeling like I'm doing what's in my business' best interest by being able to share whatever I want, whenever I want it, in a way that's immutable, trusted, secure," said Brigid McDermott, vice president of Blockchain Business Development at IBM.
