In an one-on-one interview with Rashi Varshney, Thomas Keenan, Professor at University of Calgary spoke about importance of blockchain for non-financial usages, as well as security implications of using blockchain technology.
Blockchain technology enables data sharing across a network of individual computers. It is gaining worldwide popularity due to its possibilities of usefulness in recording and keeping track of assets across all industries. But, what is so special about this technology? Why businesses would love it? How to understand Blockchain, what are some security lessons and pitfalls to avoid?
In an one-on-one interview with Rashi Varshney, Thomas Keenan, Professor at University of Calgary spoke about importance of blockchain for non-financial usages, as well as security implications of using blockchain technology.
Edited Excerpts
How would you explain blockchain to us?
We all know Bitcoin, and what makes Bitcoin work is blockchain. The blockchain is the underlying system behind Bitcoin. It is a distributed database that contains transactional data which can represent anything (e.g., with Bitcoin it represents monetary value). Each block contains a hash of the previous one, providing linkage. Unlike your accountant’s spreadsheet, there are many copies, widely distributed, and a mechanism that allows verification and reduces the chance of tampering.
Why enterprises are keen to adopt blockchain?
Blockchain allows you some degree of anonymity. While all the transactions are public (unlike say, credit card purchases) they are not linked to personally identifiable info. Also, there is no upper limit to the number of bitcoin addresses (often expressed as QR codes) a user can control. The technology enables direct ownership and transfer of digital assets without the need for an intermediary. Also, it gives speed to a transaction. Moreover, the programmability enables automation of capabilities on the ledger. Majorly, blockchain provides irrefutable proof of existence, proof of process and proof of provenance.
What can be the non-financial uses of the Blockchain?
A transaction in a blockchain doesn’t have to represent a Bitcoin, or even money — it can be anything. The parties simply need to agree how to interpret it. So, blockchain could be used to secure something like a land title in a way that counteracts bribery and corruption, this is already happening in Honduras. The technology can be used in every industry.
In healthcare, the technology can be used for health records. In healthcare, a huge problem is that we want our health privacy but we also want the ER doctor to ‘know all about us’ immediately. Blockchain technology is capable of providing tamper-proof data management for medical records company. This can solve many problems for doctors, hospitals, insurance companies, lenders, and even patients. For instance, Factom, a blockchain technology is providing an unalterable record-keeping system to medical records and services solutions provider, HealthNautica, to secure medical records and audit trails using the blockchain.
“Factom’s technology first cryptographically encodes the private medical data, and a digital fingerprint of the data is used for time-stamping and verification processes. This practice protects patient confidentiality by ensuring the actual medical records are not revealed to third parties, including Factom.”
Blockchain is value-neutral and widely applicable, and hence it can also be used for so many other self-executing contracts, like digital rights management.
What kind of security implication can blockchain have?
The fundamental concept may have flaws. When more than half the computing power on a blockchain mining network is controlled by an entity, it can effectively collude to certify false transactions. This sounded far-fetched with ‘Mom and Pop miners’, but the mining landscape has completely changed these days. In April 2016, over 70 percent of the transactions on the Bitcoin network were going through just four Chinese companies, known as Bitcoin mining pools — and most flowed through just two of those companies.
There are issues like how to incentivize people to maintain the integrity of non-financial blockchains? Also, this technology has never been load-tested, so scalability is still a question.
Also, while the blockchain is resistant to tampering, systems to implement and use it are just as vulnerable as any others to hacking, programming errors, corrupt staff, malware
The kind of data being considered for blockchain systems, from highly personal health information, to control of important physical facilities, may have consequences that far exceed the loss of money (breach of privacy, hijacking of infrastructure, etc.)
You will be hearing more and more about the blockchain, even from its traditional enemies like financial institutions. The only limit to blockchain applications will be human creativity, and perceived creepiness. Security risks of the core technology are manageable, but danger awaits in the ecosystem around the blockchain. As always, people are the biggest threat!
Speaking of security challenges, how government can help in creating an ideal ecosystem?
Blockchain doesn’t need any law, it’s a self-executing agreement, but governments can get out of the way to let it flourish.
Blockchain adoption is in nascent stage all over the world as well as in India, how CIOs in India can begin to adopt it for their organisation ?
There are public infrastructure that are open source and free. Like Ethereum, which is a platform for blockchain apps. The open source platform is crowd-funded, and enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middleman or counterparty risk.
However, the main question is if you are going to rely on blockchain technology for your business, how will you take care of security challenges? Because, people who are big and powerful can overwhelm your blockchain. So, I would suggest a CIO to first buy a small amount of Bitcoin and use it to understand the process. It’s like apply what you have learnt.
Then list business processes relevant to your work that could be affected by the factors (e.g. disintermediation) made possible by blockchain technology, brainstorm whole new processes and applications that might be made possible by the blockchain. Also, list some risks involved in moving to the blockchain.
Start monitoring what your peer organizations are doing with the blockchain, and if it makes business sense, move some non-critical process to the blockchain, possibly in parallel with other technologies.
Lastly, how do you see the future of this technology?
Blockchain will always be around. I believe that the non-financial uses, such as health records of it will be even more important in the future than financial ones like Bitcoin.
