Blockchain: This time, the hype’s justified

Published on the 30/03/2017 | Written by Donovan Jackson


Among the more promising technologies emerging today, this one just might change the world…

While outsiders tend to view the information technology industry as an exciting, ever changing environment, it is just as easy for those within it to become jaded. Paradoxically, it appears to move incredibly fast, while covering the same territory over and again. It’s akin to the spiral described by a Fibonacci sequence: we’re looking at the same problem, only it is a lot clearer as the spiral closes in over time.

So, while at TIBCO’s just-concluded Now conference in Singapore, the usual exhortations that business is changing fast and must adapt to ‘unprecedented challenges’, etc etc, were just that. The usual exhortations. But one item which has been enjoying a plenty of attention, including from NZTech and its ‘special purpose vehicle’ FintechNZ, is the blockchain.

TIBCO CTO Matt Quinn said he has seen more than his fair share of hype. “Usually, I go ‘ah, don’t worry about it’’, but trust me, blockchain is one technology which will change everything.”

Unlike the other in-vogue notions of automation, artificial intelligence and machine learning, blockchain enjoys the distinction of being an actual relatively new technology. “I studied AI at Uni decades ago and it is one of those things that comes and goes in waves,” noted Quinn with a wry smile, “And maybe this time is the time we’ll get that working properly.”

AI has its roots in antiquity (or the 1960s, depending on how you look at it). Blockchain, on the other hand, was invented in 2008 by the enigmatic ‘Satoshi Nakamoto’. Blockchain is essentially ‘just’ a database technology. The difference is that it is distributed and maintains a continuously growing list of ordered records – blocks. Each block contains a timestamp and a link to a previous block. Blockchains are inherently resistant to modification of the data — once recorded, the data in a block cannot be altered retroactively (that is, until Accenture introduced an editable blockchain, to howls of outrage).

Using a peer-to-peer network and a distributed timestamping server, a blockchain database is managed autonomously to create ‘an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.”

The Silicon Valley-based Australian explained why the technology most associated with cryptocurrency Bitcoin has captured his attention. “One of the single most important aspects of distributed world is trust. We trust that the audit agrees with, for example, a bank balance. Any asset based transaction requires trust in distributed systems that when they work, they work.”

Be that as it may, Quinn said there just hasn’t been any single ‘great way of building that trust’. “That’s what blockchain does. While it comes from cryptocurrency, the notion of private distributed ledgers with a new level of trust can be widely applied wherever there are multiparty transactions, introducing the notion of smart contracts in banking, healthcare, supply chain and so on.”

What trust and smart contracts do is to establish verifiable information – whether it be that there are 10 widgets on a shelf somewhere, or 10 bucks in a bank account.

Now, TIBCO is a middleware company, primarily, so what does it have to do with blockchain? “Many of our customers are experimenting with different implementations and there is a large degree of integration work in building clients to various blockchains. This work is important because there are many blockchains out there,” clarified Quinn.

What he sees as the major stumbling block for blockchain is its ability to scale. “It’s a relatively new technology and right now it doesn’t scale well. The problem is that it is too costly, so if you have, for example, a cost of $50 for a transaction record versus a ‘traditional’ cost of $1 per transaction [not real figures, just used for the sake of argument], it doesn’t matter which one is better. The cheaper one wins.”

But isn’t that exactly the sort of challenge the IT industry tends to lap up? Well, yes, said Quinn, but throwing tin at the problem is exactly where the cost comes from. Instead, he believes that in much the same way that multiplexing and other clever things have allowed boffins in the networking industry to shove more data through the same infrastructure, developments in blockchain will focus on doing the ledger processing more efficiently.

“This industry is unique, though, in that the solutions to the problems of today and the future can often be found in the past. Often, the conceptual solutions are already there; it just takes time for the enabling ecosystem to advance to a sufficient point to make those solutions practical.”

And that tends to happen, sooner or later. With AI, the decades-old fundamental compute and data availability problems have been addressed by the cloud; with blockchain, could the path to scale be far more rapid? Quinn certainly appears to believe so.

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