Podcast | Digging Deeper - Blockchain: Beyond bitcoin

Gartner, the research and analysis firm, says the technology will generate $ 3.1 trillion in business value by 2020. Blockchain is placed seventh in their list of 10, since we’re still feeling a little obsessed with ranks and positions. And, while at it, a bit pleased that it isn’t China in first place for a change. We’re a competitive people. Yes.

But to come back, if blockchain is the most searched term on gartner.com since 2017, which it is, and we have the 2^nd largest pool of experts in the area, the technology certainly merits a closer look.

Welcome to Digging Deeper, a podcast series on Moneycontrol. Today we take a look at what having a larger blockchain developer pool means for India, what blockchain is in the first place and why Wired believes it could transform the art world. Okay, while that last bit is true, it’s really here to serve as clickbait. Or whatever the audio equivalent of that is.

First link in the chain – origin and definition

So definitions of blockchain aren’t that simple for us lay folk to wrap our heads around – probably why it’s the most searched term on Gartner. From the sheer number of times you have to visit the site and re-read articles perhaps.

Even blockchain for dummies isn’t particularly helpful. What is though is a Forbes contributor’s analogy for blockchain. Bernad Marr says and we quote, “Some people have called blockchain the “internet of value” which I think is a good metaphor.

On the internet, anyone can publish information and then others can access it anywhere in the world. A blockchain allows anyone to send value anywhere in the world where the blockchain file can be accessed. But you must have a private, cryptographically created key to edit only the blocks you “own.”

Using your private key and someone else's public key, you can transfer the value of whatever is stored in that section of the blockchain.”

Definitions though may not be required. Most people who at the very least read the papers everyday have heard of superstar bitcoin (threatening to turn into a box office dud these days). Blockchain is the proverbial, unseen wind beneath its wings.

An aside here. Satoshi Nakamoto, credited with thinking up blockchain technology, is not a bird or a plane for sure but may not even be one super man. Satoshi Nakamoto could well be a group of people using that moniker. In any case, Satoshi Nakamoto, in a 2008 paper, wrote about peer-to-peer networks as a solution to the issue of double spending in digital currency. In simple terms, physical currency like notes and coins can exist only in one place at a time – hence no chance of the same note or coin being spent concurrently. This is not true of digital currencies that run the risk of being “double-spent” because digital currency is not immediately removed from someone’s possession upon being spent, and digital information is easier to replicate or copy.

Nakamoto proposed a decentralized approach to transactions, which Investopedia explains as a network of buyers and sellers who can interact with each other and don’t need to be routed through some sort of a centralised clearing house. The real estate market is a good example of a decentralised structure – where buyers and sellers transact with each other without having to channel any part of the process through another entity.

This decentralised approached results in the creation of blockchains.

Block refers to digital information on 1, the transaction itself – including date, time, value etc, 2, information on participants involved like usernames and so on, and 3, information that differentiates one block from another. Much like human DNA but referred to in this context as hash.

Every time new data is added to a block, it gets added to a blockchain. So a blockchain is really a collection of multiple blocks.

And here’s what makes this technology really cool and useful – in a blockchain, timestamps for a transaction are added to the end of a previous timestamp, creating a historical record that cannot be changed. The blocks are stored linearly and chronologically with new blocks being added to the end of the chain. If information on a single block is altered, it will result in changes to the unique code or hash as well. But the block that follows will still hold the older hash – meaning hackers will have to alter the hash on EVERY block to cover their tracks. Sounds doable you think? Don’t get ideas. It’s far from doable when the blockchain increases in size – which is what happens when new data is added, and transactions increase. The computational power required to alter such blockchain records is massive – a very effective deterrent to attack.

Safe to wheel out Gartner’s definition of blockchain now we think. We quote:

“Blockchain is a type of distributed ledger, an expanding chronologically ordered list of cryptographically signed, irrevocable transactional records shared by all participants in a network.”

The definitions, history and key attributes out of the way, time to tell you what interesting things the world is doing with blockchain technology these days, considering it hasn’t been an easy one to crack so far. But more about the challenges later.

Interesting uses for Blockchain

In an October 22 piece on tech trends for 2019, Forbes contributor Peter High said and we quote, “ Blockchain promises to reshape industries by enabling decentralized trust, providing transparency and reducing friction across business ecosystems. While many CIOs are just now beginning to explore blockchain and evaluate its potential, early adopters such as Walmart and Maersk are already expanding their pilot programs.”

No denying that proofs of concepts are served well and strengthened by big retail names. Or by Spinach, Pop-eye style. A New York Times piece speaks of how in spring this year, scores of Walmart shoppers fell ill after consuming contaminated greens from the store. Months later, in September, Walmart announced it would require its spinach and lettuce farmers to contribute to its blockchain database to help pinpoint contamination.

More daal-chawal kind of uses for blockchain in the retail world – Carrefour uses the technology to track tomatoes, eggs and chicken as they make their journeys from farms to stores.

Eastman Kodak has a blockchain platform that lets photographers manage and record ownership of their work. Dinodia Picture Agency – are you listening? An aside – Dinodia goes back to 1987 and is India’s first stock photo library.

Then a Wired piece from November 20, with the tantalising headline “8 trends that will shape the world in 2019” talks of how blockchain could find a neat little place for itself in the art market – by providing a unique record for each piece of art, from initial authentication to current ownership.

The article quoted Ed Vaizey MP, former UK minister for communications, culture and creative industries as saying, “Just five per cent of the $500bn blockchain industry is focused on the art market. Blockchain could increase the speed, transparency and volume of art sales globally - and most importantly of all, democratises the sector so that we can all benefit from its riches.”

Though not half as fun but closer home and hot off the griddle, a TechCircle article from November 21, speaks of HSBC India and ING Bank together deploying blockchain to accelerate a trade finance deal involving India’s largest publicly traded company by market cap. No points for guesses.

Forbes has an entire piece on 35 innovative uses for blockchains including securing health records, replacing the need for logins and passwords, yes please, preventing the spread of conflict diamonds, sharing unused hard drive space, public safety and transport solutions, ensuring quicker and effective disaster relief and response, managing bank guarantees and marine insurance...all ok and plausible so far… and this as well - enabling the creation of democratically structured organizations, and potentially even states or nations, using blockchain tools.

There’s plenty more of course, and but clearly Blockchain has a loads of uses beyond the usual applications in cryptocurrency like Bitcoin and in the banking and financial sectors.

Still only Number 7 on Gartner’s list?

Daniel Newman writing for Forbes says with no small measure of scepticism, and we quote, “As we continue to explore this technological miracle worker, we’ve come to realize that blockchain is kind of a mess. It’s too complicated for lay people to use right now, and there’s no standard way to use it because we all want to use it different.”

He does however add that mass adoption of blockchain can happen if there’s a plug and play version of it that’s easy to use and understand. We feel your pain Daniel.

Further, a Deloitte report says that the key challenge Blockchain faces is lack of awareness of the technology especially in sectors other than banking and finance, and a lack of understanding on how it works.

Bitcoin Magazine’s article featured on the Nasdaq website draws attention to a very important challenge – privacy and security - in the context of a key feature of the technology: Blockchains are designed to be accessible and visible to all those who’ve contributed data to the block or transacted on the network.  We quote, “Governments and corporations have a need to be able to protect and restrict access to their data for a myriad of reasons. This means that blockchain technology cannot work in spaces with sensitive data until this challenge is met.”

The piece also lists initial costs, integration of legacy systems and energy consumption as some of the other challenges blockchain faces.

The India opportunity – for development and developers

Before getting to India, adding heft to the potential of blockchain are leading tech films like IBM & Microsoft who have made huge commitments to the technology. Significantly, IBM uses the Hyperledger Blockchain creator tool to help organisations create their own distributed ledger and smart contract systems.

Microsoft in addition to being an early adopter of blockchain, has secured several patents concerning the use of blockchain in payment gateways and secure storage. Microsoft also lets businesses and developers to deploy their own blockchain using Stratis in Microsoft Azure.

Placing blockchain in the context of India, a Livemint article from early November says and we quote,” Public blockchains offer tremendous opportunity for India across four dimensions, jobs, capital, solutions to India’s problems and global strategic positioning. Decentralized applications on public blockchains can solve myriad Indian problems, such as eliminating middlemen, providing data security, reducing corruption and tampering of financial ledgers, and improving the speed of service delivery by governments and corporations.”

It is clear that India Inc has embarked on its digital transformation journey and is on course to meet the future, as the leading strategic trends of AI, the Internet Of Things (IoT), Autonomous Things, Augmented Analytics, Blockchain and other emerging technologies cease to function in silos and start to converge.

And the opportunity for the second-largest blockchain developer community in the world is summarized in the Livemint piece thus: Blockchain is now the fastest-growing skill set demanded on job sites, with job growth rates at 2,000-6,000 percent and salaries for blockchain developers 50-100 percent higher than regular developer jobs. The decentralized nature of projects with distributed teams can translate into lakhs of high-paying jobs from all over the world being available to Indian developers.” Unquote.

While our night skies light up with dollar signs in the eyes of 19,627 Indian blockchain developers, Satoshi Nakamoto has, as communicated to another bitcoin developer in a 2011 email “moved on to other things.”