Consortium Blockchain a Right Step

Blockchain is a very disruptive technology and if industries do not keep in pace both in terms of its understanding and impact, experimentation and adaptation with changing ecosystem could potentially lead its enterprise leader's fear of missing out (fomo) psyche becoming a reality as it did for brick & mortar companies when they missed the opportunities with the advent of Internet in the early 90’s.

Today, to be on the safer side many enterprises are forming or joining the Consortium and testing their feet not to be left out. Global financial companies lead the way followed by Cross Sector and Life Sciences & health care enterprises.

The significance and ripple effect of Bitcoin Cryptocurrency tsunami which is based on Blockchain made Industry leaders to pay attention bit more closely to its underlying technologies. Blockchain technology is not new, but how the Distributed paradigm of hardware (nodes) including the Distributed Ledger Technology (DLT) has been leveraged coupled with removing the fear of security on identity and the need for an intermediary of controller’s oversight to validate the truth of the transactions.

Smart Contracts implementation on the blockchain with a semi-trust control on transactions validity with heighted identity security by different niche platforms like Ethereum Consotium, Hyperledger Fabric Consortium (from Linux foundation), R3’s Corda, Quorum, Chain Core made it much more enticing for the industry leaders. Not to be outdone, major Cloud vendors including IBM, Microsoft, AWS made these platforms available on their portals along with development toolsets to build and deploy enterprise based applications.

Consortium Blockchain features

1.       Platforms support Privacy and Confidentiality for all the participants in the network

·         It is built on trust where participants know that all of their transactions can be traced

·         All network participants identities are backed with cryptographic certificates that are tied to its Organizations, network components and end users or client applications

·         Blockchain supports all business exchange of assets of tangible (Cars, Whole foods) to intangible ones like Futures, Intellectual properties etc

·         Only known participants can participate in the transactions thus it is private and permissioned system

2.       Distributed Ledger records transactions are built in a decentralized and collaborative way

·         Transactions Assets are defined using a collection of key value pairs (JSON) with digital signatures of every endorsing peer node with values that can be encrypted

·         Ledger is a sequenced, tamper-resistant record of all state transactions chained together in blockchain with one ledger per channel and making it immutable

·         Each participant will have their own replicated copy of the ledger besides being shared with its participants

·         There is a single place of Origin for all transactions in the blockchain to provide provenance for the transactions

3.       The ledger functions and control are implement using Smart Contracts to automate and execute mutually agreed upon by the participants

·         Privacy is key for B2B model and this is implemented using Smart Contracts and Channels

·         Smart contracts are written in chaincode which enforces the business logic in defining assets and transactional logic

·         Channel’s ledger contains a configuration block defining policies, ACL and other pertinent information

·         Major programming languages like C++, GO, Java, JavaScript are used to program the chaincode

4.       A process called Consensus is used to commit the transactions only on approval by the appropriate participants

·         Consensus allows for transactions to be synchronization across network thru this process with shared data ledgers as well shared programs that update them

·         Transactions are written in the order in which they occur in this consensus process to avoid any malicious entries

·         Transactions are committed only when the block’s transactions have met the explicit policy criteria checks and balances dictated by the members and endorsed, validated and versioned checked

·         Consensus mechanism utilizes different technology messaging brokers like SOLO, Kafka, Simplified Byzantine Fault Tolerance (SBFT)

Use Cases

There are many uses that are identified in various industries including Capital Markets, Financial Services, Healthcare, Government Legal/Regulatory, Insurance, Supply Chain Logistics, Anti Counterfeiting, Travel and these are in various stages of implementation, development, design and PoC’s. Here are some:

Healthcare: 

1. Large Pharmaceutical companies are using Consortium blockchain platform for their clinical trials to overcome its higher cost and meet Government regulations. Clinical trials involves data collection and its management in timely fashion from patients, physician offices, recruiters and research centers spread around vast geographical areas.
2. Medical Insurance claims is a 3 trillion dollar US healthcare market but still utilizes 40 year old EDI paying value-added services in validating the transactions along with a significant percentage of clerical staff processing the paper input to service long tail of small scale providers.

Supply Chain Logistics:

This use case is an ultimate for Blockchain implementation. There are two key dimensions that are required in any Supply Chain from its creation to end-delivery. 

• End-to-End traceability with ability to trace back to its Origins which potentially increases with complexity of the product in varying degrees 
• Identifying passage and impact of laws and regulations influencing the product’s journey

The complexity can further compounded when supply chain has to trace assembly of these products into SKD’s and into final product. Imagine If I extend the thought process to trace including installation issues, repairs, upgrades, warranties etc. 

Capital Markets:

Currently 26 member Japanese financial institutions have successfully implemented Internationally OTC (Over –the- Counter) derivatives using blockchain to apply master agreement without a need to renegotiate with counterparty thus improving transparency and simplifying data management.

Recently Credit Suisse and ING completed the first live securities lending transactions valued EUR 25 million using R3’s Corda Blockchain platform.

Conclusion:
A methodical study, evaluation of a disruptive and revolutionary paradigm such as Blockchain Technologies to its current landscape of ecosystem has more promises than failures.