2019 IS THE YEAR FOR THE ADOPTION OF DISTRIBUTED LEDGER TECHNOLOGY
Published on April 7, 2019
Even as we wait to announce the findings from our pilot with Zilliqa on building trust, efficiency and effectiveness across the programmatic supply chain, thought I should put down my learnings from this project. 2019 is going to be the year for Distributed Ledger Technology, popularly spoken in the same breath with Bitcoin and Blockchain. Bitcoin is a blockchain, but suffice to say that on a larger canvas blockchain uses distributed ledger technology (DLT). There are many faces to DLT, making it difficult to measure the adoption of this technology in its pristine definition. There are many routes to get to the full adoption of this technology and it is all happening in parts.
For example, one can just start with managing a distributed database with their constituent partners and yes, they are well on their way to adopt DLT in the future. Managing a distributed database, nowadays has many nuances including validation, storage and security. The management of this infrastructure is a very good starting point and a much needed one, especially when we realise that we ourselves, only own 20-30% of the widely available data in the marketplace. Cloud computing is a great example of this.
One can start building a peer to peer network, be it an ad hoc connection with a couple of computers connected via a universal serial bus to transfer files or a permanent infrastructure that links a half-dozen computers in a small office over copper wires or a network on a much grander scale in which special protocols and applications set up direct relationships amongst users over the internet. The management of this infrastructure is also a very good starting point, which some of the industries like gaming, music and social media (read Facebook) are leveraging now for the adoption of DLT.
One can also start by just focussing on encrypting a database with the advanced cryptographic technology beginning with hash functions and moving all the way up to asymmetric encryption or zero-knowledge proof methodology to secure databases. Financial services, rightfully, has chosen this route, be it credit cards, insurance or personal banking. Probably the most advanced, at this point in time for a scaled up adoption of DLT in the immediate future.
Digital ecosystem has many different needs in its journey to transform. From building trust at one end of the spectrum to becoming effective on the other side of it or a friction free experience in between. For example, an end to end encryption is a good starting point to overcome trust deficit, while a distributed database is a good starting point to provide a friction free experience.
One of the biggest learnings from running our pilot is realizing the importance of cryptography and the power of the smart contract in the DLT stack. Full adoption of DLT can happen only when all the constituent partners, in a peer to peer network use a common encryption methodology. And for this there is a need for the governance and management of consensus across the industry partners, one that links to the execution of a smart contract. Chain-code execution and exception handling of this contract “smartly” requires some level of artificial intelligence built in. This is where AI meets Blockchain. Watch out for this space!
DLT adoption is not going to be like Y2K, that one day the industry will switch OFF one system and switch ON to another system. This is going to be a slow, steady and gradual adoption and replacement of different component technologies. This is where I believe, 2019 is the year to watch out, when these replacements achieve critical mass to provide the inflection point for transformation. Do not miss the woods for trees. Just keep a close watch on the various developments in the digital ecosystem across data and technology and you will already see the gestalt in all this.
Now let us wait for the results from our pilot next week. Until then....