How blockchain can fix business pain points
- 03 May, 2018 04:00
Blockchain is a highly technical concept that has been much
hyped, without full understanding of what it can and can’t do. The reality is
that for certain use cases, blockchain can be a brilliant useful and effective
technology. For others it’s not appropriate, and trying to use it for the wrong
reasons will just make an existing problem worse.
Blockchain isn’t a replacement for bad systems. This was a point underlined by blockchain engineer Lucas Cullen, who spoke at the recent APAC Blockchain conference in Melbourne. Blockchains are an “append only repository”. They append information to a record, without altering anything existing data there. They are immutable: once a block is written into a blockchain, it cannot be altered. All of the transactions persist, forever.
As such, blockchains augment good systems with tamper proof evidence. They’re a tool to make companies and individuals accountable to their claims, enabling multi-party trust. At the same time they add complexity and time: they have lag by design. They’re not suitable for big data, or when details don’t matter, or when speed is an issue.
Let’s consider what some of the appropriate use cases are. Greg Medcraft, former ASIC chief and now an OECD director, acknowledges that blockchain is a viable commercial platform which the OECD themselves are recommending. He identifies the following four use cases:
1. Land transfer
In this example, a block of undeveloped land which belongs to the government needs to be tagged and marked with information such as boundary lines. The land is then sub divided and assigned certain property rights: commercial, residential, light commercial etc. The land is then sold and developed.
The provenance of the physical land needs to be recorded as it is being divided/sub divided for commercial and/or residential use and sale. The boundaries of the land are required to be recorded and validated. With blockchain, a permanent, immutable record is created and appended at each transaction point.
Current paper passports are frequently lost, stolen and forged. If you’ve ever had to search back through pages of visa stamps to provide information for a new visa application, you’ll have felt how impractical they are in the digital age.
With blockchain, a “digital passport” could encrypt and store personal information on an individual’s smartphone, which could then be verified alongside biometric information. It would also enhance passengers’ control of their information, with border agencies no longer needing to store it. The United Arab Emirates government is already planning to use blockchain to create digital passports and reduce long passenger queues.
3. Vehicle records
Used cars are typically an area of high fraud and murky information. The joke “one careful lady driver [and 10 maniacs]” wouldn’t be possible with blockchain. Transparency of information about a vehicle’s true history, its wear and tear and servicing, would help resellers gauge value, and give customers confidence in what they were buying.
4. Medical records
Medical errors are the third leading cause of death in the US, and a proportion of these are due to mistakes and omissions in medical records. A study at one Melbourne hospital found that half of patients’ discharge summaries were missing significant clinical information, and one in ten had the wrong diagnosis.
Blockchain could help with both the sharing of data between multiple healthcare entities, as well as improve patient privacy by removing the need for different providers to store it.
As stated, blockchain isn’t a remedy for bad systems. It can’t fix the issue of incorrect data and the need for clean inputs. In the case of land registries, countries with no central registries would need to devise a system for agreeing what data should be entered in the blockchain.
Another issue is that legislation hasn’t caught up yet. While these use cases may be technically possible, is it too early? There are already potential pitfalls around data privacy, or a patient having access to notes intended for doctors’ eyes only, and the legal requirement in some jurisdictions for data to expire (such as criminal records).
Some of these problems may be resolved by using “permissioned blockchain”. Permissioned blockchains are a marriage of concepts, combining centralised user authorisation with a decentralised blockchain transaction ecosystem.
Being able to control the users allowed on a blockchain network reduces the risk of malicious action while increasing control.
Blockchain has its naysayers but there’s no doubt it’s here to stay and we predict businesses and government agencies will in 2018 start to seriously investigate how the technology can improve their processes.
John Heaton is fintech startup Moneycatcha Pty Ltd's chief technology officer. He is an IT and banking technology veteran having worked in various senior roles with Oracle, Heritage Bank and Xstrata Copper.