Earthlings Discuss: Business Applications of Blockchain Technology

Business applications for blockchain don’t have the same celebrity status as NFTs and cryptocurrency, but most would agree that it is worth taking a serious look this emerging technology. Here at Earthling Interactive, we are lucky enough to work with innovative clients that have asked us to help lead their foray into immutable ledgers. Building the UI for blockchain applications means we need to be cognizant of how to exploit the benefits without succumbing to shiny-object temptations. To get a better understanding of blockchain, our VP of Services, Erin Courtenay (EC) sat down with one of our teams currently working on a blockchain project. She wanted to get their insight on the practical, aspirational, and cautionary aspects of blockchain technology. Here is a transcript of our conversation (a video recording of this conversation is embedded at the bottom of the page). Earthlings in this conversation are: Jamie Role (JR), Director of Applications; Joe Harvey (JH), App Developer; Chris Tranel (CT), App Developer We’re not going to be talking about crypto so much today. We’re going to be talking about the utility of blockchain for other business applications. So, Joe, if you don’t mind, I’m going start with you. I struggle with understanding the difference between why in a business environment you would implement a blockchain over just a traditional database. Because from my understanding, they kind of do the same thing? JH: The advantages: the information is decentralized; it is distributed among a larger number of participants. For things like ledgers where you’re sharing that information with different participants, it creates a level of trust between everybody that is involved. Let’s take for instance a typical way of setting up a database, you might have redundancies, but you would typically just have one. And then that would fail if there were any problems with that database. But there is one source of truth and one person responsible for that data. In blockchain, having that responsibility distributed creates integrity among everybody that is using it, and redundancy. Everybody has the same information distributed. Chris, I am going to reinterpret what I heard from Joe. And what I want you to do is tell me if I got this right: It is a little like having a bunch of witnesses that all have agreed; they share a truth, versus somebody being a single authority on what happened? Do I have that right? CT: Yes. And it goes even further than that, not only do they have an agreement on what the data and the data structures look like, but they all have their own copies of the data that has been collected. So yes, along those lines, correct. And what is the data? What goes in there? CT: It could be anything really, the only restriction is that all parties must agree to what is going to be in there and how it is stored…. criteria for data to be written through the chain. In those agreements, they have something called smart contracts. Those are the business logic and agreements that are written right into the code. And that code is also distributed. There is a copy of that code for each participant on the blockchain they get executed by the nodes. When I hear a crypto evangelist talking about currency one of the advantages that they describe is getting rid of the middleman or the authoritative body that is dictating terms of around those fiscal interests. What you just described with a smart contract that I had not realized is that the contract is written into the code. So, does that negate the need for attorney involvement? CT: What attorneys would be involved in is writing the smart contracts. It is the enforcement that is unique. Because the enforcement is written right into the code as far as what gets written and how it gets written. And it is enforced on each individual node. And so, it is indelible. It’s just… it is what it is? CT: Correct. And one of the potential drawbacks of the chain is that you can change them, but that requires a consensus. If the parties have an agreement and something comes up that was not anticipated, the process for changing and adapting can be long and time consuming. It can be changed, but again, you must go through that entire process and get a consensus. That brings me to another question what are the tradeoffs for implementing a blockchain? What are some of the downsides? Chris mentioned it takes a long time to change. What other challenges are there? CT: That is one of the big drawbacks – you must get everybody to agree to change. Whereas if you’re only using one database, you just need to make that change to that database or any other servers that are hosting that database. The other drawback is the amount of time it takes to access data off the blockchain. You do not want to put things into the blockchain that are constantly changing and updating. It makes it a lot slower for you to be able to get that information. You need to look at what you’re putting into a database versus a blockchain and why. The big misconception is that blockchain completely replaces a traditional database. But really, they are partners, and they work together. That’s interesting. So that data doesn’t only live on the blockchain, you can have a conventional database alongside that to just sort of be able to quickly access the data. Is that right? CT: Yes, you can do that, and you can also store supplemental information beyond what is stored in the blockchain. The blockchain will store exactly what is in the smart contract and the agreement, but there might be more details like you want to keep, for example – notes, you would keep in a traditional database, because you don’t need to be taking resources up in the blockchain for that. Okay, to summarize, the big advantage is that the data is distributed. The disadvantage is how difficult it is then to reformulate that data, should there be a change a reason that you need to change the data? Is that it in a nutshell? CT: Yes, I think that’s it. If I have a business, and some function of my business, I decided to maintain data on blockchain. Do I have to use cryptocurrency to do that? In other words, do I have to do a massive overhaul of my whole fiscal situation? JH: The short answer is no. Cryptocurrency is a unit of measure that is stored in a ledger. It’s just another type of information that the ledger tracks. So no, it’s not necessary, but it could complement your business depending on your niche or function. CT: Cryptocurrency is built on blockchain, but it’s not the entirety of blockchain. Blockchain is the underlying storage and processing of the data. Cryptocurrency is one example of blockchain. Let’s say I did want to use cryptocurrency for part of my business, could that be part of the smart contract? Or do I need to run a different sort of blockchain arrangement for cryptocurrency? CT: There aren’t any hard and fast rules. A smart contract can be whatever the parties agree to so if cryptocurrency is a part of that… so be it. Outside of cryptocurrency what are other sort of business applications you’ve seen that seem like they have potential or merit? JR: The manufacturing industry is a good example – tracking equipment maintenance, employee interaction with equipment, anything that requires routine and traceable data. Another example is in the medical field where it is especially important to keep track of medications, procedures, tests and so forth. Blockchain works best when you have two parties that have a specific agreement on things that absolutely must happen, you need to track timing and other critical details. Is it always two parties on a blockchain – or can there be more? CT: There again, it is whatever people can agree upon. We talked earlier about the difficulty in changing the blockchain and the need for consensus – which is more feasible with two people. The more parties you have, the more challenging that’s going to be. On the other hand, one strong point for blockchain is the capacity to enforce trust among large groups. But, if there is a small piece of a process where there have historically been contested issues implementing an immutable blockchain can help remedy that tendency for dispute – because every party in the smart contract holds the data. Lightning round. Looking at where we are today with blockchain – are you bullish or bearish on uptake of the technology? JH: I would definitely say bullish. Except if we get if we start seeing computer processing capacity get to the point where they can start breaking the blockchain cryptography. I wouldn’t expect that for a couple of decades. But that is a theoretical possibility. CT: I think that it has its applications. But it feels a little faddish to me at this point. Some people might be looking to use it in places where it’s maybe not the best fit. JR: Bullish… For awhile blockchain kind of hung out in the back water of the internet but now it is really starting to come into the light. It has a lot of potential for growth. I agree with Chris that it needs to be used appropriately, otherwise, if not – that could be detrimental to it becoming an established technology.