Preparing for the next steps of blockchain – CH&Co @ EIC16

CH&Co was invited to deliver a keynote about blockchain at the European Identity & Cloud conference in Munich last week. It was a great experience and we want to thank the organizers Kuppinger Cole and Joerg Resch for the opportunity. Our expert Sebastien Meunier had great conversations with specialists in Identity & Cybersecurity, and met with Blockchain firms such as Ethcore and Evernym. An article about the presentation was published in Computerweekly.

Sebastienmeunier

The objective was to give an overview of the current state of the Blockchain / distributed ledger technology, to reflect on how it will evolve and how to prepare for the next steps from a business perspective.

Here was the narrative:

  • Bitcoin was in the spot light since its creation early 2009, but after 2014 the hype has shifted to the underlying Blockchain technology.
  • Some people believe Blockchain technology will change the world, while others are more cautious on its actual potential beyond crypto-currencies, so it is important to be able to cut through the hype.
  • Bitcoin/Blockchain was designed to solve the double-spending problem and allow peer-to-peer exchanges of units of value, but it is also a trust system ensuring the trust between participants who don’t know each other, without the need of intermediaries.
  • Beyond Blockchain, the distributed ledger ecosystem has expanded in 3 ways:
    • Alternative crypto-currencies – so far none of them has become a serious competitor to bitcoin.
    • Specialized networks designed for specific use-cases – mainly payments (e.g. Ripple & Stellar) and smart contracts (e.g. Ethereum).
    • Private distributed ledgers – toolkits (Bloq, Chain, Eris, Multichain, …) allowing to build distributed systems in a private environment, where access and building of the ledger is controlled by a predefined list of operators.
  • The Distributed Ledger technology (DLT) relies on several bricks to define how the network nodes communicate, how to settle transactions, how to manage digital assets and how to implement the business logic. See the DLT stack with some (non-exhaustive) examples of firms:

blockchaintechnology

  • The DLT ecosystem is very complex, still growing. Some people think the early adoption of standards could foster the adoption of the technology, but some people think it is too early and we shall let “1000 thousand blockchains blossom” and let standards emerge naturally.
  • We don’t know what the end game will be…
    • Competing networks: multiple public rails with differentiated features, with private DL solutions pegged to public rails as needed?
    • Standards driven networks: Industry standards could emerge along verticals & horizontals (by asset type, global service, …)?
    • Universal trust service: a global public rail build as a layer over the internet – a kind of new internet where every server node has a storage and computing capacity?

blockchaintechnology

  • …but we can imagine the next steps:
    • 4+ years: Mainstream adoption, with major industry-wide disruptions, elimination of intermediaries.
    • 2-3 years: Emergence of global standards, Large partnerships/JV btw businesses and tech providers, Disruption of small markets, Emergence of new markets
    • 6-18 months: Experimentation and first large scale proofs of concept, efforts to build industry standards, Niche innovations in large markets
  • What Businesses should do to prepare for the next steps: be aware of what’s happening (training, market watch), experiment (PoC), collaborate (consortiums, workgroups), anticipate the change, develop their strategy (priorities, roadmap)
  • In the experimentation phase, the identification of relevant use-cases is key, yet not easy: not all business use-cases are relevant, not all use-cases will be disruptive.
    • “When all you have in mind is a blockchain, everything looks like a blockchain use-case”
  • From a business perspective, there are 3 main ways to build a distributed ledger solution:
    • Build distributed ledgers at industry / consortium level: can be disruptive for intermediaries, bringing efficiency for the participants of the “cartel”.
    • Leverage existing public distributed ledgers to store “proofs” (hashes of information) outside the firewall (BTC) or build distributed applications (ETH): can go from enhancement of existing services to significant impact and creation of new services.
    • Build a private distributed ledger at Group level: probably doesn’t make any sense beyond experimentation – a centralized system could probably do.
  • There are 6 ways to work and become knowledgeable about Distributed Ledgers:
    • Market watch
    • Internal experimentation – but it can be difficult to acquire & retain the expertise in-house
    • Sponsorship of accelerators / hackathons – meet the innovators
    • Participation to workgroups / consortiums
    • Strategic Investments (through an internal Venture Capital)
    • Partnerships with startups or service providers
  • Final thoughts
    • It’s still early days for distributed ledgers
    • The main issues are: identity management, standardization, legal & compliance issues
    • Blockchain technology is an enabler – the Business perspective is key
    • Be aware of what’s happening, identify relevant use-cases, experiment, develop your strategy
    • Technology providers & Consultancies can definitely help, but it is important to develop in-house competencies

Link to the full presentation