Blockchain: where is it go­ing?

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IS BLOCKCHAIN A CRU­CIAL MISS­ING LINK IN THE FU­TURE OF THE CAR­RIER IN­DUS­TRY, OR JUST A HYPE-DRIVEN FLASH IN THE PAN? GUY MATTHEWS AS­SESSES THE PO­TEN­TIAL OF THE TECH­NOL­OGY AND CON­SID­ERS THE CHAL­LENGES IT REP­RE­SENTS

Blockchain tech­nol­ogy is emerg­ing as a hot car­rier topic, hailed as a po­ten­tial game changer and in­dus­try re-shaper.

It didn’t start out that way. At its most ba­sic, a blockchain is a data struc­ture that makes it pos­si­ble to cre­ate a dig­i­tal record of trans­ac­tions, and share it among a distributed net­work of com­put­ers. Blockchain’s early ex­is­tence was all about en­abling the Bit­coin dig­i­tal cur­rency, al­low­ing for trusted trans­ac­tions be­tween anony­mous par­ties, akin to pay­ing for a cof­fee or a news­pa­per in the real world with ac­tual coins, the le­git­i­macy of which need never be doubted, with the iden­tity of the payer ir­rel­e­vant.

The fi­nan­cial sec­tor soon no­ticed that some­thing in­ter­est­ing was hap­pen­ing in the edgy and pe­riph­eral sphere of dig­i­tal cash. By ap­ply­ing a vari­ant of the orig­i­nal blockchain model to its own world, a bank might be able to re­duce the set­tle­ment time for a se­cu­ri­ties trans­ac­tion, ne­ces­si­tat­ing less cap­i­tal to be set aside to cover credit risk.

A so-called per­mis­sioned blockchain (see jar­gon buster panel, right) could al­low trusted par­ties to do busi­ness with no need for a cen­tral au­thor­ity, but in a way that a reg­u­la­tor can still mon­i­tor.

The blockchain band­wagon has rolled on, and now it is the turn of the tele­coms com­mu­nity to clam­ber aboard. Less than a decade from its in­cep­tion, the hum­ble blockchain is spo­ken of as: • The way to au­to­mate the sale of pub­lic Wi-fi or mo­bile data ac­cess; • The fu­ture of roam­ing man­age­ment; • The an­swer to the stream­lin­ing of OSS and BSS pro­cesses by mak­ing them cheaper and faster; • The en­tire ba­sis of to­mor­row’s in­ter­net of things (IOT); • Pow­er­ing the smart cities of the fu­ture,

con­trolled and op­er­ated by car­ri­ers.

It is too early to say with any cer­tainty which, if any, of these out­comes will come to pass. In Au­gust 2015, US car­rier Ver­i­zon put money into a start-up that has been de­vel­op­ing con­nected data mod­ules to al­low in­dus­trial as­sets to act as au­ton­o­mous agents.

At ap­prox­i­mately the same time French player Or­ange launched an ini­tia­tive it called Chain­force which is look­ing into a num­ber of blockchain use cases.

Elec­tronic health records

And early in 2016, Emi­rati car­rier du es­tab­lished a pi­lot pro­gramme to fa­cil­i­tate the se­cure trans­mis­sion of elec­tronic health records in the UAE via blockchains.

“Or­ange be­lieves the use of blockchain tech­nol­ogy could be use­ful in open­ing up new ser­vice ar­eas,” says Ni­co­las De­massieux, se­nior vice pres­i­dent with Or­ange Labs Re­search. “Mul­ti­ple use cases are be­ing stud­ied to­day, as di­verse as health­care and bank­ing, in the in­ter­ests of im­prov­ing our ser­vices and propos­ing new ones to our cus­tomers. As a ma­jor net­work op­er­a­tor, Or­ange has a role to play as an ac­tive blockchain node.”

De­massieux freely ad­mits that, while he fully be­lieves in the dis­rup­tive po­ten­tial of blockchain, the tech­nol­ogy is at a very early stage of its de­vel­op­ment – with a lot still to be learned.

“There is much work to be done around both the tech­nol­ogy and its ecosys­tem,” he con­cedes. “The is­sues that must be over­come in­clude the in­her­ent com­plex­ity of a de­cen­tralised sys­tem for end users, the pro­tec­tion of sen­si­tive data in a sys­tem ac­ces­si­ble to ev­ery­one, its gov­er­nance, as well as data stor­age chal­lenges.”

In these pri­mary phases of its evo­lu­tion, it is prob­a­bly ven­dors and not car­ri­ers that have the real heavy lift­ing to do.

Luke Sully is as­so­ci­ate part­ner of IBM’S Blockchain Se­cu­rity Ser­vices divi­sion and an early and en­thu­si­as­tic pro­po­nent of the tech­nol­ogy. He says the tech­nol­ogy has the po­ten­tial to com­pletely reimag­ine how busi­ness net­works func­tion, given its abil­ity to re­duce both the fric­tion and the cost in trans­ac­tions.

“If you en­vis­age a long and com­plex sup­ply chain where data is be­ing moved and everybody has a copy of that data, there is a se­quen­tial or­der to how things are up­dated,” he ex­plains.

“If you take that long line and put it into a cir­cle with the same data in the mid­dle, then all the data is distributed and shared eas­ily. As in­for­ma­tion changes, ev­ery­thing is up­dated. You can see im­me­di­ately how that pro­vides some in­ter­est­ing value propo­si­tions and use cases.”

Sully says net­work op­er­a­tors have ev­ery rea­son to buy into the tech­nol­ogy’s fu­ture, and points to sig­nif­i­cant blockchain ef­fort around ma­chine to ma­chine and the col­lab­o­ra­tion of things.

“It is use­ful when you have a big and com­plex net­work where in­for­ma­tion needs to flow quickly,” he says. “There could be many as­sets on that net­work send­ing out data, per­haps planes, wash­ing ma­chines or cars, and blockchain can pro­vide a de­gree of au­ton­omy for those el­e­ments to com­mu­ni­cate and trans­act. It has the fea­tures of an en­abling func­tion in the in­ter­net of things.”

Another telco use-case Sully iden­ti­fies around the area of cus­tomer trans­fer, re­mov­ing fric­tion as cus­tomers move be­tween providers: “Imag­ine two or three ser­vice providers par­tic­i­pat­ing in a net­work with cus­tomer data as the ledger,” he says. “How much time and cost would be saved if telco B could ac­cess the cus­tomer data from telco A so they could move across quicker? There’s cur­rently a lot of fric­tion both in the telco back of­fice and in the cus­tomer ex­pe­ri­ence side too.”

Sully, like De­massieux, is san­guine about how early the in­dus­try is on the jour­ney to real life blockchain de­ploy­ments: “There’s a long curve in how it’s go­ing to de­velop, but we’ve al­ready moved away from ‘here is a great so­lu­tion, let’s find a prob­lem’,” he says.

Tech­nol­ogy hur­dles

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And there will be bumps along the road: “There are both some philo­soph­i­cal chal­lenges and some tech­nol­ogy hur­dles that blockchain will have to get over first,” Sully warns.

“You’re look­ing at in­sert­ing blockchain into ex­ist­ing in­fra­struc­ture, and that presents a num­ber of in­te­gra­tion chal­lenges. Plus a ser­vice provider will be sub­ject to reg­u­la­tory re­quire­ments us­ing a blockchain as they will with any other kind of data­base. Much will there­fore de­pend on the kind of in­for­ma­tion that you will hold or pass along that blockchain,” he says.

“You will need to worry about sen­si­tive data, par­tic­u­larly with a lsrge num­ber of other par­tic­i­pants on the chain. There are se­cu­rity chal­lenges too – but a num­ber of ad­di­tional se­cu­rity el­e­ments are built into blockchain as well. It is about com­pletely reimag­in­ing how a busi­ness net­work func­tions, so it will be a huge op­por­tu­nity and a chal­lenge too.”

En­rique Ve­lasco-castillo, se­nior an­a­lyst with the re­search divi­sion of in­de­pen­dent an­a­lyst firm Analysys Mason, says it is far too early to pick out any blockchain lead­ers, given that mean­ing­ful stan­dards have yet to be es­tab­lished.

“The whole ar­chi­tec­ture of a blockchain still has to be tested by the in­dus­try, and some con­sen­sus formed about how the tech­nol­ogy will be de­ployed, ei­ther by in­di­vid­ual op­er­a­tors or as part of con­sor­tia,” he says.

Se­cu­rity is­sues, he be­lieves, have yet to be prop­erly un­der­stood: “The way in which these ser­vices op­er­ate can leave them open to a series of po­ten­tial at­tacks,” he says. “Se­cu­rity con­cerns have to be fur­ther ex­plored, and it is very early days for that.”

He points out that breaches have al­ready hap­pened – most no­tably in­volv­ing ven­ture cap­i­tal firm DAO which was hacked and robbed of more than $60 mil­lion worth of dig­i­tal cur­rency.

He agrees that IOT is one of the most at­trac­tive blockchain use cases. But Ve­lasco-castillo warns about the hype. “There will be a long process dur­ing which we will find which of the var­i­ous use cases that are be­ing talked up are ac­tu­ally ap­pro­pri­ate for blockchain.”

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