Blockchain: From Online Hype to Commercial Reality?
Blockchain – the most famous of the distributed ledger technologies, or DLT – has for some time now been a familiar word whose meaning few truly know. As with various apparently seismic developments before it, blockchain has seemed on the tips of countless tongues, the headlines of innumerable think-pieces, and the subject of myriad corporate presentations for a good few years. New and exciting technologies tend to produce evangelism and hype, and blockchain has proved an exemplar in this way.
According to the IDC Spending Guide published in July 2018, worldwide spending on blockchain forecast to reach $11.7 Billion in 2022. Mobile network operators however are realistic people, who do not alight bandwagons prematurely; DLT’s potential is real, and is clear to many players in the industry, but remains yet at the scoping stage. Wholly fresh technologies with such potentially various applications require prolonged strategic assessment before serious investments and wide-scale deployments can be made. Operators have already successfully tested DLT in an array of contexts, from identity services TO digital currency, but these remain in their infancy and mass consumer recognition remains low.
As one insightful recent report from Gartner points out, only 1% of CIOs report any uptake of blockchain at all. DLT solutions will only make their way from chat forums to service offerings at scale where they offer demonstrable commercial value, and from a consumer perspective that means simple, predictable, and low-risk payment models – which offer clear advantages over existing cloud-based solutions. The acid test must be something like “if we removed the word blockchain from the product description, would it still be attractive?”. When consumers recognise that DLT offers more effective ways of establishing trust and transferring authenticated data, the answer will be a resounding ‘yes’ – but that time has not yet come.
The mobile industry is still therefore at the exploratory stage when it comes to DLT; there is, nonetheless, a good deal of exploratory work going on. Among the most recent products of this work is the GSMA’s comprehensive new report Opportunities and Use Cases for Distributed Ledger Technologies in IoT, which sets out the technical state of play, and shared challenges for operators considering a move into this space. The findings are frank but encouraging – there is much yet to do, but a wide range of use cases are now quickly emerging to which operators can turn their hand – from healthcare and insurance to logistics and consumer devices.
Tracking of supply chains, for instance, can be streamlined immensely by use of DLT to share records between the diffuse parties who make them up – suppliers, shipping companies, customs agents, importers and so on – allowing stakeholders to access records in real time without requiring complex intermediation. In digital healthcare there are applications already being tested in patient data management, whereby the need for enormous databases can be negated and patients can maintain their own data on devices such as blood-pressure monitors, and allow practitioners and insurers secure access to it. The energy sector stands to make enormous efficiency gains through decentralisation of storage and production, opening up the prospect of peer-to-peer transactions, and even civic uses such as e-voting are becoming increasingly viable.
All of these applications, and the many more outlined in the report, are spaces in which the mobile industry is already a proven and natural partner. As existing providers of global connectivity, with the necessary technical infrastructure and expertise in digital identity already in place, there is hardly a more obvious candidate in play to make good on the evident potential of DLT solutions. A recent report by GSMA Intelligence provides a compendious overview of how this can be achieved, but also a frank assessment of what remains to be done before the rewards can be seen at scale. One challenge is that improvements still remain outstanding to ensure pairing of devices and users, so verification is truly being achieved of personal identity and not merely of devices. Data analytics platforms, too, do not yet optimally support real time application to assets in transit, as are necessary in logistics – constant updates across highly complex supply chains require a degree of interoperability which is fast being achieved, but is not yet fully there. These present shortcomings are however precisely those identified by the industry itself for resolution, and form the next stage of business planning for operators with a serious interest in monetising the possibilities DLT can offer.
As Telefonica has demonstrated through a recent collaboration with IBM – which saw the two giants implementing the technology to streamline their own internal business processes – blockchain can add real value to these kinds of applications in enterprise, by making device, connectivity and data management functions more efficient. We can expect to see many more such votes of confidence in blockchain from operators and their partners in the medium term. Deployments through vertical industries in the IoT stand to improve the security and reliability of frequent e-payments, such as those in smart parking, while also enhancing privacy in such sensitive areas as smart healthcare. The burgeoning sharing economy as a whole provides naturally fertile soil for DLT – in car rentals, for instance, where driving records can be stored to allow swifter risk assessments and identity verification. Where users can ‘carry’ their identities, preferences and payment information securely with them between services without needing to re-register, the efficiency and convenience DLT can add will quickly become evident at scale.