By Eric Ward
You have likely heard about blockchain technology through its association with cryptocurrencies such as Bitcoin. While cryptocurrency remains an important application of blockchain technology, it is only one example.
Blockchain is an emerging technology that is also gaining traction in other business applications such as supply chain management. Companies such as IBM, Microsoft, and JP Morgan Chase are making huge investments in blockchain that they hope will make business more efficient and give them a competitive advantage.
Understanding the Basics
Blockchain is the latest version of distributed ledger technology (DLT) that helps people do business with each other by tracking who owns what. For people to do business with one another, we need:
Of course, these values exist in modern business, but they are almost exclusively dependent on a trusted third party (for example, a bank or government agency). These trusted third parties can be expensive, which adds drag to the system. Blockchain presents the possibility of replacing these trusted third parties with trust in an automated blockchain system.
So how is this done? Blockchain provides trust, transparency, and auditability by combining well-known technologies into the following:
1. Shared Ledger
Systems that rely on a trusted third party give full control of the official ledger to the trusted third party. In the case of a discrepancy, we assume that the trusted third party holds the source of truth and that each participant in the transaction is responsible for reconciling with the source of truth.
Blockchain, on the other hand, has a shared ledger (also known as a distributed ledger). Every participant in the business transaction has a copy of the source of truth. The blockchain system ensures that all copies are up-to-date and consistent with one another, eliminating the need for the trusted third party to hold the source of truth.
Cryptography is used to provide a positive identity of transaction participants and to verify those transactions. Ownership of assets transfers to and from the correct accounts. It is easy to detect attempts to corrupt the transaction data with the help of well-known public/private key encryption technology currently in wide use in other applications.
3. Consensus/Trust Mechanism
The blockchain system provides an agreed-upon protocol that allows all participants to decide on the order of the transactions in the ledger. The blockchain system asks participants to replace their trust in a third-party organization with trust in the consensus protocol.
4. Smart Contracts
Smart contracts are computer programs that automate the execution of transactions based on predetermined business rules. Here is a simple example: A bank writes a smart contract for the purchase of a new home. When the home purchaser’s loan balance reaches zero, the title to the house automatically transfers from the bank to the owner without human intervention and is visible to anyone with access to the blockchain ledger.
What Skills Do I Need?
Blockchain relies on many commonly used enterprise technologies and techniques, including software development and distributed systems.
Where Do I Start?
Blockchain has the potential to disrupt many business processes that we currently take for granted. Smart contracts can automate many things that are done manually today. The shared ledger has the potential to make digital goods (such as ebooks or MP3s) more like physical goods (think about selling an ebook to a friend after you have read it).
As with any new disruptive technology, we cannot see all the possibilities for blockchain. Learning how blockchain technology works and how to apply it is a great way to complement your existing development skills and to open new career opportunities.
Two of the biggest blockchain platforms are IBM’s Hyperledger Fabric and Ethereum. Quorum, the JP Morgan Chase-backed blockchain, is a variant of Ethereum, so skills such as smart contract development are transferable.
Hyperledger is a great place to start if you want to get into supply chain, logistics, or inventory management applications. Hyperledger is a large project, much of the technology is open source, and a large amount of material is publicly available.
Ethereum is a great starting point if you’re interested in fintech, cryptocurrency, smart contract development, or if you want to dip your toe into blockchain without a lot of overhead. There are great Ethereum and Quorum resources available, including developer tools and tutorials for smart contract development.
Your career pathway in blockchain is in front of you. Are you ready to begin the journey?
Eric Ward is Director of Enterprise Solutions at Trilogy Education Services where he is responsible for creating technical training solutions that enable enterprises to meet their strategic goals in the face of an ever-changing technology landscape.