The adoption of blockchain technology has been lower compared to other emerging technologies mainly due to the difficulty in understanding the technology. Blockchain as a service (BaaS) holds the key to driving mainstream adoption of the technology as it enables companies to experiment with blockchain-based applications.
Listed below are the key technology trends impacting the blockchain theme, as identified by GlobalData.
BaaS is a type of software as a service (SaaS) hosted in the cloud that allows businesses to rent rather than build a blockchain platform. It functions as a fully managed blockchain service ranging from project creation to full deployment. BaaS gives companies the possibility to experiment with blockchain applications and smart contracts and take advantage of the benefits of blockchain, such as improved transparency and data security, without worrying about developing expensive in-house competencies and resources.
BaaS is particularly appealing for small and medium-sized enterprises (SMEs). The BaaS model is dominated by cloud service giants like IBM, Microsoft, and Amazon.
The original purpose of blockchain technology was to enable the transfer of value within trustless networks. The different parties did not have to trust each other to conduct transactions involving the exchange of value. Beyond the world of cryptocurrencies, however, trust remains important to most commercial relationships. Most commercial blockchains will reject the wholly trustless model promoted by the cryptocurrency platforms in favour of permissioned platforms where participants are vetted and approved before they can join the network.
Most blockchain networks are initially highly centralised but will gradually distribute control over different network functions to multiple participants over time. It takes time for new participants to get a better understanding of a blockchain’s functions and properties. Many private blockchains are likely to develop into federated or hybrid versions.
Zero-knowledge proof (ZKP)
ZKP allows one party to prove to another party that they know a value without conveying any information apart from the fact that they know the value. Consider a new applicant for a loan who needs to convince the bank that they have maintained a sufficient account balance over a period of time. Traditionally, this would involve sharing bank statements covering that period, which reveals more personal information than necessary to the bank, such as exact balance and transaction details.
With ZKP, only information related to whether they meet the requirement or not is shared. In the context of blockchain, and especially public blockchains, ZKP ensures the privacy and security of user information. There are several different types of ZKPs, with zk-SNARKs (zeroknowledge succinct non-interactive argument of knowledge) being the most popular.
Artificial intelligence (AI)
The convergence of blockchain and AI is considered inevitable as both handle data in different ways. AI analyses and generates insights from data, while blockchain enables secure storage and data sharing. The main challenge for AI is related to how its models make their decisions. There have been plenty of high-profile cases in recent years where AI has contributed to bias and discrimination.
With blockchain, it is possible to track the provenance of training data used for the AI model and see a trail of all steps from data entry to conclusion. It will become easier to audit the decision-making process of an AI model, if decisions and associated data points are recorded on the blockchain by adding trust. Blockchain and AI can also be combined for data protection, creating diverse datasets, and data monetisation.
Internet of Things (IoT)
Blockchain can add a layer of accountability and security to IoT data and be a future enabler of IoT efficiency, scalability, and standardisation. It can also act as a facilitator of IoT applications such as supply chain track and trace. In healthcare, for example, blockchain-enabled IoT devices will allow patients to control access to the data that these devices collect.
The technology will make the devices more resilient to cyberattacks and provide a detailed record of when another party accessed the data. In the supply chain, blockchain-based systems, enabled by a smart contract, can automate payments against a specific condition, as measured by IoT sensors.
Blockchain companies have enabled integration at the application programming interface (API) level to reduce developers’ coding requirements and invite business users to create blockchain apps quickly. Blockchain capabilities are increasingly being integrated into core technologies, including business applications, databases, and hybrid and multi-cloud offerings, to further blockchain adoption.
The large BaaS players, like IBM and Microsoft, are driving the development. The complexity of taking on blockchain often puts off enterprises. Integrating the technology into core technologies facilitates ease of use, making it an attractive alternative as part of digital transformation efforts.
This is an edited extract from the Blockchain – Thematic Research report produced by GlobalData Thematic Research.