We are all familiar with cloud computing–where computing power and systems resources are organized and linked into computing clouds, to be shared amongst many users–but there is a debate regarding its benefits in the market.
In addition to obvious advantages such as improved speed, availability and cost, there are some concern that cloud computing can block data localization to support blockchain networks.
Blockchain, or distributed ledger technology, underpins any number of leading technologies that offer immutable proof of ownership or authenticity of goods and services by accurately tracking the information it holds. At the forefront of blockchain is ‘blockchain ledgers’, or public ledgers that allow fast, secure and reliable internet-based transaction processing and management for trade and cross-border payments.
A trusted, immutable and random record of trading, business records and financial transactions, this information can be used to ensure an accurate transfer of ownership over time. The software component of the blockchain network, called a ‘distributed ledger’, establishes the records and records the information at multiple points.
However, there are several potential issues that can arise from a reliance on a web-based ledger. These include legitimate risk of spam or phishing, compromises or attacks on the integrity of a blockchain network and peer-to-peer attacks by blockchains themselves, such as ‘self destructing’.
To mitigate against these risks, it’s essential to have multiple trusted, localised system components and a multi-party code base. But there is a counter-argument to all of this. Today, there is no true, an immutable, secure and reliable public blockchain service that is available for business use, which gives widespread access and support for blockchain data access, localisation and local access for trade and payment processes.
We as a business can attempt to use cloud computing to solve these challenges by developing our own locally hosted private, decentralized blockchain systems.
As previously mentioned, blockchain provides a centralised audit trail of the transactions and changes to a valid chain. However, this can be problematic when validating and supporting multi-party transactions. Although the block records exist, different parties cannot view the same data at the same time. Because of this, the lines of identification, record-keeping and validation of a company’s business processes become much more challenging in a private system like cloud computing.
Cloud computing can help solve these challenges by co-locating different types of networks, such as a network of edge nodes, on different servers, and making these nodes and their data accessible to the public blockchain and associated API. Importantly, the system’s de-identified, encrypted identities can only be seen by the parties using the system. This enables the data to be stored in a private fashion and provides for logical multiple-party match-making, making secure, accurate control more achievable in distributed ledger applications.
For instance, last year we saw a very successful trial project in which a leading distributor was able to work with the warehouse management tools from DHL. The data analytics and operational activities provided from the sales to distribution network tied to DHL’s shipment tracking system provided a rich understanding of the sales process for the warehouse team and a better visibility into the business operations of the distributor.
Furthermore, due to the network neutrality that the localised solutions provided, accessing and maintaining data local to the blockchain and the network was made easy. Additionally, with secure access to trusted, trusted (or encrypted) infrastructure, it is possible to store records and validation records securely with the knowledge that it will only be used for that purpose.
In this scenario, local distributed systems can accelerate the integration of blockchain into the market as blockchain-based commerce solutions can be entered into DHL’s warehouse network for real-time correlation and data capture as the products are manufactured.
In the long-term, the Australian economy is at a critical juncture that could force major global retailers, technology companies and large financial institutions to adopt blockchain technology for a complete business transformation. By investing in technology as a powerful enabler of new business practices, we will see a shift in Australia’s economy in a direction that will benefit all parties, governments and the markets we serve.
In the long run, compliance will remain the limiting factor on the full adoption of blockchain technology. As governments introduce new legislation and regulations for companies that choose to move forward, the benefits of local, secure cloud based blockchain technologies will likely emerge.