Enterprise blockchain – adding reliability by design
- Blockchain can add trust, transparency and security to certain business processes
- A report from the World Economic Forum listed the considerations for ensuring blockchain remains reliable
Blockchain’s prime characteristic as a distributed ledger technology (DLT) has ignited many organizations to leverage its ability to add transparency in business operations.
Whether it is towards supply chain or big data management, blockchain earned a reputation of adding trust and traceability to an organization’s ecosystem.
Even so, companies will fare better when they understand the elements of a blockchain and the vulnerabilities points that need to be addressed to ensure the safety of digital assets.
This was the central theme discussed in a report released by the World Economic Forum. The report touched on key elements that organizations should be aware of when creating and designing a safe platform to store and manage digital assets.
With contribution from business leaders of Deloitte & Touche LLP, the key elements include the deployment of internal and external management of blockchain and the data stored, as well as cybersecurity systems.
A ‘single version of truth’
The first element, deployment services, looks into how businesses and individuals can interact with digital assets through the use of technology and service providers. The cited examples include “blockchain explorer software, digital wallets, custodial services, and exchanges.”
Essentially, companies can cross-check data sourced from blockchain with information obtained from a service auditor’s report to ensure the reliability of information.
Subsequently, companies can enhance a blockchain’s reliability and validity through consensus protocol. The report explained, “the objective of the consensus protocol is to ensure that the blockchain network’s node operators will reach the same conclusion about the validity of transactions.”
By doing so, businesses are encouraging a single version of ‘truth’ across an entire operation and discourage bad actors from targeting fragmented systems or sharing of information.
Next, the report also highlighted the importance of network enablers.
Network enablers refer to the blockchain node operators that are responsible for validating new blockchain and mining for the network. While network enablers ensure blockchain networks are monitored and guarded against malicious activities, there have been attacks on blockchain networks that successfully removed or altered transactions.
Companies considering operating more node operators will find reduced speed in transaction processing; thus, finding the right balance between maximum efficiency and robust security is key.
Organizations can consider employing their own internal controls for better management and monitoring of activities, including “initiating transactions and recovering unintended transactions with smart contracts.”
If we look at the stated elements collectively, it ties into the understanding that public blockchain is supported by a community of developers from independent organizations or formal societies. This community promotes the adoption of their blockchain and maintenance of blockchains lifecycles (responding to feedback and performing research for improvements).
Companies need to assess the validity, effectiveness, and compatibility of these blockchain platforms for the safeguarding of digital assets.
As Amy Steele, Audit & Assurance Partner, Deloitte & Touche LLP, stated: “A reliable blockchain should have an effective design for its intended purpose — to properly record a digital asset’s creation or transfer.”
Blockchain bears the capabilities to revolutionize the way companies and stakeholders collaborate in the world of supply chains. Blockchain is also making its mark among researchers, technologists, and enterprises to find a plethora of use cases such as hunting cybersecurity threats, promoting sustainability in supply chains, and establishing an inter-company payment system.
Last year, HSBC announced plans to shift US$20 billion worth of assets to their blockchain-based custody platform. More recently, Boeing inked a partnership with Honeywell to utilize their blockchain platform to manage the sales of airplane parts worth US$1 billion.
7 February 2023
6 February 2023