SIU Blockchain and Human Resource Management Efficiencies Discussion

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creel13495

Computer Science

Schiller International University

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Discuss the following questions: 1. How can blockchain increase human resource management efficiencies? 2. How and why is blockchain a disruptive technology in human resource management?


You are required to cite this week’s assigned readings in your paper. You may also cite prior week's reading assignments and external sources if you wish.

Use the following headings to organize your paper: Introduction, Question 1, Question 2, Conclusion, References.

minimum of 500 words

Your response should be formatted in APA style and reference each of this week's readings.

  • As always, the word count is ONLY for the BODY of the paper – the cover page, reference page, and / or Appendix (if included) do not count towards the word count for the paper
  • Indent the first line of each new paragraph five spaces
  • Refer to the example APA paper in the getting started folder under the content tab if you need an example. Also, a power is provided under the information tab that addresses APA format.
  • Use double-spacing / zero point line spacing, a running header, page numbers, and left justify the margins.

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About This E-Book EPUB is an open, industry-standard format for e-books. However, support for EPUB and its many features varies across reading devices and applications. Use your device or app settings to customize the presentation to your liking. Settings that you can customize often include font, font size, single or double column, landscape or portrait mode, and figures that you can click or tap to enlarge. For additional information about the settings and features on your reading device or app, visit the device manufacturer’s Web site. Many titles include programming code or configuration examples. To optimize the presentation of these elements, view the e-book in single-column, landscape mode and adjust the font size to the smallest setting. In addition to presenting code and configurations in the reflowable text format, we have included images of the code that mimic the presentation found in the print book; therefore, where the reflowable format may compromise the presentation of the code listing, you will see a “Click here to view code image” link. Click the link to view the print-fidelity code image. To return to the previous page viewed, click the Back button on your device or app. Praise for Blockchain for Business “Much has been written about blockchain in the past few years: what it is and what it is not (at various levels of detail), as well as the technology’s long-term strategic value for companies, industries, and economies. However, what we’ve been missing is a practical, operational, ‘how to’ set of steps for creating, implementing, and operating a blockchain-based solution. This book aims to fill that gap. It’s an invaluable tool for anyone ready to take the plunge and start taking advantage of this remarkable technology. “Most technologies can be implemented one business at a time. Not so with blockchain. Blockchain is particularly valuable when applied to a collection of companies working closely together as a business ecosystem, such as a supply chain. Blockchain for Business goes into great detail about what it takes to organize and manage such an ecosystem, including the technical and business models that in the end drive the decisions about whether to join or not, and the governance necessary for a smooth, efficient operations. It also nicely explains the necessary technical expertise and management roles needed to successfully create and operate blockchain frameworks and applications. “Blockchain for Business is an invaluable tool for anyone ready to take the plunge and start taking advantage of this remarkable technology.” —Irving Wladawsky-Berger, Research Affiliate, MIT; Columnist, WSJ CIO Journal; VP Emeritus, IBM “Jai, Jerry, and Nitin have written the guidebook to address the critical knowledge gap that exists between the hype of blockchain and cryptocurrencies and the pragmatic utilization of blockchain technology for transforming businesses. Blockchain for Business leverages their firsthand insights and provides a practical approach for business and technical leaders to leverage a proven methodology to drive successful blockchain projects that deliver trust and transparency for all participants.” —Marie Wieck, General Manager, IBM Blockchain “Understand how to capture the power of the trust machine. This book contains a wealth of resources and tools for those looking to apply blockchain solutions in a business environment. A mustread for enterprise executives.” —Perianne Boring, Founder and President, Chamber of Digital Commerce “Jai, Jerry, and Nitin nailed it! Blockchain for Business addresses the critical question business leaders are attempting to answer: How does my business derive real, measurable value from blockchain? This is a practical guidebook for both the business and technology leader to help identify business value from blockchain technology in the form of new growth opportunities, sustainable competitive advantage, time savings, cost reductions, and risk mitigation—turning blockchain into business results!” —D. Keith Pigues, CEO and Founder, Luminas Strategy, Coauthor Winning with Customers: A Playbook for B2B “Blockchain for Business is a must-read for executives looking to define blockchain’s potential to transform business processes. Jerry, Jai, and Nitin have comprehensively described the key steps business leaders should take to identify the right scope, select the best technology, and establish an appropriate business model and governance structure.” —Arvind Krishna, SVP, Hybrid Cloud and Director of IBM Research Blockchain for Business Jai Singh Arun Jerry Cuomo Nitin Gaur Boston • Columbus • New York • San Francisco • Amsterdam • Cape Town Dubai • London • Madrid • Milan • Munich • Paris • Montreal • Toronto • Delhi • Mexico City São Paulo • Sydney • Hong Kong • Seoul • Singapore • Taipei • Tokyo Many of the designations used by manufacturers and sellers to distinguish their products are claimed as trademarks. Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been printed with initial capital letters or in all capitals. The authors and publisher have taken care in the preparation of this book, but make no expressed or implied warranty of any kind and assume no responsibility for errors or omissions. No liability is assumed for incidental or consequential damages in connection with or arising out of the use of the information or programs contained herein. For information about buying this title in bulk quantities, or for special sales opportunities (which may include electronic versions; custom cover designs; and content particular to your business, training goals, marketing focus, or branding interests), please contact our corporate sales department at corpsales@pearsoned.com or (800) 382-3419. For government sales inquiries, please contact governmentsales@pearsoned.com. For questions about sales outside the U.S., please contact intlcs@pearson.com. Visit us on the Web: informit.com/aw Library of Congress Control Number: 2018968178 Copyright © 2019 Pearson Education, Inc. All rights reserved. This publication is protected by copyright, and permission must be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. For information regarding permissions, request forms and the appropriate contacts within the Pearson Education Global Rights & Permissions Department, please visit www.pearsoned.com/permissions/. ISBN-13: 978-0-13-558135-3 ISBN-10: 0-13-558135-4 1 19 Dedicated to My mom and dad, Saroopi Devi and Phusiya Ram, who gave me existence in this world; my siblings, who encourage me with admiration; my darling Varshal, who strengthens my soul with love and inspires me; my daughter Saachi and son Yogya, who enlighten me with joy every day. And in memory of my loving brother Mr. Omprakash Arun (1968– 2013); my angel sister Ms. Babita Arun (1988–2016); and my respected father-in-law Mr. Chandrahas Mayekar (1943–2016). —Jai Singh Arun My darling Steph. Not since Lennon and McCartney has there been a more prolific pair of composers like the two of us. —Gennaro Cuomo My parents, for their unconditional love; my spouse Ritu, for her unconditional support; and my son Neil, who inspires me every day. —Nitin Gaur Contents Foreword Preface Acknowledgments About the Authors Chapter 1 Introduction to Blockchain Blockchain Beliefs Enterprise Blockchain Why Blockchain Matters The Trailblazers Founders Scope: Dream Large and Act Incrementally Motivation: Driving Momentum within the Ecosystem Governance: The Total Is Greater Than the Sum of the Parts Blockchain for Good Reducing Foodborne Illnesses Eliminating Big Data Breaches Preventing Counterfeiting Blockchain Questions from Business and Technology Leaders Does Blockchain Apply to My Industry and Business Objectives? How Does Blockchain Drive Top-Line Growth and Competitive Advantage for My Business? What Value-Added Business Models Does Blockchain Present? How Does Blockchain Network Governance and Design Work? Do I Need a Dedicated Blockchain Development Team? What Is the Cost of Implementing Blockchain? Other Questions Chapter Summary References Chapter 2 Opportunities and Challenges Disruptive Elements Transparency Immutability Security Consensus Smart Contracts Opportunities Transformative Power of Blockchain Transformative Opportunities Challenges Scope Motivation Governance Technology Chapter Summary References Chapter 3 Understanding the Technology Landscape Blockchain: A Technical Perspective The Four Building Blocks Why Blockchain? Blockchain as a Consumable Technology Blockchain for Enterprises Enterprise View of Blockchain: Technology and Business Domain Litmus Tests to Justify the Application of Blockchain Technology Technology, Business, and Regulatory Considerations for Blockchain Essential Maturity Imperatives for Enterprise Blockchain Token Revolution Asset Tokenization: Essential to Powering the NextGeneration Digital “Instance” Economy Introduction to Tokenization: Understanding the Token Revolution Various Industry Definitions Token Valuation Models and the Instance Economy Understanding Digital Asset (Token) Fungibility: Opportunities and Challenges Related to Token Valuation and Blockchain Ecosystems Defining Fungibility Considerations for Meaningful and Sustainable Blockchain-Powered Business Networks Enterprise Integration: Coexisting with Existing Systems of Record Blockchain Network Extensibility Blockchain Project Sustainability Chapter Summary References Chapter 4 Business of Business Models Path to Blockchain Enterprise Adoption: A Prescriptive Approach 1. Identify an Appropriate Use Case 2. Devise a Business Blueprint: Distilling an Existing Business Process 3. Map the Business Blueprint to Technology Tenets: Devising a Technology Blueprint 4. Ensure Enterprise Integration with (Legacy) Enterprise Systems Business Modeling and Design Business Model Considerations Chapter Summary Chapter 5 Developing a Governance Structure for Blockchain Networks Governance Structure and Landscape Technology Infrastructure Governance Network Membership Governance Business Network Governance SCTrustNet Business Network Governance Network Membership Governance Network Infrastructure Governance Chapter Summary Chapter 6 Building a Team to Drive Blockchain Projects Enterprise Structures in a Decentralized Economy Centralized Structure Decentralized Structure Hybrid Structure Roles of an Enterprise in a Blockchain Network Founders Members Operators Users Building an Effective Team Project Team Roles Intraprise Synergy An Example of a Blockchain Project Team Blockchain Technology Solution Team Chapter Summary Chapter 7 Understanding Financial Models, Investment Rubrics, and Model Risk Frameworks Understanding Blockchain Project Financial Fundamentals Blockchain Investment Rubric Proof of Concept or Design Business Valuation Governance and Risk Growth and Scale Return on Investment Modeling Net Present Value Internal Rate of Return Benefit–Cost Ratio (BCR) Payback Period Risk Modeling Blockchain Model Risk Framework Chapter Summary References Chapter 8 Looking Ahead: What Does the Future Hold? The Network of Networks Blockchain at the Nexus of Technology Blockchain and Artificial Intelligence Blockchain and the Internet of Things Blockchain and Quantum Computing Blockchain Opportunities and Challenges: What Lies Ahead? Overall Summary References Index Foreword I’m delighted to provide some context for this enormously thoughtful and eminently practical book, Blockchain for Business. When Alex Tapscott and I wrote the first edition of Blockchain Revolution in 2016, we characterized blockchain as a platform for conducting transactions of value. We explained that for nearly four decades, we had the Internet of information. It vastly improved the flow of data within and among firms and people, but it didn’t transform the deep architecture of the firm. That’s because the Internet was designed to move information from person to person. It wasn’t designed to solve what cryptographer David Chaum called the “double-spend problem,” the ability to spend a single digital dollar in two places online.1 1. David Chaum. “Blind Signatures for Untraceable Payments.” Advances in Cryptology: Proceedings of Crypto 82 (January 1982): 199–203. Now for the first time ever we have a native digital medium for value, through which we can transfer any asset—from money and music to votes and intellectual property—peer to peer in a secure and private way. Trust is achieved not necessarily by intermediaries like banks or governments, but by cryptography, collaboration, and clever code. Based on the success of the book, Alex and I founded the Blockchain Research Institute (BRI), a think tank dedicated to investigating blockchain use cases and the leadership required to drive experimentation and change in an organization. Our membership has grown to include global corporations, governments, nonprofit organizations, and members of the blockchain start-up community. IBM’s CEO, Ginni Rometty, recognized the transformative potential of blockchain technology early on, and IBM became a founding member of the BRI. Gennaro “Jerry” Cuomo, co-author of this book, participated in the opening panel of the BRI’s first all-member summit in the fall of 2017. His contributions were invaluable to the executives in attendance. Since then, we’ve expanded the program to nearly 100 projects across 10 industry vertical groups and nine Csuite roles in both the public and private sectors. IBM has been an active member, open to sharing what its teams have learned in their collaborations with Walmart and the Brooklyn Roasting Company on food traceability, with Maersk on digitizing global shipping, and with Unilever on tracking digital ad buying.2 2. Reshma Kamath. “Food Traceability on Blockchain: Walmart’s Pork and Mango Pilots with IBM.” Journal of the British Blockchain Association (June 12, 2018). jbba.scholasticahq.com/article/3712-food-traceability-on-blockchain-walmart-spork-and-mango-pilots-with-ibm; IBM Corporation and Brooklyn Roasting Company. “Transparency from Farm to Cup.” The Blockchain Bean, May 1, 2017. www.ibm.com/thought-leadership/blockchainbean; Larry Dignan. “Unilever Aims to Force More Digital Ad Transparency, Plots Blockchain Pilot with IBM.” ZDNet, February 12, 2018. www.zdnet.com/article/unilever-aims-to-force-more-digital-adtransparency-plots-blockchain-pilot-with-ibm; Nicky Morris. “Maersk/IBM Complete Supply Chain Blockchain Pilot.” Ledger Insights, August 9, 2018. www.ledgerinsights.com/maersk-ibm-supply-chain-blockchain-pilot-tradelens. The crucible of common experience leads to similar thinking. That’s probably why these themes of Jai Singh Arun, Jerry Cuomo, and Nitin Gaur’s book, Blockchain for Business, resonate so much with our own—and in my view, are spot on. Digital identity. Jai, Jerry, and Nitin highlight the role of digital identity throughout Blockchain for Business. Indeed, Jai is a thought leader in this area, the co-author of one of IBM’s important works, “Trust Me: Digital Identity on Blockchain.”3 This is a big deal, and it was a big idea of the paperback edition of Blockchain Revolution. Alex and I underscored the need for self-sovereign identities, using blockchain as a means of bootstrapping our identities and enforcing them in any context without a third party. We reported on the work of the Decentralized Identity Foundation (DIF), a consortium of which IBM is a member. DIF was formed to combine “decentralized identities, blockchain IDs, and zero-trust data stores that are universally discoverable.”4 Its working groups are focusing on three big areas—identifiers and discovery, storage and computation of data, and attestation and reputation—with an eye toward developing use cases and standards.5 IBM has contributed a lot to these endeavors, working with ATB Financial, Evernym, the Sovrin Foundation, and Workday on verifiable credentials, and with SecureKey Technologies on a new digital identity and attribute sharing network with a mobile app, among its many collaborations.6 3. Jai S. Arun and Alexander Carmichael. “Trust Me: Digital Identity on Blockchain.” IBM Institute for Business Value, April 2017. public.dhe.ibm.com/common/ssi/ecm/gb/en/gbe03823usen/gbe03823usen00_GBE03823USEN.pdf 4. Identity.Foundation. “Decentralized Identity Foundation” n.d. identity.foundation. 5. Identity.Foundation. “Working Groups.” n.d. identity.foundation/#wgs. 6. Dan Gisolfi. “Decentralized Identity: An Alternative to Password-Based Authentication.” Blockchain Unleashed: IBM Blockchain Blog. IBM Corporation, October 5, 2018. www.ibm.com/blogs/blockchain/2018/10/decentralized-identityan-alternative-to-password-based-authentication; Adam Gunther. “Collaboration: Unlocking Decentralized, Digital Identity Management through Blockchain.” Blockchain Unleashed: IBM Blockchain Blog. IBM Corporation, April 4, 2018. www.ibm.com/blogs/blockchain/2018/04/collaboration-unlocking-decentralizeddigital-identity-management-through-blockchain. Opportunities and challenges. Concerted effort to transform obstacles into opportunities has been the most important factor in the blockchain’s success thus far. Executives need to understand the regulatory uncertainty, the level of energy consumed by proofof-work consensus mechanisms, the efforts of governments such as China and Russia to limit individual use of cryptocurrencies, and the fears that blockchain technology will be a job killer, to name a few areas of concern. We wrote quite a bit about these issues, and we applaud the authors for tackling them head-on. Business models. The business models for blockchain are largely decentralized networks, subject to network effects such that when the number of nodes increases, so does the size of the business model. Jai, Jerry, and Nitin have described four important business models: founder-led networks, joint ventures, the consortium, and business ecosystems. They outline a four-step process for moving from pilot project to enterprise integration. It’s very hands-on. Governance. The blockchain space is full of formal and informal leaders. Some have executive roles in start-up, blockchain consortia, and regulatory bodies, and others possess vision and talent that are both compelling and influential. We wrote extensively about the need for governance networks— multistakeholder networks in the domains of standards development, policy guidance, community advocacy, knowledge, and education, among others. Jai, Jerry, and Nitin were wise to cast these issues in practical terms of permissioned and permissionless blockchains, with on-chain and off-chain governance of protocols and the applications that run on them. These issues will be critical to the scaling, interoperability, and crisis management of these systems over time. Team building. Here’s where the rubber meets the road in enterprise blockchain pilots. IBM has vast experience in this area, assembling teams across divisions within its own firm and working across industries and national boundaries. The authors provide a guide to getting the right people on the team and then managing the project effectively, so that the enterprise can leverage success and learn from failure. Financial models. The financial services industry has become somewhat of a Rube Goldberg contraption that performs eight basic functions: verifying identity, transferring payments, holding savings, making loans, trading assets, investing capital, insuring assets and managing risk, and accounting. Smart contracts and distributed applications running on distributed ledgers are challenging incumbents in each of these eight areas. Initial coin offerings are already disrupting venture capital. Conversely, incumbents could transform their businesses for the better, if they embrace blockchain. IBM is working directly with American International Group on a smart multinational insurance contract for Standard Chartered Bank, and with the Bank of Montreal, CaixaBank, Commerzbank, Erste Group, and UBS on their global trade finance platform called Batavia.7 7. Suzanne Barlyn. “AIG Teams with IBM to Use Blockchain for ‘Smart’ Insurance Policy.” Reuters, June 15, 2017. www.reuters.com/article/us-aig-blockchain- insurance-idUSKBN1953CD; Giulio Prisco. “IBM, Five International Banks Pilot Blockchain-Based Platform for Trade Finance.” NASDAQ.com, April 26, 2018. www.nasdaq.com/article/ibm-five-international-banks-pilot-blockchain-basedplatform-for-trade-finance-cm954045. Jai, Jerry, and Nitin have provided a sound blueprint for constructing an enterprise blockchain strategy, from identifying appropriate use cases to driving top-line growth and establishing a competitive position. We agree—now is the time for leaders to act, and Blockchain for Business should get them moving. —Don Tapscott, Cofounder and Executive Chairman Blockchain Research Institute Co-author, Blockchain Revolution Preface Because blockchain has the potential to drive the re-imagination of processes and business models in a distributed and decentralized manner, it can be a transformational technology for many businesses. Many business and technology leaders, however, might overlook its potential usage and value for their business and industry, or associate it primarily with Bitcoin and cryptocurrency applications. Although blockchain is the foundational technology underpinning Bitcoin, it has broad applicability to multiple industry use cases and enables compelling value propositions beyond the financial world. The capabilities of blockchain for enterprise use cases beyond cryptocurrency are not well understood, and the potential for transforming business models in new ways by using blockchain is not obvious for many reasons. A business-driven technology usage perspective requires a balance between pragmatism and a vision for business outcomes. Who Is This Book For? There are many good books available today that address the highlevel potential of blockchain technology or go deep into technical implementation and programming topics. The primary intent of this book, however, is to address the distinct gap between high-level and deep technical concepts. This book is a practical guide for leaders who need to understand and evaluate how blockchain technology can transform their organizations’ business processes and models. It provides a simple and pragmatic overview of blockchain technology and its capabilities and value from a business perspective. It describes various realworld examples, implementation approaches, and industry-specific and cross-industry use cases. In addition, it provides leaders with the insights that are needed to define potential business models and governance structures, establish teams in decentralized or hybrid enterprises or ecosystems, and understand the costs and return of investment. Also, this book brings clarity to the current state of the technology and its evolution and describes how leaders can better prepare to take advantage of upcoming capabilities. Many leaders who are still unsure about how to drive transformation with blockchain technology start by identifying a right business use case; defining a business model and governance structure; establishing a team; and determining costs, return on investments, and a financial structure. This book addresses these concerns for business and technology leaders by providing an integrated view of business and blockchain technology. What Is Covered in This Book? Our goal is to cover all of the key topics with which you need to be comfortable in order to positively impact your organization as it evaluates and implements blockchain technology. Even if you are already familiar with some of the basics, the early chapters will reinforce your understanding of important concepts and explore general use cases. As you dive deeper, you will be systematically introduced to the specific steps and details that will enable your organization to successfully implement a blockchain solution. Feel free, however, to jump directly to the chapter that most directly impacts your current role and answers your most immediate questions. You will also find references for further study throughout the chapters to fill in any gaps or provide more detail, depending on your level of experience or organizational role. Chapter 1: Introduction to Blockchain The introductory content in Chapter 1 shares critical perspectives of blockchain technology so that leaders can realize its beliefs and gain a true understanding of enterprise blockchain concepts and capabilities. You will learn why blockchain matters for your business. You will learn about trailblazers and key aspects, including how to carefully select a scope for your blockchain project and motivate participants in a blockchain business network while ensuring governance. This chapter also shares some transformational examples of blockchain for social good, and shares “top of the mind” questions and answers that are related to blockchain technology. Chapter 2: Opportunities and Challenges You might be wondering what opportunities and challenges you might face when you implement a blockchain network. Chapter 2 describes these topics, including how blockchain can apply to your industry and business objectives. It describes how blockchain technology’s disruptive elements drive transformation across traditional organizational structures, business models, and ecosystems. These elements also fundamentally open endless opportunities in many industries to innovate and challenge the status quo. The primary challenges for a blockchain project’s success are specific to the scope, motivation, and governance, rather than the technology. Chapter 3: Understanding the Technology Landscape Chapter 3 defines the overall blockchain technology landscape and addresses the trust divide between an enterprise (permissioned) blockchain and a public, permissionless blockchain. Enterprise blockchain design and enterprise integration impact the cost of the solution deployment and the longevity of the application, so economic incentives are a vital component of any blockchain network. This distinction is vital for the valuation of crypto assets and to ensure the continued and sustained growth of a blockchainpowered business network. Chapter 4: Business of Business Models When you are ready to adopt blockchain into your enterprise, it is important that you pick the correct business and technology model for your business and industry. You want a model that provides economic incentives for joining a blockchain network, such as the creation of value that exceeds what you can achieve alone. The correct model will also help you combat the disruptive forces that blockchain creates, which is imperative if you want to compete under this new economic paradigm. Chapter 4 describes the possible business models that you can choose, which include joint venture, consortium, NewCo, business ecosystem, Build–Own–Operate (BOO) or founder-led networks, and Build–Own–Operate–Transfer (BOOT) or founding consortium–led networks. Chapter 5: Developing a Governance Structure for Blockchain Networks So, you have a model for your blockchain network and are ready to implement it. The first thing you need to do is set up a governance structure, which ensures that you and your ecosystem partners have a common vision and goals for the blockchain network. With a governance structure in place, the ecosystem partners know how their blockchain network is managed. Chapter 5 describes how to set up the governance structure, which addresses industry-specific requirements and ensures a tight linkage between the business model and the technology blueprint. By adopting a common governance structure, all participants adhere to a common set of objectives, fair and equitable use of network resources, and rules of engagement. Chapter 6: Building a Team to Drive Blockchain Projects You must gather many different people to build the team that will drive the creation of your blockchain network. Creating a blockchain project requires enterprise-level roles, such as founders, members, operators, and users, and other roles, such as steering committee members, project managers, blockchain consultants, engineers, and many more. Using “the best of the best” from each enterprise to develop a blockchain network is known as intraprise synergy. By using this concept, you empower each participant in the blockchain network with the decentralized authority and autonomy to use their skills as part of the broader network. Chapter 6 describes this concept and its many parts in detail. Chapter 7: Understanding Financial Models, Investment Rubrics, and Model Risk Frameworks As you might have surmised by now, there are many challenges surrounding the technical complexity of blockchain. One such challenge is the plethora of financial models, investment rubrics, and frameworks (structures that aim to scale blockchain networks with the greatest efficiency) that are available today. Which do you choose? Chapter 7 helps you make that choice. By following the guidance in this chapter, you can help ensure a methodical, quantifiable, and measurable deployment of resources while effectively managing risk, all at scale. With the correct mixture of a strategic approach, business design, financial rubric, GRC framework, and access to technology acumen and the correct talent, a blockchain-powered business network can transform industries and businesses while being disruptive and immensely profitable. Chapter 8: Looking Ahead: What Does the Future Hold? This chapter prepares you for the future as the evolution of blockchain technology as the network of networks in a decentralized economy becomes more pervasive. You learn about the nexus of the blockchain technology, which includes artificial intelligence, the Internet of Things, and quantum computing, and see how these intersections can add value to your business. Also, this chapter provides readiness advice for critical areas from a futures perspective. Acknowledgments It was an inspiring effort to find the gap in the current blockchain books out there in the market, but it was a very challenging task to fill that gap with a truly pragmatic and business value perspective. However, with the collective wisdom and more than seven decades of technology and business leadership experience, a decade of blockchain technology expertise, and thousands of customer interactions among three of us, this expedition was absolutely rewarding and heartening. Writing a book is a journey, and during this journey there are many people who directly or indirectly help you reach your destination. We are very fortunate and sincerely thankful to have such a supportive, encouraging, and tremendous tribe, consisting of our family members, colleagues, and editing and publishing team members who graciously helped us make this journey successful. First of all, we sincerely thank the professional and awesome publishing team from Pearson—our executive editor Gregory Doench, a great partner and pleasure to work with who made the entire book writing process very smooth and timely for us; production editor Julie Nahil; copy editor Jill Hobbs; and project manager Rachel Paul. Second, we are indebted to many of our colleagues who provided exceptional help throughout, including Steven Stansel from IBM marketing services (previously IBM Press), who walked us through with the overall book writing process, reviewed and refined the initial book proposal, and introduced us to the Pearson team; Wade Wallace from the IBM Redbook editing team, our first-gate editor who polished the language, caught grammar inaccuracies, and filled the messaging gaps before handing it over to the Pearson team; Colby Murphy from IBM Blockchain marketing, who helped us with marketing support and specially with the looking ahead and futures content; Tim Richer and Steven Mikolajczak from IBM Blockchain marketing, who provided overall process support to ensure content sanity and adherence to marketing and legal guidelines; Peter Reith from Jerry’s team, who helped him with book tasks, timing, and resources; Shaun Lynch from the IBM Blockchain design team, for the creative book cover design; and Steve Kim, also on the IBM Blockchain design team, for design consultation. Our special thanks to Marie Wieck, IBM General Manager, Blockchain, for her kind support, enabling us to work with Pearson on the book and also providing early book review and a review quote. And special thanks as well to Arvind Krishna, SVP Hybrid Cloud and Director of IBM Research, founding leader of IBM Blockchain technology, for his invaluable guidance and leadership in this space and his early book review and review quote. Finally, we are very grateful to the following people: Don Tapscott, thought leader, author of Blockchain Revolution, who provided an unbiased review of the manuscript and graciously wrote the Foreword; Dr. Irving Wladawsky-Berger, technology leader and research affiliate at MIT, columnist at WSJ CIO Journal, and VP Emeritus, IBM, who candidly reviewed the manuscript and provided a sincere and awesome quote. To Dr. Keith Pigues, CEO and Founder of Luminas Strategy and coauthor of Winning with Customers—a Playbook for B2B, who provided instrumental and constructive guidance on simplifying the content and focusing on delivering value for the audience, reviewing the manuscript, and writing a review quote. To Perianne Boring, Founder and President of the Chamber of Digital Commerce, who is a driving force behind promoting the acceptance of blockchain technology through education and advocacy and working closely with governments, private organizations, policymakers, regulatory agencies, and industry—she is a great friend and leader from global blockchain community who helped us with manuscript review and provided a review quote in a timely manner. Most importantly, Jai would like to thank, from the bottom his heart, his awesome wife, Varshal. She is a true inspiration and sparked his thoughts and encouraged him to write the book. While working herself full-time as senior program manager for information privacy and security at Cisco Systems, she did double duty for several months taking care of everything at home: their two young children’s school, club, and sports activities many evenings, and over weekends by herself for all the piano, dance, taekwondo, and painting classes, and soccer, basketball, and volleyball practices and games. Thank you so much, darling. Jai would like to extend his thanks to his daughter, Saachi, and his son, Yogya, for their understanding and for allowing Daddy to spend ample time to write this book, missing many great moments of their activities. Also, Jai is eternally grateful to his mother, Saroopi Devi; father, Phusiya Ram; and mother-in-law, Chitra Mayekar, who have been calling him from India every other day during this period, asking about his well-being and showering their blessings on him. Jai and Varshal’s siblings from India—Suchita, Ramesh, Amey, Vijay, Sunita, Anita, and Vinita— have been a great support and motivational backbone. Beside Jai’s family, of course, this would not have been possible without his coauthors. He truly enjoyed this memorable book-writing experience shared with them and sincerely thanks Jerry for his extraordinary leadership and technology vision. He thanks Nitin for bringing unique insights and true balance from his hundreds of client interactions to the critical topics of the book. Finally, he appreciates and thanks his management team, including Bruce Hawks, Venkat Raghavan, and Sanjay Tripathy, for their direct and indirect motivation and support. In the spirit of Jerry famously saying, “Blockchain is a team sport,” Jerry would like to acknowledge Team Cuomo: starting with his lovely wife, Stephanie; his dad and mom, Jerome/Pop and Rita/Reetz; his daughter and son-in-law, Rose/Robo and Christophe B.; his son, Gennaro/Bud; his sisters, Stephanie/Ses and Andrea/Agia; and his many wonderful in-laws, aunts, uncles, nieces, nephews, and cousins. Each person has helped shaped Jerry’s smile. He thanks the Mind the Gap band (Aydo, Barry, Marc, and Lin) for putting up with practices he missed. And “Blockchain Jerry” would not be that without his workmates. He knows that by only naming a few, he will get in trouble for leaving people off the list, but he has to, at least, thank the current leadership team of the “IBM chain gang” that supported him in getting blocks on the ledger: Arvind K., Marie W., Bridget Van K., Ramesh G., Brigid M., James W., John McLean, Gari S., Krishna R., Chris F., Sharon C., Anthony O., Kathryn H., Mark P., Peter R., Andy C., Bobbie C., Meeta, Mihir S., David H., Gale F., Steve K., Tim R., Alan D., Alan B., Adam G., Dan G., Eileen L., Rob S., Rachel J., and Michael B. . . . and John W. Jerry has special thanks for Colby Murphy for helping guide his pen in the right direction. Last but not least, Jerry thanks his coauthors, Jai and Nitin, for ensuring that when Jerry agreed to help write this book, it was treated as a transaction on the blockchain that once committed could not be undone. This team has defined Jerry and made him who he is today —and he is so thankful for that. Nitin would like to acknowledge his wife, Ritu, for her support and for handling things on the home front and taking care of their son, Neil. While jobs and related travel can be extremely demanding on everyone’s time, writing a book adds to the ordeal. It is at such times that a nudge and encouragement can do wonders for energy levels, so he thanks both Ritu and Neil for supporting him through this journey. Also, he would to thank his coauthors: Jerry for his mentorship, leadership, and support, and Jai for shepherding him through the process and making sure every single detail was covered. He also thanks Tim Richer from IBM Marketing for his support, Wade Wallace for an early draft edit, and Jill from the Pearson team for timely edits and responses. Special thanks to Greg Doench from Pearson for his guidance on the publication process. About the Authors Jai Singh Arun is a senior program director at IBM’s corporate strategy team and drives strategic product management and business development of IBM Research innovations within the areas of blockchain, artificial intelligence, and cybersecurity. He has over two decades of global, cross-functional business and emerging technologies leadership experience, building multi-million dollar software, systems, and services businesses. Jerry Cuomo leads IBM’s engineering and product initiatives on Blockchain. He holds the prestigious title of IBM Fellow and is recognized as one of the most prolific contributors to IBM’s software business, producing products and technologies that have profoundly impacted how the industry conducts commerce over the World Wide Web. Nitin Gaur is an IBM distinguished engineer and worldwide director and leads IBM’s global blockchain labs and services. He is responsible for strategy and for developing IBM’s digital currency technologies and offerings, such as stable coins and digital fiat. He pioneered IBM’s enterprise blockchain strategy and advised IBM decision makers, business partners, and clients on the use of the technology. 1 Introduction to Blockchain Blockchain will do for transactions what the Internet did for information. —Ginni Rometty, CEO, IBM Blockchain is a technology that is poised to usher in a new way of conducting business that will change everyday life for the better. Blockchain empowers groups of institutions to achieve better outcomes by creating new growth opportunities that together are greater than the feats that any single member could achieve alone. Blockchain makes it possible to reimagine many of the world’s most fundamental business interactions and opens the door to new styles of digital interactions yet to be imagined. It is now regularly showing its potential to vastly reduce the cost and complexity of getting things done across industries, government agencies, and social institutions. Most people who have heard of blockchain associate it with the cryptocurrency Bitcoin. Although they are related, these two concepts are not the same. The potential uses for blockchain are far broader than the applications for cryptocurrency. Also, whereas the Bitcoin network operates on permissionless membership principles and extends anonymity, a permissioned blockchain network governs its membership with known entities. The full benefits of blockchain will be realized through its broadest use across the broadest set of industries. We have participated in hundreds of blockchain projects across the supply chain government, healthcare, transportation, insurance, chemicals and petroleum, and many more industries. From those experiences, we have developed three key beliefs. Blockchain Beliefs We have the following beliefs about blockchain that reveal its vast promise: Transformative: We believe that blockchain is a transformative technology that can radically change the way businesses interact. At the center of a blockchain is a shared immutable ledger. Each member of a blockchain network has an exact copy of the ledger that is kept current as it updates over time. After a transaction is entered, it cannot be changed. With this shared copy of the truth: Net new growth opportunities are discovered because new trusted business models are identified. Sustainable competitive advantage is gained through participation in a new decentralized economy with new business models. Time is saved because multiparty transactions can be processed immediately. Costs are reduced because overhead is eliminated by having businesses transact directly with each other. Risk is mitigated because the ledger acts as an immutable audit trail. Open: We believe that blockchain must be open to encourage broad adoption, innovation, and interoperability. Organizations such as the Linux Foundation’s Hyperledger Project, with hundreds of members across all industries, have provided a breeding ground for business-savvy blockchain software. Only with openness will blockchain be widely adopted and spur innovation for business. Ready for business: We believe that blockchain is ready for business use today. A new breed of blockchain technology is now available that has been engineered from the ground up, under the governance of the Hyperledger Project, to handle the demands of enterprises and provide a foundation that ensures good ethical business behavior. Enterprise Blockchain The basic blockchain concept can be defined quite simply: It is a shared, decentralized, cryptographically secured, and immutable digital ledger. However, enterprise blockchain enriches this definition with a few key attributes: Accountability: Network members are known and identified by cryptographic membership keys with assigned access permissions by business role. Without such accountability, compliance with regulations such as the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and General Data Protection Regulation of 2018 (GDPR) would be nearly impossible to achieve. Privacy: Although members are known to the network, transactions are shared only with those members that need to know about them. Enterprise blockchain uses various techniques to achieve privacy, including peer-to-peer1 connections, privacy channels,2 and zero-knowledge proofs.3 Scalability: Supporting an immense volume of transactions is critical to enterprise scenarios. Because transactions are not typically throttled in enterprise blockchains as they are in networks like Bitcoin, they can be carried out immediately. Any particular enterprise’s transaction rates will depend on many factors, including the number of peers and the complexity of the smart contract. Transaction rates measured in thousands of transactions per second are certainly achievable.4 Security: Enterprise blockchains are fault-tolerant. With faulttolerant consensus algorithms, the network continues to operate even in the presence of bad actors or carelessness. An example of a fault-tolerant consensus algorithm is RAFT.5 Motivational: An enterprise blockchain benefits from a built-in incentive system to help accelerate the adoption curve. You can think of this driver as a “loyalty point” or a “token” that delivers a motivational and economic incentive for network providers and consumers. Enterprise blockchains are often incorrectly characterized as private networks. In reality, access to an enterprise blockchain is controlled by “the governors,” who set the policy establishing how new members can participate in the network. The visibility (public or private) of the network depends on how it is governed. Thus, it is true that enterprise blockchains are permissioned, but not necessarily private. Why Blockchain Matters Blockchain matters because no business operates in isolation. Multiple institutions can achieve more together than any single institution can alone. By implementing business processes that leverage the collective knowledge of the group, processes can become orders of magnitude more cost-efficient. New processes— processes that were not possible before blockchain—can be created. This opens up new opportunities and can create a competitive advantage for many businesses. For example, the U.S. Food and Drug Administration (FDA) recently adopted food labeling regulations6 that require manufacturers to notify the public of “sugar added” to food. But how does a company that produces protein bars, for example, know with certainty that the ingredients it is using contain sugar—and more importantly, how can it prove that fact if challenged? When it operates as part of a trusted food blockchain, in which ingredient suppliers record food information to a blockchain, the company marketing the protein bar can easily show the provenance of each ingredient, from farm to convenience store. This approach saves both time and money. Additionally, the same blockchain can be used to prevent foodborne illnesses and to enable the participating companies to trace bad ingredients that might be causing such illnesses. Because the food industry must follow numerous regulations (for our own safety and well-being), you can easily imagine how an enterprise blockchain would be essential to making this scenario work. In particular, blockchain can address the following concerns: Accountability: The blockchain means that you can prove your institution is who you say it is to the FDA and other companies. Privacy: Your competitor will not know from which vendor you are buying your sugar and at what price. Scalability: You can track many food records. Security: You must trust all the information, and information access must be resilient. Motivation: Economic incentives provide an incentive for members to contribute data. The Trailblazers The blockchain trailblazers are off to the races, having implemented live networks that are demonstrating real business value today. Consider these examples of early trailblazers: The Trade Finance solution7 that is convened by We.Trade The Identity Verification (verified.me)8 solution that is convened by SecureKey The Foreign Currency Exchange9 solution that is convened by CLS-Group The Event Ticketing10 solution that is convened by True Tickets The Autonomous Car11 solution that is convened by Car eWallet The Internet of Loyalty12 that is convened by Loyyal These solutions are real, running applications—not proofs-ofconcepts. They serve as production systems with multiple members, adding blocks and exchanging value daily. Founders The trailblazers who founded these networks have many things in common. Most notably, behind these solutions you will find a set of imaginative individuals who exemplify the dominant connector archetype.13 For instance, Greg Wolfond14 from SecureKey has an inclusive personality and naturally promotes a culture of working together toward a common goal. As a solution convener, Greg has maven and salesman archetype qualities, which instills in others the excitement and motivation to participate in a multi-institutional solution working toward a mantra of “The group can produce a better outcome than any individual institution alone.” By working closely with these solution founders and following trends that are observed from hundreds of blockchain engagements, we have learned what it takes to move an idea to a live network. Specifically, these founders have balanced scope, incentives, and governance to produce a live network. Scope: Dream Large and Act Incrementally Blockchain solution founders dream large and act incrementally. They aim to unleash the transformative power of blockchain, but realize that their “moon shot” requires an “Apollo program” that lays out a set of steps that ultimately move the solution to production. Trailblazing founders agree that the solution scope must be business-driven. Most founders set goals that are disruptive, leading to a new way of conducting business. At the same time, their minimal viable product (MVP) goal is more basic, usually focused on demonstrating one facet of the disruptive business model, which is more likely to yield an initial cost savings versus a new revenue stream for solution members. Rather than “ripping and replacing,” some founders initially keep their current business-to-business systems in place while they run their distributed ledger technology in parallel to add new functions to an existing business process; in doing so, this approach enriches—rather than replaces—the process. We call this a “shadow ledger.” Similarly, although successful solution founders realize that a decentralized solution is the goal, only a minimal viable ecosystem (MVE) of members must participate to launch the solution. Solutions that commence with more members take longer to activate than solutions that start with fewer members. Membership considerations are critical and must be addressed up front. New members might be hesitant to join a network in which their competitors are also participating. However, having competitors participate makes the ecosystem more trusted and vibrant because trust is gained through a diversity of members. The right governance and incentive system can help. Motivation: Driving Momentum within the Ecosystem Successful founders understand how to motivate the members of their network. This motivation is often accomplished by creating an economy of buyers (data consumers) and sellers (data providers) within the solution. Motivation is created by balancing obligations and rewards. For example, the SecureKey solution provides “privacy protecting” ground rules (defined in chaincode) for how data are exchanged. This set of rules also ensures that digital asset providers “get paid” when digital asset consumers “pay” to have identity attributes verified. The ground rules create the backbone of a digital marketplace, which motivates participation through better accuracy, lower-cost verification, greater speed, and a better overall user experience. Asset tokenization is an emerging technique that is used by enterprise blockchain founders to provide a motivational incentive system. In many cases, the token is native to the solution and can play a role akin to that of loyalty points. For example, one solution introduces a native carbon credit token that is awarded to a network member when that user conserves energy. The user can exchange the token for discounts on debit card purchases that are made via a debit card provider that, like the local energy company, is also a network member. Governance: The Total Is Greater Than the Sum of the Parts Governance is mandatory within a blockchain network, and a blockchain solution’s likelihood to go live is increased to the degree it is written down. The best founders are “referees” who bring together the group on multiple levels. In each case, a “board of stakeholders” is convened to define the rules that are inherent in the solutions and converge on the scope and motivation. Workgroups are typically defined to focus on business models, legal concerns regarding intellectual property (IP) rights and liability, technical design, and architecture. Proper business governance encourages participation and removes uncertainty and the risk of business obligations (which are embodied in smart contracts). Proper technical governance ensures that the blockchain solution can be managed in a decentralized way so that deployment of new smart contracts or the invitation of new members happens with consent from the group. The first graduating class of blockchain trailblazers has already had their solutions go live, with “blocks on the chain.” They are dreaming large but starting incrementally, motivating a group of diverse members to participate in a solution through incentives and an inclusive governance process. Blockchain for Good The trust model that underlies blockchain networks provides a natural setting for solutions that are unmatched in delivering social good. Blockchain is poised to deliver strong business returns. Moreover, when used correctly, it can deliver user experiences that are respectful of user privacy and literally save lives. Here are three examples that illustrate how blockchain for social good is also good for business. Reducing Foodborne Illnesses Has this ever happened to you? You are rushing through New York’s LaGuardia Airport trying to make a flight. You are hungry and grab a salad before hopping on the plane. An hour into the flight, though, you do not feel well. In 2006, a nationwide outbreak of Escherichia coli15 was linked to bagged spinach. It took regulators two weeks to conduct the backtrace and determine the exact source of the outbreak. During those two weeks, many people got sick and one person died. Tons of good spinach was unnecessarily discarded—wrongfully wasted— because we could not tell the good spinach from the bad. IBM Food Trust Network16 consists of several major food companies, including Walmart, Unilever, and Nestlé. This network enables supply chain visibility across these members (and their ecosystem) to quickly pinpoint the sources of contamination. The network is already showing results that can reduce the impact of food recalls and limit the number of people who get sick or die from foodborne illnesses. With blockchain, network members can track the provenance of ingredients as they travel from farm to fork. Recently, Walmart did an experiment that traced the origin of sliced mangos from Walmart stores back to the farm. This process showed a radical improvement from the approximately 7 days it took to conduct the backtrace by using traditional methods down to 2.2 seconds by using an enterprise blockchain platform. Frank Yiannas, Vice President for Food Safety at Walmart,17 says, “That’s food traceability at the speed of thought with blockchain.” This is an inspiring example of blockchain changing everyday life. Eliminating Big Data Breaches Has this ever happened to you? You are renting an apartment. The real estate company asks you to share information about every aspect of your life—where you live, your mother’s maiden name, your Social Security number, your place of employment, and a credit statement from your bank. You repeat this process when you sign up for a new smartphone and when you visit the doctor for a checkup. You have bits and pieces of information, including user IDs and passwords, scattered all over the Internet. Then, you get a notice from a major service provider that your data were stolen! This scenario is scary and frustrating—and all too realistic: An estimated 15.4 million consumers were hit with identity theft in 2016, according to a Javelin Strategy & Research 2017 Identity Fraud Study.18 The days of big data breaches appear to be numbered, though, with the emergence of the Verified.Me network created by SecureKey.8 The Canadian Verified.me network is live and hosted by the major banks of Canada. With the Verified.me smartphone app, you can take control of your digital identity attributes. The app provides a simple experience for signing up for (and signing in to) Internetbased services. Acting as a digital rights management system for your identity, the app enables you to give permission to the real estate company to electronically ask the questions that are required to rent an apartment. Similarly, you give permission to trusted institutions (such as banks, state or province motor vehicle departments, and your employer) to answer the real estate application questions. With blockchain, the verification process takes place in real time and with unprecedented respect for your privacy. The solution is designed so that there is no central database of identity information. Instead, the blockchain ledger is used as a digital rights management system, storing permissions and proofs by which the user grants institutions rights to access your identity information. Without a central “data honeypot,” the attack surface of an identity breach is radically changed, making it difficult for bad actors to walk away with a “big score.” Blockchain also prevents your digital data from being tracked. You might not want the real estate company to know with which bank you do business. With “triple blind data exchanges,” the data requester never knows who the provider is, the data provider does not know the requester, and the network operator knows neither of those parties. Blockchain enables only the necessary information to be exchanged. If you are using Verified.me to prove your age to enter a bar, you must prove only that your age is 21 or older; you need not show your driver’s license, which also includes your address. The National Institute of Standards and Technology,19 along with other privacy agencies, views this approach as the best strategy for protecting users’ privacy. Preventing Counterfeiting Has this ever happened to you? It certainly happened to one of the authors. A friend, who had a headache, asked for an aspirin. I went into the road-warrior aspirin bottle that I keep in my notebook bag and gave him one. Before he took it, he scrutinized the pill and asked, “What are you giving me?” It didn’t look like any aspirin he had ever seen. I said, “I think it’s an aspirin.” He responded with a bit of terror in his voice, “You THINK?” The pill had a number on the side, which I quickly searched on my phone and revealed to be a generic form of Tylenol. Phew! This sort of issue is rapidly becoming a widespread concern. The World Health Organization estimates that 1 in 10 medical products now circulating in low- and middle-income countries is either substandard or falsified, including pills, vaccines, and diagnostic kits. Examples include cough syrups for children that contain powerful opioids, and fake antimalarial pills made of only potato and cornstarch. The Crypto Anchor Verifier project20 from IBM Research Lab aims to use artificial intelligence (AI) technology with blockchain to prevent counterfeiting. The technology uniquely identifies a physical asset as a corresponding digital asset to trace provenance. The manufacturer can place a digital cryptographic fingerprint of an aspirin on a blockchain so that the pill can be verified for authenticity as it progresses across the supply chain. The Crypto Anchor Verifier provides a lens attachment for a standard smartphone. This app leverages AI technology to perform light spectral analysis against a physical asset. It captures microscopic properties, viscosity, and other identifiers, and produces a unique digital identifier for physical goods. When immutably placed on a blockchain, the “fingerprint” of that digital good can be checked again by the Crypto Anchor Verifier at customs, at a point of purchase, or immediately before you swallow your medication. These examples show the promise of blockchain. It is energizing to see blockchain changing everyday life for social good. With this benefit as a motivation, we continue to solve the business and technical problems that will unleash many similarly inspiring uses of an enterprise blockchain.21 Blockchain Questions from Business and Technology Leaders Blockchain is both a disruptive technology and a transformational one. As you think about leveraging blockchain for your business, you might have several questions in mind. As we have shared the blockchain technology and its business value with hundreds of business and technology leaders from many different industries, a predominant set of questions emerged. We did our research and rounded up the most searched terms as they relate to blockchain for business. Figure 1.1 shows these terms and their associated volume of interest. Figure 1.1 Most searched blockchain for business terms. After observing the data from our study, we inferred the top six questions that business leaders might have about blockchain. Each of these questions is introduced here and explored in further detail throughout the rest of this book. Does Blockchain Apply to My Industry and Business Objectives? Blockchain will most certainly impact every industry, including yours. In many cases, blockchain solutions will affect specific industries and cross-industries. For example, the trade, financial, and food-supply industries already are connected by blockchain. Blockchain will transform the way many industries do business, but it will not be the answer for every business objective. How Does Blockchain Drive Top-Line Growth and Competitive Advantage for My Business? As blockchain enables trust and transparency across businesses, it opens up new opportunities for new business models, new ecosystems, and new economic environments with secure, distributed business transactions. These new opportunities will drive new revenue streams for many businesses and enable them to leapfrog the competition by adopting a transformational technology and potentially disrupting some competitors from the value chain. For example, a digital trade chain can simplify a trade finance platform and provide access to more trading partners and more business, and a “know your customer” (KYC) application can use blockchain to reduce the friction and time to verify and onboard clients faster. What Value-Added Business Models Does Blockchain Present? Blockchain will both enhance many existing business models and create new models. To ensure that we have defined a clear path to enterprise blockchain adoption, we must focus on both business and technology models. We can take a singular use case that has an industry and enterprise impact and apply business and technology value analysis that results in a business architecture and technology blueprint, along with requirements for compliance, audit, and enterprise integration. The aforementioned artifacts drive an adoption model that enlists and surfaces hurdles and challenges, and factors in the costs and economic viability of the blockchain solution. Permissioned networks might also need to uncover the correct incentive and economic model to compel enterprises to join a platform that uses the notion of creation, distribution, and sharing of rewards that benefit all stakeholders. It is imperative that industries start the journey to explore the correct business model that enables value creation and elevates the modernization efforts that many industries desperately need to combat disruptive forces. How Does Blockchain Network Governance and Design Work? When members join a blockchain network, there must be clear protocols in place to govern and operate the network. In the enterprise space, we must define a simplified governance framework, in which we create a governance model that is inclusive of the principles of game theories, incentives, penalties, flexibility, delegation, and network mechanisms of coordination. These core principles must be included in all governing aspects of a blockchain business network, including the technology infrastructure governance, network membership governance, and business network governance. Do I Need a Dedicated Blockchain Development Team? In short, the answer to this question is yes—but you do not necessarily need a new team. Any developer can be a blockchain developer, because a typical blockchain solution is composed of 80% application and 20% blockchain framework. Applications can be written in languages that your development team already knows, such as Node.js, Go, Java, JavaScript, and Python. The framework component can be managed by blockchain platforms. Like the application component, the associated smart contracts can be developed in familiar programming languages. Therefore, a development team whose members use the knowledge that they already have can easily become a blockchain development team, with 80% of the team focused on the application and 20% of the team focused on the framework. What Is the Cost of Implementing Blockchain? The cost of implementing blockchain can be calculated by using variables that are specific to your project or use case, participants, technology, business model, and return on investment (ROI) expectations. However, getting started on your blockchain journey is cost-efficient because blockchain platforms such as Hyperledger, Ethereum, Corda, and Quorum are open technologies or open source, and even enterprise platforms like IBM Blockchain offer free tiers to help you get started. Other Questions Here are some other questions that might be of interest as ponder enterprise blockchain. All these questions will be covered as you continue through this book. What are the advantages of adopting blockchain? What are the top challenges in implementing blockchain? Are there guides to help with implementing blockchain? Which scalability concerns arise with blockchain? Which type of IT infrastructure is needed to implement blockchain? How do I think about designing a blockchain solution? Which speed and data acceleration factors must be addressed to meet transactional requests? Chapter Summary We hope that this introductory chapter has piqued your curiosity about blockchain and its enormous benefits. Imagine a world where your data are secure, fewer people die due to foodborne illnesses, and counterfeiting is a worthless endeavor due to the instant verification of fakes—to name just a few of the benefits of blockchain. If these benefits are not enough for you, think about how your business can benefit from showing accountability to governments and other entities, safeguarding its business moves while remaining efficient, scaling the enterprise to new levels, keeping its data accessible while also keeping it secure, and profiting from contributing data to the blockchain network. If this sounds amazing to you and you are eager to learn more about the opportunities that are provided by a blockchain network, continue with Chapter 2. It explores more of the opportunities that blockchain can create for your enterprise, but also highlights some of the challenges that you must overcome to reap its copious and profitable benefits. References 1. “Security Model.” The Network: R3 Corda V3.0 Documentation. R3, 2016. docs.corda.net/releases/release-M8.2/key-conceptssecurity-model.html. 2. “Channels.” Prerequisites: Hyperledger–Fabric Docs Master Documentation. Hyperledger, 2017. hyperledgerfabric.readthedocs.io/en/release-1.0/channels.html. 3. “Zero-Knowledge Proof Standardization.” An Open Industry/Academic Initiative, 2019. zkproof.org/. 4. Vukolic, Marko. “IBM Research: Behind the Architecture of Hyperledger Fabric.” The Analytics Maturity Model (IT’s Best Kept Secret Is Optimization). IBM, 2018. www.ibm.com/blogs/research/2018/02/architecture-hyperledgerfabric/. 5. Ongaro, Diego, and John Ousterhout. “In Search of an Understandable Consensus Algorithm (Consensus Version.” raft.github.io/raft.pdf. 6. Center for Food Safety and Applied Nutrition. “Labeling & Nutrition: Changes to the Nutrition Facts Label.” U.S. Food and Drug Administration, Center for Drug Evaluation and Research, 2018. www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsReg ulatoryInformation/LabelingNutrition/ucm385663.htm. 7. Condon, Mairin. “We.Trade Blockchain Platform Completes Multiple Real-Time Customer Transactions.” We.Trade, 2018. wetrade.com/article/we-trade-blockchain-platform-completesmultiple-real-time-customer-transactions. 8. “Your Identity in Your Control.” Verified.Me, SecureKey Technologies, 2018. verified.me/. 9. “CLSNet.” Oversight Committee, CLS Group, 2018. www.clsgroup.com/products/processing/clsnet/. 10. “True Tickets.” True Tickets, 2018. true-tickets.com/. 11. “Introducing Car EWallet.” Car EWallet, ZF Friedrichshafen AG, 2018/. car-ewallet.zf.com/site/carewallet/en/car_ewallet.html. 12. “Loyyal.” Loyyal, 2018. loyyal.com/. 13. Gilkey, Charlie. “Maven, Connector, or Salesperson: What’s Your Archetype?” Productive Flourishing, June 28, 2018. www.productiveflourishing.com/maven-connector-or-salespersonwhats-your-archetype/. 14. “Meet the Team: Greg Wolfond.” SecureKey Technologies, 2018. securekey.com/about-securekey/meet-team/. 15. “Multistate Outbreak of E. coli O157:H7 Infections Linked to Fresh Spinach (Final Update).” Centers for Disease Control and Prevention, October 6, 2006. www.cdc.gov/ecoli/2006/spinach-102006.html. 16. “IBM Food Trust.” IBM Food Trust: IBM Blockchain. IBM, 2018. www.ibm.com/blockchain/solutions/food-trust. 17. Mearian, Lucas. “Why a Walmart VP Had a ‘Religious Conversion’ to Blockchain.” Computerworld. IDG Communications, April 27, 2018. www.computerworld.com/article/3269431/blockchain/why-awalmart-vp-had-a-religious-conversion-to-blockchain.html. 18. “Identity Fraud Hits All Time High with 16.7 Million U.S. Victims in 2017, According to New Javelin Strategy & Research Study.” Javelin, 2018. www.javelinstrategy.com/press-release/identity- fraud-hits-all-time-high-167-million-us-victims-2017-accordingnew-javelin. 19. “Digital Identity Guidelines: Now Available.” NIST Special Publication 800-63B. National Institute of Standards and Technology, 2017. pages.nist.gov/800-63-3/. 20. “Verifier Pairs AI with Optical Scanning for Real-World Product Authentication.” The Analytics Maturity Model (IT Best Kept Secret Is Optimization). IBM, 2018. www.ibm.com/blogs/research/2018/05/ai-authentication-verifier/. 21. Cuomo, Jerry. “Simply Defining Enterprise Blockchain.” LinkedIn, 2018. www.linkedin.com/pulse/simply-defining-enterpriseblockchain-jerry-cuomo/. 2 Opportunities and Challenges Trust is the most important element that drives both a successful transaction in a business and a meaningful personal or social value exchange in a society. —Jai Singh Arun Aside from the Internet, which actually emerged at the end of the 20th century, blockchain is the most disruptive technology of the 21st century. It radically unravels the trust, transparency, and accountability issues in business, and opens endless opportunities for innovation across industries. In recent decades, businesses and trade have crossed geographic boundaries and become global and open in many ways. Nevertheless, the most fundamental challenge remains trust. In many situations, would-be partners have either limited or no trust, which is why an intermediary is often required between two or more parties to complete their business transactions. Examples of such intermediaries are banks, insurance agencies, trade agencies, government agencies, credit agencies, and identity bureaus. The transformational shift that blockchain delivers is a new way to forge trust among distrusted partners. This shift will disrupt the way that they—and you—do business. It brings many new opportunities and a shared or peer-to-peer economy for every industry and organization, including intermediaries, to reimagine and transform their business processes and business models. However, every opportunity comes with an initial challenge. Blockchain adoption is challenging when you try to address too large a scope, there are no motivations or incentives for participants, and the governance structure is cumbersome and has many stakeholders. Disruptive Elements What makes blockchain so disruptive? Blockchain intrinsically bridges the trust gap in our business networks and our societies by co-developing a shared copy of the truth. Five critical elements of the blockchain technology drive this disruption: transparency, immutability, security, consensus, and smart contracts (Figure 2.1). How you see these disruptive elements—that is, your perspective of each of them—suggests ways to transform your business. Figure 2.1 The five disruptive elements of blockchain technology. Transparency Blockchain provides end-to-end visibility of your business transactions with a single source of truth that is replicated or shared across the distributed ledger in your business network. Based on the permissions that are given in a private or public blockchain-based business network, you can see the full trail of a transaction. In the past, this transparency has not existed in business networks that involve multiple participants. Thus, the new transparency disrupts many intermediaries or third parties in your business network by enabling direct peer-to-peer connection and exchange. Imagine a supply chain network with a single source of truth across the value chain. It is difficult to get real-time visibility of shipments in a logistics and supply-chain business because such a complex network includes multiple participants (users of goods, retailers, distributors, manufacturers, suppliers, and brokers), each of which keeps its own record of a transaction, and whose records are never synchronized. A blockchain-based supply chain network provides greater visibility and transparency that drives efficiency and higher value. Immutability After you record a transaction into a blockchain, no one can delete it. If you try to modify the transaction, the blockchain appends another update record to the transaction, which is visible to the participants in the network. Each transaction in a blockchain is encoded into a data block and uniquely signed and timestamped. Each block is connected to the blocks before and after it. These blocks cannot be altered or modified; they are linked together to form a chain that is immutable and irreversible. An immutable history of transactions eliminates the counterfeiting and fraud challenges faced by many businesses. The blockchain-driven provenance process eradicates counterfeiting by using immutability and transparency. Counterfeiting is the biggest challenge globally for legal and financial documents and valuable goods, such as drugs, food products, luxury clothes, and jewelry. It costs companies more than 7 percent of their annual expenditures, amounting to almost $4 trillion each year on a global scale.1 The immutable digital record and history of transfer of an asset or good are identifiable and visible to the participants within the blockchain network, so this approach blocks fraud and tampering attempts in a system or process. Security Blockchain provides a highly secure transaction system that is almost impossible to hack. Every transaction record on a blockchain is cryptographically secured with digital signatures, along with a trail of the transaction updates. Participants in the network have their own private keys that are assigned to a transaction or any update to an existing transaction. Therefore, security vulnerabilities are easily identified and inherently prevented. Every transaction is replicated or shared across the distributed ledger, which means that hackers must look at every ledger and find the same data or record across all the ledgers, which is difficult. Security, privacy, and compliance are bolstered by a distributed ledger, transaction integrity, high availability, and auditability. The security of business-critical data and transactions is a primary concern in any organization and across all industries. Digital transformation of such data and transactions, in turn, is the key driving force of further complexity in today’s business world and brings up new security issues. Global cybersecurity spending was expected to exceed $114 billion in 2018, according to analyst firm Gartner,2 and Statista predicts that it will total more than $234 billion by 2022.3 Most organizations keep their business and customer information in a centralized system. Unfortunately, such centralized systems are vulnerable to attack. Blockchain applies a decentralized approach, in which the transaction data are replicated across the distributed ledger. Thus, even though one of the ledgers is not active, the other ledgers have a copy of the transactions and ensure availability. Each transaction is validated or consented to by network participants before it is posted in the ledger. Although you can identify the members in a blockchain, they can maintain their anonymity and privacy, which is important for organizations to ensure trust. Having an untampered transaction history in blockchain delivers readily available auditability for compliance and regulation purposes. Consensus The network participants in blockchain use a consensus mechanism to eliminate the need to rely on central authorities and third parties to validate business transactions. The foundation of cryptocurrency, for example, is a public blockchain that requires miners to validate the currency transactions. This process, which is called proof of work or mining overhead, involves a huge amount of computing power and energy. In contrast, permissioned blockchain includes trusted participants on the network and uses consensus algorithms that validate transactions anonymously without mining overhead, and with a fraction of the computing power and the energy costs that are used in a public blockchain. Consensus drives fair participation in a business network with democracy. On a global scale, unfairness is more than 50% in economic structures where benefits and burdens are not fairly distributed across the country government according to a BBC poll. Many businesses spend billions of dollars every year to deal with unfairness issues, while others lose billions of dollars every year without being aware of unfairness. Many intermediaries in the legal, business, and government arenas take advantage of unfairness and deceptive practices for their own economic or financial benefits. Blockchain technology has the potential to replace the unfairness in government and businesses with a truly democratic and transparent approach toward transactions. Smart Contracts You can think of smart contracts as self-executing electronic contracts that state the legal and business terms of an agreement between business partners. Smart contracts in blockchain are business logics that are programmed and embedded into a transaction record that enable business process automation. Such contracts allow transactions and agreements to be executed among various business participants without engaging the services of a central authority, legal system, or arbitrator. Business process automation is possible by using smart contracts because the transactions in blockchain are trusted, transparent, and immutable. Smart contracts fuel business process innovation with automation, speed, and compliance without hefty costs and risks. Even though automation and agility are increasing in business or legal contracts management, the average cost of processing and reviewing a basic contract has increased by 38 percent in the last six years and now averages $6900, according to the International Association for Contract and Commercial Management (IACCM).4 The global legal services market alone is expected to top $1 trillion by 2021, based on a Statista report.5 Think how much you are spending on your contract management services and how much potential smart contracts have to save money, enable contracts to be processed faster or almost instantaneously electronically, and reduce risks through application of transparency and immutability. Initial estimates suggest that blockchain technology can reduce the execution time of business contracts from days to minutes, from manual to automated, at a fraction of the current cost, essentially without any legal entity becoming involved. Next, we’ll explore how these disruptive elements from blockchain can uncover new opportunities for your business’s transformation. Opportunities Many individuals and organizations (sometimes unintentionally) thwart positive changes in business due to their inability to see how new innovative technologies can revolutionize the future. Emerging technologies bring new opportunities and change our lives by changing the way that we think and operate. Two of the revolutionary technologies that we witnessed in the 20th century were personal computers and the Internet. The next significant transformative technology of the 21st century is blockchain. Gartner forecasts that the business value that is driven by blockchain will amount to $3.1 trillion by 2030.6 The true business value will be driven by the new opportunities that users envision to transform their businesses in various use cases across a wide range of industries, from cryptocurrency to cross-border payments, food safety to provenance, supply chain to trade finance, clinical trials to healthcare exchanges, digital rights management to royalty settlements, digital identity to land registry, and many more. Blockchain presents endless opportunities. Transformative Power of Blockchain Blockchain technology drives transformational opportunities in three ways so that enterprises, economies, and ecosystems flourish. This transformation trilogy is composed of new organizational structures, new business models, and new ecosystems (Figure 2.2). Figure 2.2 The blockchain transformation trilogy. Distributed Organizational Structure Most modern organizations, whether public or private, are highly centralized, and they typically institute bureaucratic governance that benefits monopolies. Partners in that network are driven to compete adversely. All too frequently, a command-and-control–driven approach intended to gain short-term benefits disables the innovation agenda in these organizations. The centralized structure in such an organization has either limited or no visibility, trust, and transparency across the business. These challenges drive higher costs, reduce agility, add inefficiency in operations, and create an unhealthy and unsustainable culture within the economy. Now imagine how you might use blockchain to revive a centralized organizational structure that drives freedom of innovation and autonomy in the participating business networks. The distributed nature of blockchain technology, along with the emphasis on consensus and smart contracts, delivers a self-governing business network with a greater autonomy that flattens traditional enterprise structures into a distributed and shared structure. Business transactions are managed in a distributed and shared ledger that offers transparency and visibility across the network without any complex and hierarchical nature. Imagine a new government structure for a country that is free from fraud and bureaucracy and transparent to its citizens. This new distributed structure enables organizations to be highly cost-effective, efficient, and faster in delivering services and business results. Trusted Business Model Business models are primarily a construct indicating how organizations bring a set of capabilities to create and deliver value to their clients and partners by maintaining relationships, ensuring stickiness, and differentiating products and services from those of their competitors. The traditional business models are process-heavy and require the presence of many stakeholders, intermediaries, and third parties due to limited trust and transparency. These characteristics drive inefficiencies, higher costs, and sluggishness in the business. Recently, however, new models have emerged that have disrupted traditional models, such Uber (taxi service), Airbnb (short-term housing rental), and Netflix (movie rental). Blockchain presents many opportunities beyond cryptocurrency for organizations to disrupt traditional business models by using peer-topeer exchange with trust, digital and automated execution of business contracts, and agreements with smart contracts. The intermediation between third parties is handled by distributed ledger and transparency, and transaction integrity is ensured with security and cryptography. Blockchain injects trust into business transactions. It fundamentally changes the state of trust in business models by making it dynamic, so that business models can be defined as either trusted, semi- trusted, or untrusted. A public, private, permissioned, or consortia blockchain establishes trust with the correct governance structure and policy. Organizations’ brand and reputation systems that are built on blockchain can provide assurance of truth and transparency through their business records, which can visibly demonstrate trustworthiness to their potential clients and partners. Examples of such business model transformations include the following: A music distribution model in which music files are exchanged directly from creator to the listeners and monetized without any distributors A remittance model in which money is transferred from a sender to a receiver without a financial institution acting as an intermediary An open market model that connects buyers and sellers directly without an exchange intermediary Decentralized Ecosystem An open approach toward business transactions’ trust and transparency in a network that is driven by blockchain promotes a transformational journey for the network’s participants. In this approach, organizations and systems cooperate, and value is cocreated and contained in the network. As blockchain delivers distributed organizational structures and trusted business models, it fosters new emerging trusted marketplaces and economy-to-exchange value. Peer-to-peer models are driving the new ecosystem of players and eliminated the roles for intermediaries. This systematic change fosters the creation of new consumers, competitors, microeconomies, profit pools, and a distributed ecosystem. Decentralized, ecosystem-driven markets are impossible to compete with. The following examples illustrate new ecosystems that can emerge as part of distributed environments: Start-up funding is reinvented by using initial coin offerings (ICO) and tokens. A “know your customers” (KYC) service is created and used within a business network and eliminates the traditional KYC that was redundant for each organization. Assets and land registration in developing nations can leapfrog traditional rural and urban development and real estate governance ecosystems in developed nations. A trading and investment model runs without a clearinghouse. Achieving these kinds of advances is not a matter of mastering the blockchain technology; instead, it requires rethinking your current market role, value streams, and existing business ecosystems, and finding opportunities to transform your business. This is a new radical shift in businesses in which many elements must be redesigned, such as organizational structure, business model, and ecosystem. Transformative Opportunities This section examines some of the industry-specific transformational opportunities that may be driven by blockchain, beyond Bitcoin or cryptocurrency. Banking and Financial Markets Blockchain capabilities deliver banking innovations to revamp the experience for customers by reducing transaction times from hours to seconds, eliminating manual processes, and eradicating unnecessary intermediaries in trade finance, digital identities, and cross-border payments. With blockchain, you can conduct business rapidly and securely, moving from paper-based to blockchain-stored transaction records, which can enable easier expansion to underserved markets, such as small and medium enterprises. Trade Finance Banks continue to struggle with manual processes and stringent requirements for managing, tracking, and securing domestic and cross-border trade transactions. For example, processes for corporate trade financing letters of credit are typically paper based and fragmented, which can make financing more challenging for the 50 percent of smaller enterprises that might not have credit sources. Blockchain-based smart contracts can automatically store, secure, and exchange contract details and financial terms; coordinate trade logistics and payments via an integrated real-time network; and streamline digital trade processes. With blockchain, ledger transactions can flow from one small enterprise to another one through a trusted bank. Larger firms can also benefit by better tracking of trade finance transactions. For example, IBM and eight European banks have created We.Trade, which is a multiple-bank collaboration that is building trusted digital trade chain connections with smaller enterprises. Digital Identity Verification Requiring clients to repeatedly provide identifying information can erode customer satisfaction and cause transaction delays. Onboarding clients for checking accounts or mortgages or migrating them from one bank to another requires strict compliance with KYC standards. On IBM Blockchain, identification documentation can be consolidated with managed access and permissions without storing the actual identifying information. This supports KYC due diligence, helps secure personal information, and enhances client satisfaction. For example, IBM and SecureKey Technologies are building an identity-sharing ecosystem with Canadian banks that will enable clients to instantly verify identities when opening new accounts. Other uses include driver’s license applications and requests for utility services. Insurance Blockchain can simplify and secure multiparty operations at the heart of the insurance industry. Whether interacting with customers or dealing with other parties, blockchain can reduce the challenges that are presented by multiple parties that keep their own records. As transactions occur, insurers can rely on blockchain’s distributed ledger technology to update and validate information against other records in the network; reduce management costs for policies, claims, and relationships; streamline operations; and enhance customer satisfaction. Companies can also capture opportunities and revenue through new business models or new insurance products. Complex Risk Coverage Employees, policy holders, adjusters, and agents who cannot view insurance policy information usually need human help, which increases the chance of errors, delays claims resolution, and increases costs. The challenge escalates with complex insurance programs or managing policies in multiple countries, which can involve strict legal and regulatory adherence. Blockchain can resolve many of these obstacles to smooth operations. For example, using IBM Blockchain, AIG and Standard Chartered converted multiple policies into “smart contracts” that provided a single, consolidated view of policy data and documentation in real time. The solution enables visibility into coverage and premium payments, delivering automated notifications to network participants after payment events occur. Group Benefits Organizations offering group benefits often rely on a complex network of administrators, providers, employees, and others to manage those benefits. Different versions of the same data require consolidation to ensure eligibility and access to benefits. For example, IBM Blockchain can be the vital link across a vast ecosystem of third-party administrators and service provider networks. Its shared ledger transparency can help employers reduce errors, which results in improved claims processing, better provider management, and lower operational expenses. Healthcare Blockchain can transform healthcare enterprises and increase the quality of care by enabling new ecosystems and new business models to evolve. Healthcare information that is stored on a blockchain can change the way that providers store clinical information and how they share information within their own organization as well as with other healthcare partners, payers, and patients. Blockchain decentralizes healthcare information, increasing data availability, efficiency, transparency, and trust. However, it requires careful planning to make the most of the advantages it brings. The blockchain infrastructure that IBM is helping to build provides enterprises with a solid platform for both immediate and long-term business solutions. Patient Consent and Health Data Exchange Disparate record-keeping systems can result in patient consent forms and medical histories that are incomplete, conflicting, or ambiguous. By comparison, blockchain-stored records can be used to provide complete, longitudinal health records for individuals, giving all patients more control over their own information through verifiable consent. With blockchain, every patient record reflects the bestknown medical facts, from genomics data to diagnostic medical imaging, and data can be reliably transferred when needed, with no need for a central gatekeeper. Clinical Trials Management Clinical trials of healthcare interventions generate mountains of data, which requires healthcare administrators to keep reliable and consistent records for peer review and to meet regulatory requirements. Blockchain tools, in concert with electronic data capture (EDC), allows clinical data to be automatically aggregated, replicated, and distributed among researchers and practitioners with greater auditability, provenance tracking, and control compared to complicated conventional systems. Retail and Consumer Goods Blockchain is removing obstacles and increasing visibility for consumer products and retail business transactions. Greater transparency through a shared and immutable ledger enables businesses to establish a climate of trust across areas such as invoicing and payments, the consumer supply chain, and global shipping. Through the use of a distributed and trusted database, a blockchain solution reduces barriers that might otherwise impede business, such as siloed management and regulatory systems, timeconsuming settlement processes, and uncertainty between entities conducting transactions. Blockchain speeds transactions, builds trust between participating members, and opens the door to cross-industry and global business opportunities. Commerce All too often, lengthy invoicing and payment processes across diverse systems lead to delays in verification and payments, triggering disputes and driving up the cost of doing business in today’s global markets. Blockchain helps remove friction from such commerce by providing a common chain of information visibility that is shared across vendors and purchasers. For example, a major consumer goods company used IBM Blockchain to reduce the complexity and ambiguity it encountered in invoice processing. The solution cut processing times from five days to one and trimmed processing costs by 50 percent. The company plans to expand its new model to numerous other supplier relationships. Supply Chain Management Disparate systems that are used by multiple entities across a supply chain can block visibility across the ecosystem, creating an atmosphere of distrust and leaving all parties at risk. For example, trust in the food supply has suffered due to a lack of industry transparency between suppliers, processors, distributors, retailers, logistics providers, and consumers. A blockchain-based food supply chain provenance like IBM Food Trust is a collaborative solution that unites growers, distributors, processors, retailers, and other food industry stakeholders to efficiently and securely trace food through every step of the supply chain. The IBM Blockchain–powered solution helps ensure food safety from farm to store through rapid end-to-end traceability of data and access to compliance certification. For example, Walmart and IBM have partnered to help improve food safety by using IBM Food Trust. The first blockchain food safety solution to run production data for products across the food system, it allows early adopters to confidently and securely share data with their food supply chain partners. In another supply-chain application, IBM and Maersk have announced a joint effort to streamline shipping through creation of an efficient and secure global trade digitization platform based on IBM Blockchain. The proposed venture will address needs for transparency, simplicity, and open standards as goods move across borders and trading zones. Government From issuing identification and registering property to administering elections and enforcing laws, government must ensure stringent data stewardship to protect citizen information, maintain trust, and ensure the accuracy of public records. Governments face challenges unlike those encountered in any other domain: Data architects, administrators, and privacy officers must protect citizens’ personal information, yet keep vital information accessible when needed. Scaling complicates life for government administrators, too: The vast scope of mandated services and the large workforces that are needed to provide them can lead to fraud, waste, and abuse, allowing significant errors to slip into vital public records. Asset Registration We rely on government to accurately record and track our homes, businesses, cars, and more, so as to verify ownership and ensure smooth financial transactions. Accurate and accessible registries are crucial to engender trust and transparency in government. Despite this need, today’s registries suffer from slow, duplicative processes and an overreliance on error-prone, incomplete, and manual data entry. Blockchain enables government agencies to increase the accuracy and efficiency of publicly held records by linking ownership of an asset to a single and shared ledger without disrupting the existing registry data. Fraud Prevention and Compliance All too often, fraud, information privacy abuse, and accidental data exposure plague government data transactions. Moreover, siloed legacy systems and processes within government frequently result in multiple versions of multiuser data sets. In the absence of a single version of the truth, the risk of fraud and the difficulty of ensuring compliance increases each time a data set is accessed, because there is no way to distinguish between correct and incorrect entries. Blockchain creates a shared and trusted ledger that sequentially appends cryptographi...
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Explanation & Answer

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Running Head: BLOCKCHAIN TECHNOLOGY

Blockchain Technology

Institutional affiliation

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BLOCKCHAIN TECHNOLOGY

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Introduction
Today, exchanges structure one individual to another or in organizations includes an outsider
assuming responsibility for how the exchanges are finished. To make an advanced installment or
move money, there is regularly a bank or charge card supplier to go about as a centerman for the
exchanges to be finished. The control of the exchanges by an outsider has made noteworthy
issues, for example, security and protection of data. Whenever hacked, the frameworks can
release any private data, or an exchange can be sent to an off-base location thus making
weakness concerns and protection. Subsequently, Bitcoin innovation was created as an approach
to tackle these issues and advance improved security and expel the center man from controlling
the exchanges, which possesses additionally decreased expenses and energy for sending the
exchanges.
Blockchain ceaselessly empowers the circulation of database answers to keep up the developing
arrangements of information records. For instance, the information can be recorded on an open
record, and any data of the exchange, for example, dates are recorded. The possibility of
Blockchain innovation was presented by Bitcoin and cryptographic money, whereby individuals
can purchase and trade products and ventures with advanced cash. Despite the fact that
Blockchain is by all accounts appropriate for the ebb and flow innovation, its difficulties and
constraints should be examined and tended to. The respectability, security, and protection should
be improved to forestall assaults. The examination themes on Blockchain innovation, for
example, security, trustworthiness, classification, versatility, and execution, have been dissected
in this investigation.

BLOCKCHAIN TECHNOLOGY

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Analysis
Blockchain innovation is generally applied in digital currency and savvy contracts. To make sure
about these applications, a high registering force ought to be improved despite the fact that it
brings about high vitality use. Pohl et al. (2019) feature that Blockchain innovation can be
improved through distributed computing. Blockchain innovation has the capacity of changing
how exchanges are done today. Since the innovation isn't restricted ...


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