Can blockchain really make big data better?
Blockchain is not just a synonymous with cryptocurrencies like Bitcoin. It’s way more than that! It is set to disrupt the way enterprises handle digital transactions. But could it also be the solution for big data issues and challenges?
For many people, the term “blockchain” is synonymous with cryptocurrencies like Bitcoin. In reality, though, blockchain has an identity of its own, and the technology’s wider potential is seeping into corporate awareness.
There is no time like the present to get to know blockchain closer, as it will almost certainly play a role in your business before too long—perhaps even within the next two years if the market growth predictions prove accurate.
In case you’ve been too busy to notice this rising interest, what follows is an introduction to distributed ledgers, along with some viewpoints about their impact on big data as shared by the blockchain developers from itransition. Their thoughts go along with examples of companies already employing blockchain-related tools and solutions.
Blockchain in brief
A blockchain is essentially a database, or perhaps more accurately, a ledger. However, instead of data existing in columns and rows like in a conventional database, it is contained in blocks that are chained together in sequence—hence the name.
Understanding blockchain requires awareness of its specific characteristics, which together solve many problems of conventional data systems. Of these characteristics, the following five are particularly notable:
Blockchain ledgers are decentralized: Unlike conventional databases that are held on a single computer or server, blockchains are distributed ledgers, directly accessible to any party in the network. In a blockchain, there is no single point of control.
Peer-to-peer data transmission: Because there is no single point of control, blockchain data is transmitted directly from one user to another. All transmitted data instantly updates the entire ledger, so everyone on the network has the same single version of the truth.
Anonymous transactions: Data transmissions take place between addresses on the blockchain. This ensures transparency and, at the same time, allows users to remain anonymous. However, anonymity is not necessary if the blockchain is set up to require proofs of identity.
Transaction records are immutable: Each blockchain transaction creates a record that is irreversible and unchangeable. Records are ordered chronologically and are visible to all users in the chain.
Blockchains are programmable: Because a blockchain can be bound to computational logic, it’s possible to program functions and transactions via rules and algorithms.
Perhaps, the easiest way to think of a blockchain is like a book, where each page (a block of data) references the preceding page by way of the page numbers (unique block fingerprints). Hence, just as a book is essentially a chain of pages, which together provide an ongoing flow of information, a blockchain is a chain of data parcels, which together provide a continuous and indelible record of transactions.
Blockchain and big data: Made for one another?
As the introduction to this article showed, blockchain promises potential in many use cases. Enterprises across a wide range of industries are beginning to grasp the technology with fervor as they see the benefits of early adoption and the risks of being left behind.
As with any evolving technology, there are of course risks involved with getting in early. According to the analysis by Deloitte, few recent blockchain projects have made it past a year or so of existence, and only around 15% of the projects orchestrated by companies are still active.
As competencies develop though, leading IT enterprises and startups alike will begin to see real success with blockchain solutions. There is already an expectation that distributed ledgers will help enterprises finally get to grips with big data, which thus far has had its share of challenges.
Speeding up the financial service industry
The marriage of blockchain and big data will help enterprises by making real-time analytics much more achievable—and reliable. For example, in the financial services industry, big data has not yet solved the difficulties of detecting fraud and assessing risk. This is primarily because existing detection and assessment methods depend on historical data.
If financial institutions can harness blockchain as a means of conducting transactions, they will finally be able to evaluate risk and identify suspicious patterns in real time. This will help to protect banks and their customers from fraud—but that’s not all. It will also speed up the transaction process (making it almost instantaneous) and reduce the cost of money transfers by eliminating the barriers of security and risk checks involved.
This at least is the hope of a Japanese banking consortium that has begun developing a blockchain-powered money transfer app with the help from Ripple, a U.S. based digital payments enterprise. Closer to home, NASDAQ has also shown its readiness to put faith in blockchain technology, applying it to the management of share trades.
Beyond finance: Blockchain in other sectors
Similar stories of enthusiasm for blockchain and big data are emerging from other industries. They include healthcare, pharmaceuticals, real estate and even fashion where distributed ledgers can assure provenance of garments all the way from raw material sources to the retail display. In the logistics sector, Walmart, Maersk, UPS, and FedEx are all experimenting with blockchains to improve supply chain transparency.
Meanwhile, the tech giants are already cashing in by helping companies leverage blockchains. Google has just started developing its own blockchain technology, but Bloomberg reports that IBM and Microsoft are enjoying the largest benefits so far, gaining 32% and 19% respectively of total revenue from blockchain-related services and tools.
If big is the quantity, blockchain is the quality
So what is it that inspires such confidence in the blending of blockchain and big data?
It largely comes down to three blockchain data attributes which are rarely assured in the conventional, centralized data management:
1) Security: Blockchain architecture ensures that data is almost impossible to corrupt or tamper with.
2) Integrity: Blockchain data offers audit trails, certainty of origin, and guaranteed integrity.
3) Value: Blockchain-generated data is structured and complete; its value is rarely questionable.
In short, it is more about trust in data than anything else. It’s hard to escape the irony in that revelation, given the suspicion existing around cryptocurrencies—without which, blockchains may not yet have captured so much attention.
A world of decentralized possibilities awaits
The potential effects of blockchain technology extend far beyond the way we use big data. It’s also expected to integrate with other digital technologies, including cloud solutions, the IoT, and AI. This, of course, will enable the creation of new types of assets, as it has already happened with Bitcoin and similar digital currencies.
All in all, blockchain is not a technology to miss, because those enterprises that wake up to the opportunity can exploit it to create new services and business models. And for those who play the role of intermediaries today, adopting blockchain may be the key to survival in the decentralized digital future.