In general terms, a blockchain is an immutable transaction ledger, maintained within a distributed network of peer nodes. These nodes each maintain a copy of the ledger by applying transactions that have been validated by a consensus protocol, grouped into blocks that include a hash that bind each block to the preceding block.
The first and most widely recognized application of blockchain is the Bitcoin cryptocurrency, though others have followed in its footsteps. Ethereum, an alternative cryptocurrency, took a different approach, integrating many of the same characteristics as Bitcoin but adding smart contracts to create a platform for distributed applications. Bitcoin and Ethereum fall into a class of blockchain that we would classify as public permissionless blockchain technology. Basically, these are public networks, open to anyone, where participants interact anonymously.
As the popularity of Bitcoin, Ethereum and a few other derivative technologies grew, interest in applying the underlying technology of the blockchain, distributed ledger and distributed application platform to more innovative workplace use cases also grew. However, many workplace use cases require performance characteristics that the permissionless blockchain technologies are unable (presently) to deliver. In addition, in many use cases, the identity of the workplace participants is a hard requirement, such as in the case of financial transactions where Know-Your-Customer (KYC) and Anti-Money Laundering (AML) regulations must be followed.
For the future workplace ecosystem, we believe that we need to consider the following requirements:
•Participants and peers must be identified/identifiable
•Workplace ecosystems need to be permissioned
•High transaction throughput performance
•Privacy and confidentiality of transactions and data.
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Blockchain technology continues down the path toward broad adoption as organizations gain deeper understanding of its transformational value, within and across their industries. IDC projects that annual global spending on blockchain solutions will reach US$9.7 billion by 2021.2 This technology’s success in capturing both mindshare and investment is remarkable considering that a few years ago the word blockchain was known only through its relationship to cryptocurrencies.
Today, blockchain is to trust what the web was to communication: a profoundly disruptive technology that transforms not only business but the way humans transact and engage. And large enterprises and consortia are deploying enterprise-grade blockchain solutions, avoiding complexities in traversing multiple disparate databases. With technical hurdles and policy limitations being resolved, we will likely see breakthroughs in gateways, integration layers, and common standards in the next few years.
Concerns around scalability and cost-performance of transaction processing are being addressed as proof of stake becomes a viable alternative to proof of work consensus, and enterprise tools have emerged to manage and maintain high-performance blockchain stacks. When further breakthroughs occur, expect blockchain to become even more ubiquitous. The door will be open for cross-organizational business process reengineering, an arena that encompasses massive transformation and possibilities across industries, functions, and geographies.
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