Blockchain technology has immense potential to streamline business transactions and processes, but the technology isn't devoid of limitations, according to Pramod Achanta, partner, financial services blockchain practice leader at IBM North America. Achanta spoke with SearchCIO at the recent Fusion CEO-CIO Symposium, produced by WTN Media. In this video, Achanta enumerates the myths, benefits and challenges associated with implementing blockchain technology. He also offers pointers on how to find the right use cases for the evolving technology and explains how blockchain can complement cybersecurity.
What are some of the benefits of implementing blockchain technology?
Pramod Achanta: In our chairman's words, blockchain technology has immense potential for transforming how we do transaction processing. We believe that blockchain will do [for trusted transactions] what the internet did for information sharing. In a business transaction where trust is established through various financial intermediaries, blockchain can establish that from a technology framework perspective, thus making these transactions much more efficient to process, as well as more cost-effective and eliminating the risks involved in the process.
What are some of the challenges of implementing blockchain technology?
Achanta: This technology is still new. It's in its initial evolutionary steps, so there are certain limitations with the technology. It's not ready for a high performance, high volume transaction environment. That said, those limitations are being scaled pretty rapidly.
What is the biggest misconception about blockchain?
Achanta: There's a lot of confusion in the marketplace with respect to digital cryptocurrencies and blockchain. Bitcoin, as most of the people know, is one such implementation of blockchain technology.
There are a lot of other benefits that you can accrue from blockchain. For example, it can lower the cost of service for an existing business process and can eliminate the risks from an existing business process.
One way I would urge everyone to think about applying blockchain is that blockchain has some short-term benefits, some immediate benefits, while you can work your way toward a more redefined, reimagined and simplified business process. You don't have to always look for a disruptive idea. There are a lot of other ideas that you can implement using blockchain that immediately drive value for your businesses.
How do you find the right use cases for implementing blockchain technology?
Achanta: There are several use cases already being identified as potential candidates for blockchain. Wherever you have multiple parties involved in a particular transaction, where there are a lot of reconciliations that take place to ensure that the data is consistent across multiple parties, where there are significant delays in completing the particular transaction end to end -- those are some good candidates for blockchain.
It doesn't necessarily need to be across multiple financial institutions. There are situations where you can apply blockchain technology within an institution as well, because some of the same challenges that you see that exist in a transaction that takes place over multiple institutions also exist within the institution itself.
How is blockchain redefining cybersecurity?
Achanta: I see these two as complementary tools. What blockchain does is it increases the trust in the data itself and cybersecurity is something that will protect the data from a periphery perspective. Cybersecurity secures the perimeter; blockchain ensures that the data that's within that particular boundary is trusted.