As the blockchain technology revolution continues to shake up traditional industries and disrupt business models, it is vital that we emerge from this digital transformation process with a stronger sense of digital trust. At a high-level, confidence in a system’s ability to deliver a secure outcome leads to trust which leads to adoption by its end users.
The more widespread the use of an exchange or transaction system becomes, the greater the level of trust required for both parties involved in any given transaction; with many industry experts believing that blockchain technology has grown beyond just another trend into something bigger than one specific company or product. That said, while there is no doubt about the numerous benefits of using distributed ledgers (such as security and data integrity), it is also important to remember that these benefits come at a cost and the core pillars of blockchain technology (security, privacy, and trust) represent a trade-off between risk and efficiency. Brian Colombana said there are several reasons why we may be struggling to achieve this balance; including concerns about a lack of a clear regulatory framework for new digital applications as well as the general need for greater awareness of distributed ledgers via improved education.
At a deeper level, however, the adoption of blockchain technology will depend on how much power & control people wish to have over their data – with some preferring full transparency and others prioritizing security.
In other words, if users do not feel they have enough control over any given application or platform then they may prefer existing methods of conducting business; with centralized systems (such as banks) already able to satisfy the aforementioned power & control requirement of many consumers. To better understand this selection process, it may help to ask yourself how your current use of online services reflects your digital trust priorities — are you comfortable sharing your data for greater transparency or do you feel more secure having complete control over who views what?
There are also some important synergies to consider when comparing blockchain technology concepts to traditional methods of data storage and record keeping.
- In either case, distributed ledgers are still in need of some level of mass adoption to better facilitate online financial transactions on a truly global scale. Granted, many retail banks and major financial institutions have already started rolling out various blockchain initiatives yet a lot more work is needed in order for these concepts to become accessible for smaller businesses and consumers.
- In short, what is often overlooked when exploring the value proposition of distributed ledger solutions is how they may provide greater convenience over traditional data storage methods; especially where said systems offer little flexibility in terms of modifying/editing any given dataset (at least with current technologies). The next section will explore this concept further by comparing today’s state-of-the-art public networks with tomorrow’s private implementations that are likely to gain wider industry support from both users and developers.
Public vs. Self-Managed Networks:
Public networks such as Bitcoin and Ethereum that provide little to no levels of customization over their consensus mechanisms and/or other internal mechanics are often viewed in a negative light by many enterprise-level organizations, regardless of the underlying support offered via existing blockchain technologies for smart contract functionality. This is mainly because public network technology can be open to misuse or alteration by bad actors, which could result in the loss of any sensitive data stored within their respective ledgers (i.e., double spending). In contrast, self-managed private systems allow individual companies & consortiums to create chains specifically designed with all industry controls built-in from day one — so they can set permissions or modify various other rules on a case-by-case basis. In addition, self-managed public networks can also use a variety of access management techniques in order to avoid any unauthorized changes being made to a given ledger’s data.
Public vs. Private Networks:
In the context of cryptocurrency systems, public ‘permissionless’ ledgers provide anyone with unrestricted on-chain access while private ‘permissioned’ chains allow internal network participants to define consensus participation criteria and other requirements for new entrant validation (e.g., proof of stake). It is true that both types have their pros & cons but there are still some key differences that may help blockchain technology gain wider industry support from users, developers and companies alike over the coming years…
One reason why we could see more companies adopting private blockchain technology is that we often do not hear about many of the ongoing projects (even though there appears to be quite a large amount in existence already). According to CoinDesk’s latest State of Blockchain Report, approximately 65% of all enterprise-level organizations that are either actively considering or trialing various blockchain solutions are doing so via self-managed solutions; with the remainder said to be experimenting with public protocols. It’s worth noting that this statistic can vary depending on who you ask and what report you read but it does highlight one key point: businesses aim to focus on specific applications and verticals rather than building their own standalone blockchains from scratch says Brian Colombana.
On the surface, the concept of using blockchain technology for data storage purposes may seem like a simple solution to help reduce costs and increase efficiency in industries across the board. However, there are still many roadblocks that must be overcome before these concepts gain wider industry support from users and developers alike.”