Why Blockchain?

There has been a lot of buzz on blockchain taking it to Gartners Hype Cycle for Emerging Technologies, 2016. It has been envisioned that blockchain will do for transactions what the Internet did for information. So in this blog, lets discuss the need for blockchain?

Why Blockchain?

MultipleLedgers
Complex Transactions

If you’ve ever bought a house, you probably had to sign a huge stack of papers from a variety of different stakeholders to make that transaction happen. It is a complex transaction involving banks, attorneys, title companies, insurers, regulators, tax agencies and inspectors. They all maintain separate records, and it’s costly to verify and record each step. That’s why the average closing takes several days. Same holds good if you are registering a vehicle. In these two examples, what you are doing is ‘Establishing ownership of the asset’ and the problem is that there are several ledgers (or databases) where the information resides and all of them have to have the same version of truth. So the problem are many fold:

  • Multiple ledger(s) which are updated to represent business transactions as they occur.
  • This is EXPENSIVE due to duplication of effort and intermediaries adding margin for services.
  • It is clearly INEFFICIENT, as the business conditions – the contract – is duplicated by every network participant and we need to rely on intermediaries through this paper laden process.
  • It is also VULNERABLE because if a central system (e.g. Bank) is compromised due to an incidents this affects the whole business network.  Incidents can include fraud, cyber attack or a simple mistake.

Solution:

What if there existed a common ledger (or a distrubuted database) that everyone had an access to and everyone trust? This is what blockchain does to the business!

Why now?

There are three reasons why blockchain is starting to take a foothold now.
  • Industries are merging and interacting like never before. The growth of ecommerce, online banking, and in-app purchases, and the increasing mobility of people around the world have fueled the growth of transaction volumes. And transaction volumes will explode with the rise of Internet of Things (IoT) — autonomous objects, such as refrigerators that buy groceries when supplies are running low and cars that deliver themselves to your door, stopping for fuel along the way. These partnerships require more trust and transparency to succeed.
  • There is increasing regulation, cybercrime and fraud that is inhibiting business growth. The last 10 years have seen the growth of global, cross-industry regulations, including HIPA, Sarbanes -Oxley Act, anti-money laundering and more. And to keep pace with regulatory changes, companies are rapidly increasing compliance staff and budgets.
  • Advancement in technologies like cloud (offering compute power to track billions of transactions) and cryptography (securing both networks and transactions) are also enablers for blockchain.

In my future blog I will discuss how blockchain makes things better and how it works. So stay tuned.

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The Real Opportunity for IoT

In my last blog, I described about IoT and ended with a thought on the “Real Opportunity” of IoT.  Lets explore this a little further, but in one word, it will be Analytics.

Here is a recap on Internet of Things (IoT) : First, in the simplest terms, IoT deals with physical devices that generate data from sensors and send the streams of data via the Internet to some kind of “hub” for data collection, visualization, and analytics. Second, IoT deals with multiple types of sensors and data formats. Third, IoT solutions might deal with thousands and millions of connected devices and huge amount of data.

Now, Billions of Internet-connected ‘things’ will, by definition, generate massive amounts of data of varying complexity, formats and timeliness. This is just a swamp, especially if all you do is collect data and don’t do anything with it.  For example, Insurers pay more than $1 billion in claims in the United States for cars and trucks damaged by hail. Can Weather Company’s weather data make it possible for insurers to send text-message alerts to policy holders, warning them of an imminent hailstorm and advising them of safe locations nearby? Note IoT will make it possible to identify the exact location of these cars /trucks and identify the owner to send the text message!

AnalyticsTherefore while many people focus on the devices themselves— how they function, how they perform and how they look—the real opportunity is in the data these devices are consuming and generating and the value it provides for businesses and even entire connected cities. Retailers will piggyback on Analytics, and use IoT to pull consumers into one of their channels, where they will entice them with products that have been contextualized and personalized for the customers’ gratification. And there will be similar usecases for manufacturers, servicing organizations, public utilities, industrial, telecommunications, healthcare providers and more—to serve their customers in new, personalized ways. Using predictive, prescriptive, cognitive and investigative analytics will make it possible for organizations to discover new relationships and correlations that bring together broader and deeper insights that lead to smarter business decisions in terms of risks, costs, growth, customer service and other things.

What all will be required for organizations to harness the power of Analytics and what will be the challenges? Stay tuned.

Disclaimer: The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions

Internet of Things (IoT) – Demystified

There has been a lot of talks around IoT. In this blog I wish to demystify IoT a little bit and share some facts and my understanding on this topic.

IoT is not about Internet of connected computers, rather it is about is an Internet of connected devices (or things) that broadcasts loads of data about devices—their interactions with their owners and with each other—that traditionally had little to no computing capacity, but now do.

So lets start with some Facts: 
By 2020, there will be 28 times more sensor-enabled devices in existence than there are people in the world. Of those 212 billion enabled devices, 30 billion will be connected to networks and potentially to each other. These device include everything from cellphones to coffee makers, washing machines, headphones, lamps, wearable devices, and more. A device can also be a component of a machine, such as a jet engine of an airplane or the drill of an oil rig. These smart devices could respond to properties, such as vibration, chemicals, radio frequencies, environment, weather, humidity, light, etc.

IoT_picture_car2So what value proposition will these sensor-enabled devices bring?
Cars with on-board sensors can report back to manufacturers with information on the wear and tear of parts, indicate the cause of system failures and generate warranty notifications.
Store shelves can connect with the supply chain when they’re running low on inventory of a certain product.
Skyscrapers can send building managers information about how much electricity they’re using—and make suggestions for how to reduce it.
Wearable monitors can alert doctors about the side effects of medications and provide patients with advice on how to manage their symptoms at home.
Airplanes can connect with weather stations to help predict turbulence and avoid it during flights.

So what are the challenges and where is the “Real Opportunity” in IoT?
Stay tuned…
[Hint]: 90 percent of all data generated by devices such as smartphones, tablets, connected vehicles and appliances is never analyzed or acted on. Imagine the possibilities if that were increased to 20% or more.