In my previous blog, I walked through why blockchain matters, highlighted the core tenets that make it disruptive, and mentioned some of the enterprise IT vendors to keep an eye on. What I left out was a deep dive on the technology. So, based on feedback, requests, and the ongoing level of confusion that can be seen across the internet, here is my Explain It Like I'm 5 (ELI5) version of what a blockchain is and how it actually works.
Now the core concepts I touched upon in the video are associated with a public blockchain. As blockchains start getting leveraged in production environments with the help of enterprise IT vendors and community experts, the idea of a private blockchain becomes significantly more appealing. Organizations want the benefits of blockchain, but they don’t want the entire world to gain visibility into every transaction or be involved in dictating what they can and can’t do. Organizations want some control over who can participate in block validation. In these permissions-based blockchain networks, to participate in the network, an invitation is required, and in many cases that invitation only grants access to certain types of transactions. As such, the private blockchain approach will be the preferred method of adoption and the good news is organizations like Hyperledger are enabling organizations to properly build and utilize private blockchains.
I think that one of the first industries (outside of financials) that blockchain will revolutionize is transportation and logistics, specifically the supply chain. Think about it – tracking, recording, and verifying are core staples to a successful supply chain – blockchain makes it easier to do all of that. “But I don’t want my importer to know who I’m using as an exporter or what I’m paying that exporter.” And that’s where the private blockchain comes in. Organizations can leverage that private blockchain to provide access and transparency to certain parties that need it, while hiding it from others. In other words, the importers see only what they need to see and the exporters see only what they need to see.