Shared ledgers can deliver provenance that can have beneficial effect in developing countries
Intermediaries who can introduce errors or slow down transactions are unnecessary
Smaller scale permissioned ledgers can increase business efficiency
The term ‘shared ledger’ sounds pretty dull, but it’s exciting a lot of people to the extent that many believe that the technology underpinning this method of record keeping and authentication will prove to be more life changing than the internet.
Shared ledger works as an umbrella term, as it describes what is, essentially, a database that keeps track of ownership and covers a number of approaches such as blockchain and distributed ledger technology (DLT). An application of blockchain is the cryptocurrency Bitcoin*, which gets the all the attention at the moment.
Blockchain solved the double spend problem when using a digital currency, providing a decentralised method to track transactions. It works because this type of append-only database can only make changes to records/transactions by referencing the previous block in the chain. As new blocks are added, they are chained to the previous block using a cryptographic signature which is verified by a global computing network using a distributed consensus system (or ‘mining’ where Bitcoin is concerned). Any tampering would invalidate all the blocks that follow and, as there are numerous copies of this database or ledger, unauthorised changes are identified.
“Registering a birth is as simple as sending an email”
With blockchain, the fact that once something has been added to this digital ledger it cannot be altered opens it up to other purposes. In the case of such unpermissioned ledgers that have no specific ownership, it presents a global, censorship-resistant record that is available to everyone. Frequently cited examples include declaring a will and assigning property ownership.
The latter is seen as having significant benefits in the developing world, where unstable regimes or conflicts can displace people who may struggle to assert property rights once the dust has settled.
Undergoing trials in diamond industry is Everledger*, which, by design, provides a permanent ledger featuring certification and transaction history. This ledger includes an image of the diamond, a description and its source; enabling verification for owners, insurance companies and law enforcement.
Ethereum* is described as the ‘blockchain app platform’ and focuses on Smart Contracts which, among other things, enable digital assets to be tracked and monetised. Using the Ujo Music* platform based on Ethereum, artist Imogen Heap attached a Smart Contract to her song Tiny Human which used blockchain to manage the rights, intellectual property and payments to performers. Heap has since founded Mycelia*, a new ecosystem to take this initiative further.
Where this leads to is a decline in the need for intermediaries in areas where numerous stages of authentication and authorisation are involved from legal contracts to financial transactions. While this unnerves governments and institutions alike, the perceived wisdom is to ignore this at your peril.
Estonia is certainly ahead of the pack here, with its e-Estonia* initiative providing a range of digital services to its 1.3 m citizens. Supporting these various components is X-Road*, a decentralised database designed using Guardtime’s Keyless Signature Infrastructure* (KSI). This distributed ledger system links public and private sectors, enabling complex services to be delivered rapidly and transparently – registering a birth is potentially as simple as sending an email.
Distributed ledgers don’t have to be entirely open in all cases. For some applications a permissioned ledger is more appropriate. The difference here being that there is ownership and that the records on this ledger are checked by specific number of trusted actors. While this approach delivers a limited consensus, being a private shared ledger means that rules can be imposed regarding how much is seen by different users of the system and the transactions can be much faster too.
Dan Middleton, Head of Technology for Intel’s Blockchain and Distributed Ledger program explains how this might look: “The way that we think about permissioned and unpermissioned is actually a spectrum. You might make the system available for query to everybody or you might make it available to submit transactions only to a limited set of people. Or you might only make it available to a limited set of people to operate and validate its nodes. The system is set up to handle that kind of flexibility.”
If you want to go down that path with an enterprise deployment, then Middleton advises that the system remains true to the strengths of shared ledgers and that valuable features aren’t architected out to suit a corporate project so it merely becomes a log.
“Try out the technology internally as a learning example, but that shouldn't be the end game,” Middleton advises. “The area where blockchain is most useful is where you have potential distrusting organisations. So maybe they are friendly partners that you participate with, but you still want some assurance that everybody is following the rules. Or maybe you're in more of competitive situation where you've got conflicting suppliers in a supply chain network and you want assurance that everybody is attesting to the origin of the materials in the same way. These are all great reasons to use a blockchain because they all involve external organisations interacting with each other.”
For enterprise, having the benefits of trusted data within the business is an attractive proposition. Financial services, in particular, are prone to layers of paperwork and trust concerns, and are looking to this technology to support market trading. In September last year, financial consortium R3 together with eight member banks conducted a successful trial trading, matching and settling US bonds using Intel® Sawtooth Lake® distributed ledger technology.
A significant difference here is that Sawtooth Lake features an experimental consensus algorithm called Proof of Elapsed Time (PoET) that relies on trusted computing to deliver a more efficient consensus. Trusted execution environments (TEE), such as Intel Software Guard Extensions® (SGX) included on recent Intel processors support the PoET algorithm, which scales to support thousands of participants.
For the purposes of the trial, Intel used SGX HW and code to monitor behaviour. Intel has since contributed the Sawtooth Lake code to the open source Hyperledger* project, where it can be downloaded and appraised without need for SGX hardware. However, being a simulation this is not a secure implementation but it provides one way of exploring an area of technology that many believe will be bigger than the internet.
*Trademarks are the property of their owners
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