WEBINAR Blockchain: From Irrational Exuberance To Rational Assessment Martha Bennett, Principal Analyst May 23, 2016. Call in at 10:55 a.m. Eastern time

Agenda Setting the scene: definition and timeline Key developments Challenges yet to be addressed Vendor checklist Recommendations

There’s no such thing as “the blockchain” Source: “Q&A: Forrester’s Top Five Questions About Blockchain” Forrester report

A few key principles A blockchain is an append-only, cryptographically secured, distributed, and replicated store of records. “Cryptographically secured” doesn’t mean the transaction data is encrypted. “Store of records” doesn’t mean that all data associated with a transaction is stored on the chain. A blockchain can be described as a distributed ledger — but a distributed ledger doesn’t have to be a blockchain. Always clarify the meaning of terms first.

Blockchain timeline Source: “Q&A: Forrester’s Top Five Questions About Blockchain” Forrester report

Key developments in the past six months R3CEV: member-funded consortium Adopt, adapt, and build approach. Microsoft: “Blockchain as a service” Hosting blockchain offerings on Azure (dev and test) Linux Foundation Hyperledger Project Develop an open source framework and code base. IBM: long-standing blockchain involvement Hyperledger, Blockchain DevOps, and internal Consulting firms and SIs increasingly active 3Pillar Global, Capgemini, Cognizant, Deloitte, EY, KPMG, PwC, and Virtusa

It’s early stages yet Image source: Wikimedia Commons (https://commons.wikimedia.org/wiki/Main_Page)

More experience, more caution A number of fundamental technology issues have yet to be addressed. Use cases suitable for deployment in the near to medium term are likely to revolve around: Internal applications that can be extended to include external parties (e.g., compliance ledgers, time stamping, and archiving). Shared reference data (i.e., no confidentiality issues). Applications where a single entity has control. Selected supply chain aspects.

Changing the world will take longer . . . Among the hype, it’s often forgotten that technology alone can’t change the fundamentals. “The harmonization and development of business process cannot be separated from the application of shared mutual distributed ledger.”* *Source: Michael Mainelli and Alistair Milne, “The Impact and Potential of Blockchain on the Securities Transaction Lifecycle,” Swift Institute, May 9, 2016 (http://www.swiftinstitute.org/wp-content/uploads/2016/05/The-Impact-and-Potential-of-Blockchain-on-the-Securities-Transaction-Lifecycle_Mainelli-and-Milne-FINAL.pdf)

Changing the world will take longer . . . Among the hype, it’s often forgotten that technology alone can’t change the fundamentals. “ . . . the first idea that we (and many others) started with, appears to be wrong. This idea . . . was that private blockchains (or “shared ledgers”) could be used to directly settle the majority of payment and exchange transactions in the finance sector.”** “The harmonization and development of business process cannot be separated from the application of shared mutual distributed ledger.”* *Source: Michael Mainelli and Alistair Milne, “The Impact and Potential of Blockchain on the Securities Transaction Lifecycle,” Swift Institute, May 9, 2016 (http://www.swiftinstitute.org/wp-content/uploads/2016/05/The-Impact-and-Potential-of-Blockchain-on-the-Securities-Transaction-Lifecycle_Mainelli-and-Milne-FINAL.pdf) **Source: Gideon Greenspan, “Four Genuine Blockchain Use Cases,” CoinDesk, May 11, 2016 (http://www.coindesk.com/four-genuine-blockchain-use-cases/)

Vendor due diligence: what to ask How does your technology work, and what makes it “blockchain” or “distributed ledger”? Demand detail and clarity regarding what exists and what’s on the road map. What use cases does your solution address? Why can existing technologies not address these? At what stage of development or deployment? Do you have reference customers? How does your solution scale? Has this been proven?

A few make-or-break questions What about: Key management? Exception handling? Ensuring privacy and confidentiality? If physical and digital worlds intersect, how is the: Identity of a person or organization established in a way that satisfies governments and regulators? Integrity of the physical object ensured throughout its life cycle? Is there a dependency on the Bitcoin blockchain?

Recommendations

Recommendations Start from first principles: What needs fixing? Why hasn’t it been fixed yet? What does the new process look like, A to Z? Which pieces of the puzzle are missing? Start small, and think big in terms of: Use cases in your industry. What it means for the development of distributed computing.

Further reading “Blockchain — Don’t Believe In Miracles” Forrester report “Q&A: Forrester’s Top Five Questions About Blockchain” Forrester report Please note: Both reports contain a number of external references in the endnotes.

Q&A

Martha Bennett +44 7768 896 540 mbennett@forrester.com Twitter: @martha_bennett http://blogs.forrester.com/martha_bennett