Blockchain networks are not only not truth machines, they are also a "trade-off game", so in order to make them work, CIOs need to have a high degree of awareness of them. Namely, Forrester Research’s recent (and updated) report “CIO’s Guidance on the Six Most Common Blockchain Technology Myths.”
The report, written by Martha Bennett, a blockchain and business intelligence expert and analyst in Forrester Research’s CIO Practice, explains common misconceptions about blockchain-based networks, including concerns about immutability, decentralization advocacy and transparency. This article ends with some common-sense suggestions for CIOs to control the direction of blockchain hype.
The article points out that this is indeed hype. Because blockchain is a distributed ledger technology used to maintain tamper-proof records of transaction data, it has been hailed as a revolutionary force that will revolutionize everything from banking to healthcare to the seafood industry.
The main attraction of blockchain networks is their inherent ability to prevent fraud and ensure the provenance of goods, digital and physical. To a certain extent, this main requirement for reputation is correct, as Bennett said: Blockchain transactions are difficult to mix up, and even if they are mixed up, everyone can easily detect them; in addition, blockchain transactions The "traceability" of the network may also act as a deterrent, she added. But blockchain is not a truth machine.
“Just because it’s on the blockchain doesn’t mean it’s correct. If someone makes a false claim or issues a false certificate or prescription and enters it into a blockchain In a chain-based system, then it’s still fraudulent or if someone registers a property title but the system can’t tell if that’s the legal owner,” Bennett asserted.
Blockchain technology has been touted as having the ability to ensure consumers buy exactly what suppliers say they are buying, but Bennett believes this is also a fallacy. Ensuring the provenance of physical objects cannot be accomplished by the blockchain alone. It also requires “off-chain” mechanisms to cooperate with regulatory and law enforcement measures: “As long as the motivation for fraud is greater than the possibility of being caught, let alone punishment, blockchain technology-based The network can’t provide proof that your tuna is wild or your coffee is organic.” In fact, Bennett said, there are many things that will make blockchain networks transformative for consumers and businesses. Mechanisms and policies have yet to be designed, and this will require unprecedented collaboration and consultation between the public and private sectors and industry.
Her main advice to CIOs is that blockchain-based networks in the enterprise will involve trade-offs. A compromise will arise between the transparency of blockchain and the need for businesses to limit the visibility of certain data, namely that participants in a blockchain network will have to create data that meets confidentiality requirements but ensure that data is not open to everyone. of information remains a valid governance model.
Another piece of advice that won’t surprise CIOs is this: The technology will be ready long before businesses, governments and regulators catch up. Ultimately, as with many automation technologies, the focus right now is on figuring out how blockchain networks can improve existing business processes. In the future, the real value of using blockchain technology will be to completely reinvent business.
