Blockchain for Decision Makers

A systematic guide to using blockchain for improving your business

Romain Tormen

• Publisher: Packt Publishing
• Year: 2019
• ISBN:
  9781838554064
• Edition: 1
• Topic: Computer Science
• Subtopic: Cryptography
• Index: Computer Science

Understand how blockchain works and explore a variety of strategies to implement it in your organization effectively

Key Features

• Become familiar with business challenges faced by companies when using blockchain
• Discover how companies implement blockchain to monetize and secure their data
• Study real-world examples to understand blockchain and its use in organizations

Book Description

In addition to cryptocurrencies, blockchain-based apps are being developed in different industries such as banking, supply chain, and healthcare to achieve digital transformation and enhance user experience. Blockchain is not only about Bitcoin or cryptocurrencies, but also about different technologies such as peer-to-peer networks, consensus mechanisms, and cryptography. These technologies together help sustain trustless environments in which digital value can be transferred between individuals without intermediaries.

This book will help you understand the basics of blockchain such as consensus protocols, decentralized applications, and tokenization. You'll focus on how blockchain is used today in different industries and the technological challenges faced while implementing a blockchain strategy. The book also enables you, as a decision maker, to understand blockchain from a technical perspective and evaluate its applicability in your business. Finally, you'll get to grips with blockchain frameworks such as Hyperledger and Quorum and their usability.

By the end of this book, you'll have learned about the current use cases of blockchain and be able to implement a blockchain strategy on your own.

What you will learn

• Become well-versed with how blockchain works
• Understand the difference between blockchain and Bitcoin
• Learn how blockchain is being used in different industry verticals such as finance and retail
• Delve into the technological and organizational challenges of implementing blockchain
• Explore the possibilities that blockchain can unlock for decision makers
• Choose a blockchain framework best suited for your projects from options such as Ethereum and Hyperledger Fabric

Who this book is for

This book is for CXOs, business professionals, organization leaders, decision makers, technology enthusiasts, and managers who wish to understand how blockchain is implemented in different organizations, its impact, and how it can be customized according to business needs. Prior experience with blockchain is not required.

Section 1: A First Step into Blockchain and an Exciting World

This section provides an explanation and illustration of blockchain, a description of the components of blockchain, and a true understanding of how it works.

This section comprises of the following chapters:

• Chapter 1, Basics of Blockchain and the Illustration of Village Beta
• Chapter 2, A Technical Dive into Blockchain
• Chapter 3, Ethereum and Smart Contracts
• Chapter 4, ICOs and Tokenized Fundraising Methods

Basics of Blockchains and the Illustration of Village Beta

Blockchain has been pushed into the limelight by a new and controversial form of digital currency called Bitcoin. The success stories of early Bitcoin investors and the launch of Ethereum, a platform allowing the creation of decentralized applications, brought blockchain and cryptocurrencies to the frontier where decision-makers and executives started to pay attention to this emerging piece of technology. Many curious persons began to wonder how it could help them in their personal or professional enterprises, leading them to believe that this innovation could be an appropriate answer to their business issues. The Economist, on October 31, 2015, published the first well-known article about blockchain (https://www.economist.com/printedition/covers/2015-10-29/ap-e-eu-la-me-na-uk).

As a decision-maker, being educated enough about new technologies and innovations is paramount for your company to explore and experiment with emerging enablers that will bring competitive advantages and help you to reach a steady growth. Being able to thrive in the digital age is more and more a necessity and a complex task, especially because technological breakthroughs and mass innovation trigger a sharp shift in people's consumption habits, as well as geopolitical challenges and economic changes. Being able to consider, evaluate, and incorporate new technologies to tackle your company's business goals has become critical.

With that in mind, you should be aware that blockchain has the potential to be a paradigm shift that can redesign how organizations operate and how value is shared between economic actors. This disruptive technology is said to change how the world works, how entire industries function, and how value is being exchanged and secured. But, as promising as it is, you must act with caution. We are at the dawn of what blockchain can achieve and it is not a hundred percent mature—it's still being considered an emerging technology.

Throughout this chapter, we will consider an illustration of a blockchain application that will help you to picture and grasp the concepts with ease. By the end of this chapter, you should be able to understand the usability of a blockchain in certain environments and conditions, especially when it comes to exchanging value directly between individuals. You should be able to explain basically how a blockchain works, what are its inner characteristics, and how Bitcoin operates without any central authority.

This chapter includes the following sections:

• The significance of blockchain in the business world
• Understanding blockchains
• Breaking down blockchains

The significance of blockchain in the business world

The latest Gartner's Hype Cycle, published on August 20, 2018, shows how far blockchain is from massive adoption: 5 to 10 years (https://www.gartner.com/en/newsroom/press-releases/2018-08-20-gartner-identifies-five-emerging-technology-trends-that-will-blur-the-lines-between-human-and-machine).

The Gartner's Hype Cycle is a visual graphical representation of emerging technologies' maturity and adoption. It is an annual report published by Gartner, an information technology research and consultancy firm.

As stated by Gartner, blockchain has shown many great stories and successful proof of concepts propelled by a wide media coverage and publicity, but still faces many failures and scalability issues. Some products have seen the light, with a real impact on economy and society (Bitcoin and Ethereum are the most well-known) but the mainstream adoption and broad market applicability (the so-called plateau of productivity) will be reached only if products are sustained with large investments and the technology is understood more and more.

According to PwC's 2018 Global Blockchain Survey, 84% of C-level executives report that their organization already has involvement with blockchain technology, but more than 65% of them have not pulled through the pilot stage yet.

The PwC 2018 Global Blockchain Survey was fielded between April and May 2018, surveying 600 executives with technology responsibilities over 15 countries. More than a third of the respondents work in organizations with revenues of $1 billion or greater.

There is a significant misunderstanding around the concept behind blockchain and its applicability within the business world. Cryptocurrencies and blockchain's recent hype makes executives assume that it stands as an answer to every business challenge. In fact, blockchain has to be considered as a layer for securitizing transactions and ensuring transparency of information and authentication of stakeholders in a decentralized environment. Blockchain is often seen as a difficult notion to grasp, especially for non-tech people. This book will help you to identify, as a decision-maker, the opportunities offered by blockchain for you to understand its applicability and ultimately give you the keys for initiating a blockchain project.

Understanding blockchains

Before diving instantly into the technical part, which will be covered in Chapter 2, A Technical Dive into Blockchain, you should first have an overview of what a blockchain is. If you have already read or heard about the topic, you might have figured out that it is appropriate for any use case relying on trust being ensured by a third party and where value is exchanged between different stakeholders. With the help of a simple example taken from an imaginary situation, the following sections will hopefully unravel the things you might have been confused about and the things you are eager to understand.

Using centralized ledger systems

Imagine a village of 20 people living on an island in the middle of the ocean, without connection to any other tribes or countries. We will call this village, Village Alpha. They live a peaceful life in a resourceful environment where no one lacks anything.

Question: How do the people of Village Alpha exchange and trade goods and services between each other?

Avoiding the downsides of bartering, they invent a gold-minted coin, a form of money similar to a dollar bill in today's economy. Because this coin is portable and easy to identify and has a value in the eyes of all of the villagers, it quickly becomes the principal means of payment within the community. To ensure proper trade between each other, they record every exchange in a ledger and appoint one of them as the referring bookkeeper to maintain its accuracy and authenticity. The appointed bookkeeper is rewarded for his/her integrity and honesty by collecting a fee on every transaction.

And that's it! People can buy and sell goods with their gold-minted coins. The truth is ensured by the bookkeeper who keeps the ledger up to date, incentivized to behave fairly by levying fees on transactions. Anyone can challenge him/her by checking the transactions to ascertain proper recording.

The villagers found a solution to their problem, unknowingly inventing the banking system that prevails nowadays.

To keep it simple, I deliberately omitted talk about savings, securities, or gold reserves that are additional components of the nowadays banking system but that are off-topic in our example.

Now, let's assume that the bookkeeper is dishonest. Imagine he/she modifies the ledger during the night and erases some transactions or adds new ones? What if he/she destroys the ledger?

You can see that this system has its shortcomings. The villagers are currently using what we call a centralized payment system where everyone relies ...

Table of contents

• Title Page
• Copyright and Credits
• About Packt
• Contributors
• Preface
• Section 1: A First Step into Blockchain and an Exciting World
• Basics of Blockchains and the Illustration of Village Beta
• A Technical Dive into Blockchain
• Ethereum and Smart Contracts
• ICOs and Tokenized Fundraising Methods
• Section 2: Blockchain in Practice, Insights, and Achievements
• An Economic and Historical Approach of Blockchain
• Blockchain Legality, Compliance, and Regulation
• Blockchain for the Business World and Achievements
• Future Outlook for Blockchain
• Section 3: Blockchain for Business Leaders
• Infrastructures and Cloud-Based Solutions
• Defining Your Needs
• Other Books You May Enjoy