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Why Blockchain matters

With Blockchain creating waves in the banking industry, business transformation solutions provider, Ovations, is looking into who it will affect the most as well as the opportunities it presents for the market as a whole.

Blockchain is the open, secure and distributed database that powers the more infamous cryptocurrency BitCoin. Craig Leppan, Director of Business Development at Ovations says that Blockchain is in short a public ledger of transactions and can best be described as a massive distributed Google spreadsheet, on which participating users are constantly looking to add entries about a consistent set of transactions, but that can't be tampered with, even by its administrator.

Its reputation for being disruptive is hinged on its ability to create cryptocurrencies, particularly due to the anonymous nature of the participants behind the transactions. While popular thinking is that it is just for building payment systems, Leppan says that there are a host of non-currency applications that can be built making use of the open nature of the Blockchain system.

"The cryptography and security behind it are complex, but the key thing is that the ‘spreadsheet' is copied and held by all users working with it. What this means is that no one owns it but they all contribute to the updates. No one user can bring it down or add to it unilaterally, it's a consensus system built on creating new rows in the spreadsheet or "blocks" necessary in the on-going "chain" of transactions," says Leppan.

The Trust Machine

It was recently described in a cover story of the Economist magazine as the "Trust Machine", an apt term for the underlying value that the Blockchain system provides. However, in this descriptor lies the threat it poses to third parties that are currently providing the self-same services.

"Several banking and card associations may view Blockchain as an attack on the central nature of their clearing and settlement operations. The bigger concerns also come from Reserve Banks who see it as breaking the financial controls of cross border payments, and this has led to many banks staying clear of embracing it," adds Leppan.

Trusted Third Parties

Trusted third parties come in many shapes and forms, and not just as financial Institutions. In fact a Deeds Office, Shares and Trading desks, as well as anyone who holds a record of ownership on your behalf qualifies. Generally, a third party will be guarding their central private ledgers of users' transactions and the fees associated with providing that service.

The Blockchain system allows the open and distributed nature of the Internet to take the place of those third parties, allowing the participants and the shared ownership of the "block" to determine when value or records have changed between parties.

Designed to solve the problem of digital cash, the underlying deterministic properties of the chain and the transfer of records between participants, means that the applications it can be used for are far broader than just payments and currencies.

"Blockchain is today being used in a myriad of interesting applications, as it is able to guarantee digital ownership as well as transfer content without the duplication of the content associated with Internet sharing. The more we embrace the openness of new technologies like Blockchain, the bigger the business opportunity for all, but for many companies they still need to get past the traditional concept of data ownership," ends Leppan.

Ovations

Using the right combination of people, process and technology remains the Ovations approach to the fast-changing information technology and business landscape. Ovations has helped many of South Africa's largest organisations to achieve sustainable business improvement through this unique approach. Its model is based on building long-term relationships with its clients, as well as with partners who are not just along for the ride, but shape the journey using technologies that create real experiences. Ovations consultants are capable of working both in advisory and execution roles, from strategy through to delivery as well as supporting these solutions post implementation.

Ovations' key focus areas include: Business Process Management, Enterprise Content Management, Integration, Architecture (Enterprise and Solution), and Business Consulting. These are further complemented by its Service Delivery Practice; its OneStream Case Management solution; the Ovations Academy and its innovative new Digital Practice.

 

Editorial contacts

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Charlene Carroll
(+27) 11 314 2533
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