Blockchain on the backburner
Why is there so little appetite for block chain among enterprises in South Africa
In 2008, the famous whitepaper ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ was posted to the Metzdowd cryptography mailing list under the name Satoshi Nakamato. It’s been cited almost 28 000 times, which is due to the elegance of its reasoning, the simplicity of its language and the foundational part it’s played in establishing the world’s most successful blockchain. (See sidebar)
The whitepaper showed that for the first time in human history, there was now a mechanism that would allow strangers to agree on data without any intervention by a third party. And, while any party can add data, no one can change it.
A lot has happened since then. Fortunes have been won and lost; coins and chains have proliferated and there has been much work on interoperability, and still the Bitcoin blockchain endures. The Ethereum blockchain got going a couple of years later, and here there are peer-to-peer smart contracts that can be run without a middleman.
But with all this innovation, there hasn’t been any major adoption of blockchain among enterprises in South Africa. It’s not clear exactly why, because the country is seen as a leader in crypto adoption, and also has some of the world’s best minds, some of whom helped the Reserve Bank with its Project Khokha initiatives. In this experiment, the SARB and seven commercial banks ran a trial with Quorum, Ethereum’s enterprise network, and made a blockchain-based interbank system. The trial went swimmingly, but even this has not been enough to persuade anyone to put their toe in the water. But should this change, there are any number of vendors, among them IBM, Oracle, and VMware, that have been working on solutions.
Ian Jansen van Rensburg, director, solutions engineering at VMware SSA, says its blockchain solution is his company’s “best-kept secret”, and that this interview is the first time he’s ever been asked to speak about it.
Enterprise blockchains were created, he says, so that companies could secure and manage their internal data.
“Most companies have a CRM system, a central database, and all the information is stored and secured on that database. You’re only as secure as your weakest link in that environment,” he says, adding that it’s impossible to hack a blockchain because of the way it’s constructed.
“In a blockchain environment, even if ransomware is put on the chain, the chain will see that something has changed in one of the blocks and won’t replicate it. Ultimately, if it doesn’t come from a source that it trusts, it will discard that block and will fall back to the previous block. Because you can’t hack it, it provides a very secure way of replicating data among networks and companies. Traditional databases can easily be hacked.”
He mentions a recent example of a local company, which he can’t name, that had been hacked and ransomware had been installed on all its databases, encrypting all its data. “They couldn’t do anything. They had to pay the penalty, millions of rand, to unlock that data. It’s sad for a company that works hard to earn its money to have to pay thieves and criminals.”
He says if a bank were to implement an enterprise blockchain solution, it would be able to replicate its customer data to all its branches and any participating bank throughout the world. This would mean, in theory, that a transaction such as an application for a loan could be approved in minutes or seconds.
Jansen van Rensburg says that an enterprise, or permissioned blockchain, is closed and private. Once the enterprise wants to share data with other parties, it will need to use a publicly accessible blockchain. In VMware’s case, this would be Ethereum. Customers can run the VMware blockchain on vSphere, but the data doesn’t have to reside there. It can also be run on the VMware Cloud on AWS, or just from AWS if customers want to run the SaaS version.
Why hasn’t there been any adoption in South Africa?
He says the large banks still use traditional databases and mainframes for their core banking systems. Companies, meanwhile, may “play around” with blockchain in development, but the technology isn’t mainstream and isn’t being deployed.
“Maybe it’s just a maturity thing. If I ask our partners if they’re deploying or working with blockchain, they say no.”
Instead, “companies are focused on getting their multicloud strategies in place, and building private clouds and ensuring their data is secure with things like Rubric and Veeam, and properly replicated.
“Blockchain is on the backburner. It’s unfortunate because I think we can’t properly go into the fourth industrial wave without blockchain technology. It’s not possible,” he says.
I think we can’t properly go into the fourth industrial wave without blockchain technology.Ian Jansen van Rensburg, VMware SSA
“You still get banks that will take half a day to approve transactions, and you still get banks that want all your details, from scratch, when you apply for a loan. You have to enter everything, again and again. The same with cellular companies; if you apply for a new contract, you have to put all your data in every single time. It’s a schlep, and uncomfortable. We need to start implementing blockchain sooner rather than later, but people don’t like change, they’re scared of it and I think it’s the technology they’re not familiar with,” he says.
And, blockchain skills are in short supply.
“There aren’t a lot of people who have skills to deploy blockchain and run it in operations. If you’re going to put your company’s data there, it’s going to be dependent on that blockchain running well. It scares people. Then again, Bitcoin and Ethereum are running very well on public blockchains.”
In contrast, Jansen Van Rensburg says that Infosys, as well as the Central Bank of Israel, the Tel Aviv stock exchange, and the country’s finance ministry have all adopted VMware’s blockchain solution, as well as the beta version running on the Ethereum chain.
* Article first published on brainstorm.itweb.co.za