Learn how IBM’s 5 Principles for Blockchain are changing businesses

Learn how IBM’s 5 Principles for Blockchain are changing businesses blog

Blockchain has been shown to deliver good and incredibly bad outcomes alike.

Just like artificial intelligence and quantum computing, in fact.

It depends, naturally, on how its utilised, and who’s accessing its capabilities.

When cryptocurrency fraudsters indulged in elaborate pump-and-dump ICO schemes, they utilised Blockchain. But when food retailers tracked and responded to salmonella outbreaks, they were also benefiting from Blockchain’s remarkable potential.

Quite obviously, the new innovations at the cutting edge of technology are ready to transform the world on a scale that’s difficult to contemplate. But to make the very most of these reforming technologies, your clients, their businesses and their customers must all be able to trust them implicitly.

And so, at IBM, we’ve set out 5 guiding principles:

  1. Open is better
  2. Permissioned doesn’t mean private
  3. Governance is a team sport
  4. Common standards are common sense
  5. Privacy is paramount

 

Open is better

To promote open innovation and ensure the overall quality of code, Blockchain networks must foster diverse communities of open source contributors and organisations. These are even more powerful when part of an open governance model working together under free licensing models such as Apache2 and MIT. Wherever possible, developers should avoid proprietary technologies in favour of open source frameworks with defined approaches for sharing contributions. When done correctly, open development increases innovation, while hastening time to maturity and decreasing cost.

Example: The Hyperledger Project, operated under The Linux Foundation, is a “greenhouse” for growing enterprise-grade Blockchain software with strong and diverse code contributors, and liberal licensing. Hyperledger recently added 45 new members and three of its 12 projects are now active.

 

Permissioned doesn’t mean private

To support an enterprise-grade platform aligned with the regulatory and fiduciary responsibilities of its participants, enterprise Blockchains must be designed around the principle of permissioned and trusted access. Though anonymous public Blockchains afford a number of powerful capabilities, they are not suitable for most enterprises, particularly those in regulated industries. Most organisations need to know who they’re conducting business with and that no illegal activity is being transacted over the network. However, this is not to say that enterprise Blockchains must be private; instead, they should be permissioned. They may be open to anyone willing to register and cryptographically validate their identity. Common identity standards can help streamline access across multiple Blockchain networks using the same set of verified credentials.

Example: Sovrin, a digital identity management network and Stellar, a decentralised global payment platform, are examples of public, yet permissioned Blockchain networks. TradeLens, a supply chain management platform built atop Hyperledger Fabric, is another example of a permissioned Blockchain that grants participants visibility into who their network peers are.

 

Governance is a team sport

To ensure that networks serve the needs of all participants and are managed in a manner reflective of each unique use case, and to prevent undue concentrations of influence, enterprise Blockchains must embrace distributed and transparent governance. Enterprises should choose a platform that automatically provides a democratic structure hardwired into the network, with privacy and permissioning features built-in. Rules governing who can join and how, should be clearly stipulated, as well as guidelines on which participants can play key roles such as ledger operators. Trust anchors, who actually run nodes in the network and participate in validating transactions, should be distributed across multiple participants. As a general rule, a trusted governance model requires at least three designated trust anchors, but networks benefit from scaling the number of ledger holders. Governance frameworks should also take into account a network’s funding model, whether it is financed by membership fees, ledger operators, or something in between.

Example: The Verified:Me identity network in Canada, convened by SecureKey Inc, has enlisted major Canadian banks to participate as trust anchors to host nodes and validate network transactions. SecureKey has created a governance model that involves ongoing checks and balances between its constituent working groups.

 

Common standards are common sense

To help future-proof networks, prevent vendor lock-in and foster a robust ecosystem of innovators, enterprise Blockchains should be architected around common standards with interoperability in mind.  Critically, this also entails interoperability of cloud platforms; vendors should meet participants where their data already is. While most Blockchain networks presently exist in siloes, it is generally accepted that the technology is evolving to support a network of networks. The first step in promoting this interoperability is to make Blockchains visible to one another through a registry, such as Hacera Unbounded. In addition, Blockchain networks should define and publish their data models and policies for change. Wherever possible, these should be built on industry standards, or leverage APIs with permissioned access.

Example: Decentralised Identity Foundation (DIF) has defined a set of specifications on how to identify organisations, people and digital assets (called DIDs) that enable entities to be identified across Blockchain (and non-Blockchain) networks. Collaboration between Hyperledger and the Enterprise Ethereum Alliance in areas like Burrow, a modular Blockchain client, and the Token Taxonomy Initiative, an effort to standardise Blockchain tokens, are fostering these linkages.

 

Privacy is paramount

To safeguard individual and corporate data on a platform that, by definition, distributes it widely across multiple nodes, participants on an enterprise Blockchain should be empowered to control who can access their data and under what circumstances. Furthermore, while no single participant “owns” a Blockchain network, the rights to the data that resides on it should always belong to the creator. Any APIs should extend the same permissioned access programmatically. Blockchain networks must also abide by privacy regulations such as GDPR. In most cases, that means any personal data should be kept off-chain.

Example: IBM Food Trust, a Blockchain network aimed at ensuring food safety, freshness and sustainability enables brands like Walmart, Carrefour and Driscoll’s to leverage shared data to enact various supply-chain efficiencies while safeguarding each member’s proprietary information.

 

The 5 Principles in action

Blockchain has already moved out beyond the technological fringe to become an essential part of successful business.

Its own success, of course, is down to those developing and bringing the technology to market. They’ve worked hard to ensure that Blockchain is now a trusted and transparent enterprise, an efficient network promoting open innovation and collaboration that ultimately delivers real business value.

Good technology is a product of more than just sheer ingenuity; it’s also a reflection of the will to do the right thing and, as innovators, to remain committed to a set of ideals.

IBM’s 5 Principles for Blockchain serve as a guide to good practice.

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