Believe it or not, blockchain is nearly 10 years old. Since 2009, the technology has acted as the digital ledger through which Bitcoin transactions pass – it’s been the critical piece of infrastructure behind the rise of cryptocurrencies.
By establishing a shared digital ledger, public blockchain technology has levelled the playing field for currency-based transactions by democratising the flow of transactions, making them visible to anyone.
However, the same technology can be deployed within a private
blockchain scenario. While more restricted in capability, this
technology can have massive benefits for Australian business.
How does private blockchain work, and how is it different from public?
In a public blockchain, anyone can read or make transactions as it is an open-source model with no centralised database or governance. New transactions are added to the existing string (the proverbial blockchain), providing a comprehensive and transparent history of all purchases and sales that every participant has read, write or audit access to.
It allows for real-time transactions, with pre-existing nodes (participants) validating credentials and balances instead of third parties like banks. It’s an autonomous, self-validating, constantly evolving chain of activity that anyone can interact with. Bitcoin is the pre-eminent example of public blockchain technology.
Private blockchain operates under the same principles as public, but with a set operator of the string and a clearly defined set of boundaries. It contains all of the self-validating benefits of the public blockchain, but retains the privacy and centralised control that people associate with traditional transactional models.
The benefits of private blockchain for Australian businesses
If a business wants to use blockchain technology, it will typically be for one of the following operations:
- Financial transactions.
- Automate record transfer, keeping and sharing.
- Vote counting (and preventing fraud in electoral processes).
Forbes reports that blockchain and biometric eyeball scanning
technologies underpin the systems that support food distribution in the
Syrian refugee crisis. While there are many
further uses of blockchain, at the core of its business functionality
is the creation of transparent, stacking “ledgers” of information. This
is where private blockchain can prove
extremely useful.
1. Security
In a private blockchain, organisations can control exactly who has read, write or audit permissions. This is critical for industries like financial and professional services, where data will often be sensitive and its release could constitute a data breach.
Restricting administrator privileges is one of the key elements in the
Australian Signals Directorate’s ‘Essential Eight’. By combining this
tactic with the shared infrastructural
benefits that blockchain offers, businesses get the best of both
worlds.
2. Automation
Because transactions are instantaneous and non-refundable, privatising
blockchain can also greatly reduce red tape when transmitting
communications or funds within a single organisation.
It’s not just the democratisation of transfers; it’s the automation of
them, too.
3. Revolution
A recent EY (a global leader in knowledge management) blockchain revolution paper notes a core problem holding public blockchain back from widespread success – identity. The lack of digital-based identity behind the blockchain means that it cannot break through current regulatory red tape.
However, if organisations can establish a clear digital identity that
people interact with through the blockchain (which is likely easier
under a private model), EY argues that this
could revolutionise financial services. Clear, realised value is no
longer relative to the blockchain – it becomes a tangible competitor to
real-world markets.
What to look out for in private blockchain
The security of private blockchain does come with certain drawbacks. In the same sense that intranet is safer but more limited than the Internet, private blockchains are unlikely to reach the operational capacity that public ones can.
On the other hand, utilising public blockchain can mean businesses are restricted in the transactions they can make, lest secure information be made public.
Overall, the benefits of blockchain technology are profound. Shared infrastructure, less red tape and the ability to control permissions – it’s the kind of infrastructure that many organisations have been waiting decades for. However, it’s important to support this new technology with the right safety protocols in place.
Want to find out more about secure information and the future of Australian businesses? Read our comprehensive cyber security eBook.
