Blockchain technology has ushered in an era of decentralization, when customers own their data and decide how to use it. In this regard, IT leaders need to rethink their strategies, writes Aviva Litan, vice president and distinguished analyst at Gartner on InformationWeek.
Blockchain is an alternative method for tracking and managing customer data. IT leaders need to know where decentralized technology is heading or they risk losing the competitive race. Just look at the latest news to see how the value of customer data has grown. Data abuse and privacy breaches are consistently referenced in many reports from tech companies, and the latter now includes new terms such as the “surveillance economy,” where customers sacrifice data privacy in exchange for “free” services. … To combat this phenomenon, a number of legislation has been enacted, such as the California User Data Protection Act, which gives consumers the right to request information from suppliers about what data is collected about them and to attempt to prohibit its sale. Technological solutions such as blockchain, which have achieved some success in recent years, including in the field of data transparency, are less often discussed in specialized circles, but interest in them is constantly riveted.
As defined by Gartner, “a blockchain is a regularly updated list of irrevocable cryptographically signed transaction records that all network participants have access to.” Since these timestamped records are decentralized and immediately duplicated by all parties involved, it is exponentially harder to hack the blockchain. It is also more transparent: anyone with access rights can learn about a transactional event at any time in its history. For enterprises, centralizing customer data is a security threat and a single point of failure. It also imposes constraints on the introduction of new business models and customer development dynamics. At the same time, blockchain provides immutability and traceability of records without the need for centralized management. This can help you implement alternative methods for tracking and managing specific customer data.
This is especially important when the costs of adding data sources and the associated increased liabilities outweigh the benefits. With the explosive growth in the use of customer data in emerging technologies such as AI and IoT, transparency is becoming extremely important for customers. If the blockchain itself has reached a certain maturity threshold, then the UX / UI technologies that support it are in their infancy. Soon they will start a war, much like the war of standards that led to today’s Internet standards. According to Gartner, by 2024, 30% of sensitive personal data of customers will be protected by licenses based on blockchain technology. Blockchain-based UX / UI principles will benefit both customers and businesses.
The market needs atomic compatibility
Many organizations have come to the conclusion that blockchain can revolutionize economic and social interactions and ultimately become the backbone of a digital society. However, a number of fundamental problems need to be addressed first. The point is that before they can apply blockchain, they need to choose the right platform, the right smart contract language, the right system interfaces, and not worry about algorithm compatibility. In other words, the times when the blockchain can operate smoothly at the “atomic” level has not yet arrived.
Furthermore, it lacks cross-functionality (interaction between two relatively independent blockchains) where a smart contract can update multiple blockchain platforms with a single process. All this innovation and standardization will take at least three years.
There are some precautions to be taken when working with blockchain. Before giving preference to one or another type of smart contracts, you should think about security and risk management, since damage caused by accident (due to errors in the code) or deliberately (intruders) cannot be “canceled”, transactions on the blockchain, as already mentioned, are unchanged.
The need to attract competitors
As of the beginning of the year, most blockchain platforms only include three full cycle elements: distribution, encryption, and immutability. Often these proposals are aimed at improving efficiency by optimizing existing processes. According to Gartner, most blockchain platform owners do not want to partner with competitors, but maintain close ties with select vendors and partners.
Gartner has identified over 60 public blockchain initiatives. Their authors are blockchain consortia from all over the world, open for collaboration. These include banks, medical organizations, energy, transport, logistics, insurance and utilities companies, as well as educational institutions. According to analysts, in 2023