We’ve just published Splunk’s 2020 Predictions about a wide range of data technologies, from AI to virtual reality to the security threat of deepfakes. The blockchain portion discusses how distributed ledger technologies (DLTs) will break beyond the cryptocurrency realm that gets much of the coverage. Here, I thought I’d dive a little deeper into the topic.
Blockchain and other distributed ledger technologies enable parties that don’t trust each other to share data in an agreed upon and verifiable way that wasn’t possible before. Although this technology has been popularized by Bitcoin, it has applications far beyond digital currencies, and enterprises are taking notice. Until recently, organizations have been investigating and experimenting with the technology, only to realize that many of the use cases they explored are better handled by traditional database technologies. But that is changing.
In 2018, we saw that our customers were significantly increasing their understanding of where distributed ledger technology makes sense and where it doesn’t. Often they launched proofs of concept for an identified use case. Progressing to 2019, many joined consortiums around key business problems in different industries: capital markets, letters of credit in trade finance, and supply chain traceability for pharmaceuticals, aerospace and agriculture. We’re not only seeing new consortia forming, but existing consortia with production blockchains are reaping the benefits of network effects as new members join. Most of these consortiums were running pilots in 2019 and are now looking to go into production in 2020.
In 2020 some of these production projects will have failures, especially if they aren’t using Splunk to investigate, monitor, analyze and act on the data (shameless plug ;) ). The media will publish headlines about the failures. Certain CIOs will see this as a relief — an excuse not to understand this technology or come up with a game plan. Lessons will be learned from both the failures and the successes. We’re committed to helping organizations increase successes by enabling them to investigate, monitor, analyze, and act on all the data. The key to Buttercup Bucks' success was that were able to do this with data on-chain, off-chain, and cross-chain inside the Splunk platform.
Blockchain will become another piece of enterprise technology that helps an organization become more secure and efficient, even enabling new business models that grow the business or enable net-new businesses (some completely decentralized).
We still see a lot of private PoCs, often testing different blockchain technologies for the same purpose: to weigh the pros and cons. Each blockchain has varying levels of security, performance and privacy. This is one reason we predict that the future will involve more interoperability between blockchains. For example, organizations will use private or public permissioned chains with higher/cheaper transaction throughput, then anchor these transactions to a public chain that is more secure but also expensive. We did something similar at .conf19 using the xDai sidechain which is faster but arguably less secure than ethereum mainnet; however, at any point in time a bridge contract can convert the xDai to Dai on Ethereum mainnet.
It will seem counterintuitive to most CISOs and other security professionals to hear that something public is more secure. Enterprises often prefer to operate in their walled garden and at first will be skeptical of public ledgers. But this stance will change over time. It is somewhat analogous to what happened with intranets and the internet. At first, enterprises only wanted systems connected internally (intranet), but eventually realized the value in connecting to external networks (internet) as well.
Interest in blockchain has also germinated a vibrant research community that’s looking into novel cryptographic techniques such as zero-knowledge proofs, trusted computing platforms, verifiable delay functions and other innovative “cryptoeconomic” tools. As this research moves from the lab to the data center, we anticipate that these technologies will make computing more secure and private than ever before.
Security has always been a priority, but more recently privacy. Individuals aren’t in control of their data. From your healthcare data to browsing history, your data is at risk of being exposed or worse, manipulated. Regulations like GDPR are intended to help but doesn’t solve the problem. For organizations, data isn’t just an asset, it can also be a liability. Blockchain may be able to help and even enable self sovereign identity but not likely in 2020.
The Year Ahead
Getting down to specifics, in 2020, we’ll see examples of each of these:
- Increased security: In a section called “The Year of the Adversarial Attack,” our Predictions 2020 book notes that AI/ML can’t be trusted if you can’t trust the data. The integrity of data will be verified by comparing hashes on-chain before machine learning models are created or updated; similarly when automation or orchestration systems execute playbooks, they will first verify the integrity of the data before taking action.
- Increased efficiency: Production deployments will begin to demonstrate significant efficiency gains across industries and make competitors take notice. DTCC will start processing $11 trillion of credit derivatives worldwide on a blockchain built by Axoni; Walmart will continue to increase the efficiency of their supply chains; and more Hyperledger projects will graduate to production and do the same.
- Regulations: Lastly, 2020 will be a year of regulatory progress. Countries that don’t figure it out are going to be left behind; innovators and entrepreneurs will go to the countries best situated for business. China will launch their digital currency, and other countries will do the same (some already have). This will put pressure on other countries to launch their own or support something like the Libra.
It’s going to be a big year for blockchain in enterprises, but there is still a long way to go. Most use cases will be around increasing data security. In next year’s report, I expect increased efficiency use cases to dominate and potentially we will start to see some new business models because of the technology.
But let’s not get ahead of ourselves: First check out the check out the 2020 Splunk Predictions and see what else the near future holds.