By Tom Haunert
The newness of blockchain and its potential contributions to enterprise technology have a lot of people asking a lot of questions about when, why, and how to use it.
Oracle Magazine sat down with Mark Rakhmilevich, blockchain product management director at Oracle, to talk about blockchain technology, blockchain for the enterprise, blockchain challenges, and blockchain strategies from Oracle.
Oracle Magazine: What is blockchain?
Rakhmilevich: At a high level, blockchain is a distributed system for conducting transactions, including business-to-business transactions and business-to-consumer transactions, and for maintaining distributed ledgers across multiple organizations.
Blockchain helps multiple organizations conduct business securely without requiring an intermediary. It helps to enable trust because all the transactions in the blockchain can be easily tracked and provide an immutable trail of what happened, when, and how.
Oracle Magazine: What types of business and development challenges does blockchain address?
Rakhmilevich: Many organizations face the challenge of reconciling ERP [enterprise resource planning] discrepancies between multiple internal systems or across their partner ecosystems. When people extract data from systems of record—databases or ERP systems, for example—into batch files or spreadsheets, and send those around and then get updates back, the processes involve delays, potential for human error, and risk of fraud. And when an audit attempts to validate the accuracy and sourcing for all of the data, there are significant challenges to finding and proving data lineage.
Using blockchain instead to automate those kinds of processes and share data in real time is one area where many businesses can benefit. Fraud, settlement time, cost, and complexity can be reduced and businesses can get real-time visibility of information across the ecosystem.
There are a variety of uses for blockchain across a variety of industries. I’ll highlight four high-level blockchain design patterns with applications in different industries. The first one is using blockchain to enable distributed autonomous marketplaces where people exchange things of value. Cryptocurrency is an example, but there could be other things of value being traded, whether they’re physical goods or digital goods of some sort.
The second design pattern is using blockchain to reduce friction in business transactions and to support reconciliation where you have complex multiparty ecosystems, such as a supply chain. Blockchain helps to automate processes and reduces transaction friction.
The third design pattern uses blockchain to help publish information securely, whether it’s from government entities or other organizations. It could be business licenses, land titles, university diplomas, birth certificates, electronic health or vaccination records, or any other kind of information where people would benefit from being able to access it in real time in a secure manner. When information is published in a blockchain, access to the information requires authorization. And authorization to access a particular part of that information can be granted to a particular entity, and that grant itself can be securely recorded on the blockchain for nonrepudiation.
And the fourth design pattern is what’s called track and trace, where the organization can track the provenance of products and materials and ingredients, whether it’s a manufacturing environment or a retail supply chain.
Oracle Magazine: What are some specific business and industry use cases for blockchain?
Rakhmilevich: In financial services, for example, a lot of communication and work is required to handle different types of payments and remittances, such as interbank, cross-border remittances, B2B payments between companies, and national fund transfers between different financial institutions within a country. Blockchain-based systems can simplify many of these operations, bypass centralized intermediaries, and automate some of the manual processes.
When information is published in a blockchain, access to the information requires authorization.”
Securitization processes, where you take a bunch of mortgages or other loans and create a security out of them, could benefit from blockchain. All of the loan information is often collected in a spreadsheet that is floating back and forth in an unaudited manner between the participants until the value of the security gets finalized. Blockchain could automate that process and provide a lot more security and visibility around it. And it could even track the changing value of the security in real time as underlying loan payments are recorded.
In the retail space, there’s a lot of interest in blockchain. Earlier, I mentioned track-and-trace capabilities. This could be, for example, a farm-to-table kind of a food provenance tracking, where you have information on the participants from the initial farm, as well as the processing steps, the ingredients used in the final product, the country of origin, and so on, and all of the information could be accessible to the final consumer. And in warranty management, where you have the retailer, the manufacturer, and the customer involved, blockchain could help provide and automate the processes in a trusted manner. Refunds management and multibrand loyalty points tracking could also leverage blockchain.
Multiple companies are involved in clinical drug trials and need to collect and secure a variety of information and flow it back to the original pharmaceutical companies in a trusted manner. Blockchain can be a valuable solution for these transactions and speed up the data collection process.
And there are significant problems with counterfeit pharmaceuticals, particularly in the developing world where up to 30 percent of drugs in a supply chain might be counterfeit. Using blockchain to track pharmaceuticals from manufacturing to distribution to patients can help there as well as in the broader healthcare industry.
Those are just some examples.
Oracle Magazine: How do companies looking to develop and deploy blockchain solutions get started? What do they look for in tools, platforms, technologies, and so on?
Rakhmilevich: First of all, businesses are looking for enterprise-grade platforms. They want to be able to tick off all of the difficult enterprise checkboxes in terms of requirements, resiliency, security, recoverability, and so on—once. They’re going to use blockchain in business-critical processes, so the foundation platform has to provide those capabilities while at the same time supporting rapid experimentation with multiple use cases—through rapid provisioning, dynamic configuration, fast onboarding of members, and easy development of smart contracts.
And businesses look for integration requirements. Does a blockchain solution require the business to build one-off integrations, or are there tools, APIs, and capabilities available or built-in on-ramps in the applications to make it easier to include blockchain? Obviously, for broader adoption you can’t afford to depend on one-off integrations.
As many as 2,500 patents have been filed for blockchain technology in the last two or three years, according to some reports. Many of those patents have been finding their way into implementation. Where there is a rapid evolution of the technology, such as with blockchain, as businesses adopt and update new solutions they are going to want backward compatibility and confidence that the work they have put into integration and deployment does not need to be redone. That work takes time and money.
Oracle Blockchain Cloud Service is built on the Linux Foundation’s Hyperledger Fabric project.”
IT monitoring, service-level monitoring, and lifecycle management tools are important in blockchain solutions. The ability to monitor the status and dynamically change the configuration as the requirements change is important as well.
Underlying all of that, people are looking at performance and scalability. Enterprise customers are looking for hundreds and maybe thousands of transactions per second. Security and confidentiality are big requirements as well. Businesses need to know that they can control the data that’s going to be accessible to others and can determine who can see what.
Oracle Magazine: How does Oracle support blockchain?
Rakhmilevich: Oracle has built Oracle Blockchain Cloud Service as part of Oracle Cloud Platform. Oracle Blockchain Cloud Service is built on the Linux Foundation’s Hyperledger Fabric project, and it includes a lot of enhancements that focus on the blockchain strategies and business requirements I mentioned earlier.
With Oracle Blockchain Cloud Service, you don’t have to spend months building and integrating all of the key technologies, examining the enterprise requirements, and so on. You can get the service and all of its dependencies provisioned in less than 30 minutes and be up and running.
Learn more about the Oracle Blockchain Cloud Service.
READ more about blockchain.
READ “It’s All About Trust.”
EXPLORE Oracle Blockchain Cloud Service.
Photography by Bob Adler/The Verbatim Agency