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Mention Blockchain and most people’s minds jump straight to cryptocurrencies. In many cases, the second thought that comes to mind is massive resource requirements. Cryptocurrencies are built on top of blockchains – and it is the mining activity to solve the meaningless mathematical equations that lead to cryptocurrencies being so resource-intensive. In my mind, MSPs should avoid cryptocurrencies as much as they possibly can. Yet, there may be more use for a Blockchain type approach for MSPs, for example, using distributed ledgers.

First, we need to look at what a distributed ledger is. Essentially, it provides a decentralised and fully auditable means of showing proof that transactions have occurred. No one entity has control of the entries in the ledger, and as such, fraudulent use is very difficult to carry out.

(Yes, I know that fraud is rife in the cryptocurrency world, but that is attributed to the use of anonymous Wallets, not the underlying distributed ledger).

False transaction attempts can and will be traced

With a distributed ledger, multiple master nodes situated across a system, or set of systems, hold copies of the transactions that have been carried out across that ledger (or, indeed, many ledgers if it is set up as multi-tenanted system). Any attempt to inject a false transaction can be traced from any node to where it initiated, thereby enabling the malicious entity to be rapidly and easily identified. Indeed, most fraudulent entries can be prevented before they reach the master nodes. Along with this, any changes to the transaction or attempts to tamper with it or its metadata are also logged. In essence, anyone with access to the distributed ledger can run off a report on what actions have been carried out or attempted against any transaction, or any object associated with that transaction.

Eventual consistency model

The system works on an ‘eventual consistency’ model.  The idea is not to clog up the system with real-time synchronisation between master nodes, but to work towards a level of consistency over periods of time. This may seem as if it could lead to issues of inconsistent data being held across an overall platform, but the use of ‘proof of work’ and ‘proof of stake’ approaches provides accuracy and strong capabilities around maintaining system consistency.

Now, how does this play for an MSP?

Many organisations will have the need to hold unchangeable records of certain transactions and items – maybe legal documents such as merger and acquisition documents, patent applications, registered trade/service marks and so on. Also, contractual exchanges between parties may come down to legal arguments over whether the metadata around electronic copies can be trusted by one party if things go sour. Holding these documents within their own environment with timestamps may be ‘good enough’, but extra layers of capabilities could be very useful in many cases.

Other uses that are already out there in the real world include the tracking of blood-free diamonds, high-value goods such as antiques, fine art, and luxury goods. Everledger is behind some of the most forward-looking solutions in these sectors – for example, using laser engraving of serial numbers on diamonds that are then registered into its distributed ledger, which guarantees quality, source, and full audit.

The needs of a supply chain can also be covered by a distributed ledger. Again, items being moved across the supply chain can be marked and registered into a distributed ledger and then tracked and verified as necessary. Within areas such as aerospace and nuclear physics, where fraud is common, and outcomes can be catastrophic, such solutions can be extremely valuable to all concerned.

Creating distributed ledgers will lead to fraud prevention

For the MSP, providing distributed ledger services can be profitable. Holding a master node within your own environment and combining this with other nodes within your customer’s environment provides a third-party proof of veracity that can be appreciated by anyone then dealing with your customer. Indeed, taking a highly standardised distributed ledger, such as Hyperledger, and teaming up with other MSPs to create a highly distributed ledger fabric then allows for a highly secure, highly auditable set of transactional logging capabilities that creates value across the board.

By creating a distributed ledger across multiple semi-independent bodies (such as MSPs), the overall fabric becomes completely independent: the nature of the distributed ledger prevents fraud and changes of data while also removing the concept of ownership of the platform itself.

Modern distributed ledgers aren’t such a bad thing

Sure – the MSP has work to do in controlling access to the various aspects of the distributed ledger. Not everyone should have total transparency in seeing the fine detail of every transaction, and if this is going to be a multi-tenanted distributed ledger, then whole transactional processes, data, and metadata will need to be hidden from other groups.  With modern distributed ledgers, this should not be an onerous task, though: the main job will likely be sitting down with the customer and others within the complete transaction chain and agreeing to policies and access across the platform over which the transactions around the combined constituents are being monitored and controlled.

So, for MSPs looking for a different means of providing security and auditability to customers, maybe looking further into distributed ledgers (while avoiding anything to do with cryptocurrencies) may not be a bad idea.

Photo: Production Perig / Shutterstock

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Clive Longbottom

Posted by Clive Longbottom

Clive Longbottom is a UK-based independent commentator on the impact of technology on organizations and was a co-founder and service director at Quocirca. He has also been an ITC industry analyst for more than 20 years.

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