Is Blockchain on Your Radar?
We've written about blockchain and some of its applications here. Recently, I read an article in CMSWire, by David Roe about Blockchain. He recounts the direction many ISVs are developing with blockchain and concludes that it will drive digital transformation. After five years, blockchain is not considered sufficiently mature in specific industries. However, known as the technology underpinning the digital currency bitcoin, blockchain performs new functions in the enterprise. Today, more than 40 financial institutions and a growing number of companies across industries are experimenting with distributed ledger technology.
Aside from its function in cryptocurrency, blockchain is essential for records managers to consider and understand because it has critical implications for securing and authenticating intellectual property.
While there are many ways to verify the authenticity of paper, digital assets can be problematic. As you know, digital documents can be copied over or modified unless they are stored in a system like Laserfiche.
As a solution, blockchain is a digital mechanism that enables parties who don't know each other to engage in trusted transactions with guaranteed integrity of the assets being exchanged. This is achieved by embedding authentication into the document and using a closed-loop tracking system to protect against tampering or modification. This allows people to share files and have a local copy, all of which sync. Blockchain adds code, referred to as the block, to the process. The block code is protected by secure encryption, known as a public key. The public key enables control over the information without using PII (personally identifiable information.)
Each party in a blockchain gets a copy of the document containing the embedded block. If there are changes to the document, a new block is added, and the revised file syncs. As more changes are made, new blocks are added, forming a chain. Anyone can backtrack to see all the versions of the document because each block represents a change to the record. Hence, the argument could be made that blockchain handles "versioning," therefore serving as an audit trail.
Records managers will be interested to know that blockchain has a record-keeping system that tracks changes to information assets in the chain. This system is called a ledger and is distributed to all computers in the chain. If a version of a document is added that doesn't match the signatures; it's rejected. This denial ensures against fraud.
Interestingly, a group of fintech companies accessed blockchain and published a series of maturity critiques. Overall, the areas where blockchain falls short are governance (clearly defined roles and responsibilities along with business and technical operating rules), standardization( such as STP, interoperability, and backward compatibility), and compliance (complying with regulatory requirements.)
We'll continue to watch blockchain technology and explore how it affects records management. It should prove to be interesting!