DLT4EU – another Horizon 2020-funded project – is an accelerator in its own right that Digital Catapult is itself accelerating. The agency forms part of a community of beneficiaries, advisors, and investors aiming to showcase the value of DLT for public sector applications across Europe. Its main focuses are driving the “circular economy” through applications like supply chain traceability, and digital citizenship through blockchain-assisted land registration and voting.
Alongside this grant-funded work, Digital Catapult runs a commercial programme called “DLT Field Labs”. The organisation invites large companies from “traditional sectors” that are critical to the UK’s economy, such as nuclear, oil and gas and construction, to “come together with a willingness to explore DLT to solve issues within their sector”.
“We take them through a structured series of investigations to identify where DLT is best applied, and introduce them to best-in-class UK DLT companies,” explains Robert. “The final stage is to have these DLT companies tailor their solutions to meet industry needs, and see these tested in the real world.”
Slow and steady
One of the biggest differences between blockchain and other disruptive technologies like AI – and why progress in the area is a marathon and not a sprint – is that blockchain is not a tool that can simply be bolted on to existing digital infrastructure. Genuine use cases necessarily encompass multiple stakeholders. Therefore, to unlock its real potential organisations must harmonise infrastructure with others. Robert says companies need to “collectively tip their toes in the water”. Single-party blockchain pilots, he adds, are “just sexier databases”.
“The fundamental problem is that DLT asks organisations to think about new ways of sharing data and aligning processes, to share common digital infrastructure,” says Robert. “This is a huge challenge in many traditional industries, particularly those who are under-digitised, or those who have been sold the fantasy that their data is gold and needs to be hoarded.”
This is why Digital Catapult’s blockchain programme is very much a “long-term play”, something which is a hard sell in our ultra-competitive tech economy. “I would say that success stories are still rather sparse and mainly focused in the FinTech sector,” admits Rob. “I hope this will change over the next few years, and that we can play a part in that change.”
Counting the costs
One of the loudest criticisms increasingly thrown in the direction of blockchain is that it is just an overly complex and expensive database.
In the banking sector, for instance, blockchain advocates have long-claimed the technology has the potential to be cheaper and faster than current settlement mechanisms. But in May last year, the president of Germany’s central bank president said it had rested a multi-year trial project using blockchain to transfer and settle securities and cash, as it “proved more costly and less speedy than the traditional way”.
Another problem is that blockchain vendors are often guilty of providing a solution to a problem that doesn’t exist.
“Byzantine fault tolerance” is a characteristic that distributed networks like blockchain have to satisfy to maintain reliable records of transactions in a transparent, tamper-proof way. There are different ways blockchain networks attempt to satisfy this requirement. Bitcoin requires a computer-intensive Proof of Work model. A less-intensive (but also less secure approach) is a majority or multi-party consensus. The problem is that even if some use cases don’t require bulky or elaborate consensus mechanisms, companies can fall victim of being convinced that they are necessary:
“You could be right to say that blockchain/DLT is just a glorified database if used incorrectly. Many use cases out there won’t ever require Byzantine Fault Tolerant multi-party consensus. But for the ones that do, it’s absolutely critical. And part of our duty as a community is to correctly identify those use cases, call out bad actors or inappropriate applications, and to scream our successes from the rooftops.”
At Blockchain Technology World, taking place at the ExCeL London 11-12 March, Robert will discuss the state of the blockchain sector in the UK and the issues slowing the adoption of blockchain/DLT beyond the financial sector. His message to attendees is straightforward. “Don’t be afraid to experiment, but make sure you do it in the right way”.
“Begin by sitting across the table with your friends (or enemies) and you’ll soon find that the blockchain industry has some very inventive thoughts about future trusted infrastructure, and techniques for sharing and learning from private encrypted data are just around the corner. Private, in-house experiments may as well just use databases — and don’t be afraid to share your experiences in public.”