Bitcoin infrastructure for Enterprise solutions in Blockchain world

 

Bitcoin infrastructure for Enterprise solutions in Blockchain world

 Main Topics Covered :

Ø Bitcoin Vs. Bitcoin Blockchain  

Ø Why Bitcoin’s slow adoption in Mainstream consumers or business adoption? 

Ø Why the bitcoin blockchain is not yet suitable for institutional financial transactions?

 

Ø Can financial institutions enjoy the benefits of Bitcoin infrastructure (Bitcoin blockchains) without suffering from the problems of bitcoin itself?

 

Ø Multiple Enterprise Use-Cases of Multiplechain Framework (Bitcoin infrastructure)

  

Why Bitcoin’s slow adoption in Mainstream consumers or business adoption?

 

Bitcoin is getting popular day by day as a cheap, rapid and reliable method for moving economic values across the crypto economics in the world in a peer to peer manner. Bitcoin network has been operating continuously and smoothly for over more than 9 years. Inspite of losses and thefts of bitcoins belonging to individual holders, the network itself has never been attacked or hacked. 

 

Despite many technical achievements, Bitcoin is still far from reaching mainstream consumer or business adoption.

 

Possible reasons for bitcoin’s slow adoption :

 

Ø  End user’s satisfaction with existing payment systems,

Ø  Practically difficult to purchase bitcoins,

Ø  Volatility of bitcoin’s value as compared to government issued currencies,

Ø  Perception of community that bitcoin is insecure,

Ø  Question over legal status,

Ø  Lack of support for bitcoin in the mainstream financial sector,

Ø  Irreversible and unforgiving nature of bitcoin transactions

  

Bitcoin Vs Bitcoin’s infrastructure (Bitcoin Blockchain) :

 

Though slow adoption by the mainstream consumers, many experts are of the opinion that bitcoin may be helpful to improve internal processes within the traditional financial sector, by lowering costs, reducing settlement times and eliminating intermediaries.One immediate theoretical perception is to use bitcoin as a currency and technology as solution for rapid interbank settlement. But volatility in the price/value of bitcoin relative to the government issued currencies renders it non feasible in practice. More promising use of bitcoin’s infrastructure (Bitcoin blockchain) to transact assets is one interesting field to explore in future for enterprise solutions. 

  

Why the bitcoin blockchain is not yet suitable for Institutional financial transactions?

 

This problem can be divided in to two parts :

 

Ø  First part belongs to scalability and cost

 

Ø  Second part belongs to Privacy & Security

 

 

Part one problems :

 

Limited capacity of blocksize in the bitcoin blockchain which further limits the processing of number of transactions.

 

Transaction cost : It is high to the extent of app.  $250 per bitcoin, though it is optional to pay but approval of transaction may get delayed.

 

Irrelevant data : Every new bitcoin node has to download, verify and store the entire history of all bitcoin transactions which are of no interest to Institutions deploying over the bitcoin network.

  

Second part problems :

 

Privacy and security :

 

Ø  Mining risks

Ø  Lack of privacy

Ø  Openness

 

Mining is an open global race and suitable for decentralized type of network which entails several risks to institutional users :

Mining risks : 

·       Unpredictable delay for transaction confirmation;

·       The risk of refusing transaction confirmation by miners due to ideological or economic reasons;

·       The potential for a 51% attack, though chances of such an attack is minimal but financial institutions don’t want to take risk.

  

Lack of privacy :

 

Financial Institutions avoid to use bitcoin blockchain due to their risk exposability to privacy. Due to transparency designed fundamentally in bitcoin blockchain, anyone can see the transactions through the blockchain explorers anywhere in the world.

 

Openness :

 

Anyone with an internet connection can transact on the bitcoin blockchain with any participant without disclosing identities which stops financial institutions due to lack in KYC requirements which is the huge burden on financial institutions to comply with various laws enacted for KYC.

  

Can financial institutions enjoy the benefits of Bitcoin infrastructure (Bitcoin blockchains) without suffering from the problems of bitcoin itself?

 

Research resulted in favour of using the bitcoin infrastructure in form of private blockchains with closed loop in decentralized network to a certain extent which is possible with the framework of Multichain. 

 

MultiChain is  an off the shelf platform for the creation and deployment of private blockchains, either within or between organizations. It is derived from the Bitcoin core software. It supports Windows, Linux and Mac servers. It provides API and command line interface.

 

Multichain framework allows set up of private blockchains which overcome the problems of :

 

Privacy, Openness, Mining, Scalability, Irrelevant data, Transactions confirmation period, Transaction cost, etc.

 

  

There are multiple enterprise Use-Cases of Multichain-framework : 

 

Enterprise Use-Cases of Multichain-framework :

 Read more at Linkedin 

Blockchain #1: SAP for Pharmaceuticals 

US based software giant SAP has tried to solve the problem of pharmaceutical industry in USA, by developing permissioned blockchain – based solution with Multichain framework. US drugs manufacturers were facing the problem of fake returns in the supply chain of the drugs supplied to large / business customers. In USA there is trend of returning the unused drugs to the distributor / manufacturer to sell them elsewhere. During the process of returns, there was a risk of injecting fake drugs at any point in the supply chain. These fake drugs market was estimated to the extent of volume of USD 7 billion alone in USA. SAP developed the blockchain-based solution by developing a permissioned blockchain on top of Multichain framework, where multiple drug manufacturers and wholesalers have their own node, granting them direct access for reading and writing the chain. By introducing dedicated barcodes for every box of the drug and putting them on the Multichain data stream and allowing to look at the contents and origin of the product, it was tried to solve the problem of counterfeiting in drugs industry. 

 

Blockchain #2: Charity Case 

Normally donor countries finance public projects in developing countries and seek to have access to the track of important events in project’s life cycle, development phases, contracts and disbursements while making transparency in the whole project. Both donors and recipients want to have access to the development phases of the project, record and maintain data for easy searching, but who should be in charge of the contents? Neither side of involved parties are politically comfortable in giving full control of database to other party. Normally both the parties maintain their own side database and sync at common place, but problem is there when donor countries/parties are more and everyone wants access to the database. Problem has been solved with blockchain-based solution TruBudget. an open sourced, which uses Multichain blockchain. Stakeholders involved in the project maintain their own nodes at their ends, write on chain at Multichain streams and share identical picture of the project’s progress at through their own front ends. 

  

Blockchain #3: Healthcare 

Healthcare industry is the important use case for blockchain. Maintaining information / database of health records of various patients spread out in a specific region like District/State/Nation, and sharing the such data among various parties like other health centres in the areas through the usage of blockchain based solution, is the very good option for decentralization of data.

 

Recently one Southern state of India implemented an electronic medical record system to ensure the patients’ data/information sharing between hospitals and other healthcare facilities in the state. Challenge faced during designing the system was to make sure not to lose/tamper the data and to make it available to every interested party locally in each city. Data was stored on Multichain streams. Participating cities will have their own nodes locally, which participates in the consensus process.

  

Blockchain #4: Collateralizing livestock 

In many developing countries, farmers face very difficult access to the affordable loans, even if they own valuable assets such as cattles that could serve as collateral. Farmer’s cattle to be in such situation where it can be used as collateral, must be identified and tagged, immunized against diseases and insured potential mishaps. This way, each cattle can only be used for collateral once. All it is needed extensive coordination among various interested parties like country’s animal healthcare system, insurance companies and financial institutions, everyone of these has different interests  level in the whole system. In this kind of segmented data, there should be solution to make sure such coordination of data without being controlled by a central party. 

Multichain framework has been proved to be the solution for such problem. Multichain blockchain has been used to write data on Multichain streams in case of the project ‘FarmTrek’ which is the Multichain blockchain based solution developed without being controlled by a central party. Each stakeholder can participate with it’s own node and read & write information on the Multichain streams.

Each cow is tagged physically with a tamper-proof NFC (Near Field Communications) device, which is connected with mobile application used by the farmer to sign & publish transactions on blockchain.

 

Blockchain #5: KYC & Credit Score Data (Collection, Maintenance & Storage) 

 

There are lot of countries where KYC or credit scoring related data is not centralized and every bank or fintech company has to create and maintain separately, which costs high time & money both. 

Multichain framework has been used to create a blockchain-based KYC and credit scoring solution, using a network of nodes belonging to banks and smaller fintech companies. Some nodes have write privileges while others are permitted to read only. The information is stored on Multichain streams, using a hash of each person’s name and birth date as a unique key for identifying their data. 

 

Blockchain #6: Usage in Food Supply Chain Management

 

Multichain framework has been used successfully to develop a blockchain-based ‘Food Traceability Solution’. With increasing awareness of food and health, interest has grown in giving consumers greater transparency in to how their food is sourced, processed, transported and stored.

While developing solution on Multichain framework, data is written on to streams in a proprietary binary format, Nodes are run by multiple companies within the food supply chain. The finished products are labelled with QR codes which are scanable in order to browse a web-based summary.

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