While the blockchain industry has been around for over a decade, it has only been in recent years that it has started to professionalise and mature into a technology which can provide legitimate solutions to enterprise use cases.
In the early days, expertise and professionalism in relation to the technology was scarce, and this opened a Pandora’s box for other radical narratives to emerge for the use of the technology.
This meant enterprises that dared to foray into the world of blockchain were sometimes tarnished with a degree of guilt by association. Couple this with the fact that many actions written to the blockchain are in clear text, and it’s natural to understand why legacy enterprises were reluctant to pursue it for their business use cases.
The false dichotomy between private and public blockchain
Out of this hesitancy arose the notion of private blockchains, whereby enterprises presumed they would have the benefits of a blockchain system while still maintaining the privacy and security required to handle their sensitive data.
Although this is understandable, it is also unfortunate for them to have been presented with the false dichotomy between public and private blockchains as in fact, there need not be any such choice between the two.
The disadvantages of a private blockchain
In developing a private blockchain, enterprises lose many of the attributes that make a blockchain powerful. The version of a ‘blockchain’ they will inevitably end up creating will have very little difference to a conventional permissioned database while at the same time inheriting all the challenges and vulnerabilities associated with securing and managing that.
The advantages of a public blockchain
Using the public blockchain as an external timestamp server means an enterprise can enhance the security and integrity of their internally managed databases in numerous ways. For example, by constructing a Merkle tree out of their data, an entire set of business activity can be securely summarised as a 32-byte value. Scheduling an attestation of this value to the blockchain means many of the timestamping and data verification properties inherent to the public blockchain can be realised, while at the same time never exposing any sensitive details of the data.
Enhancing data privacy on a public blockchain
Other techniques such as masking can allow for the mutation of a data entry before it’s published to the blockchain. The details for this mutation scheme are kept securely within the enterprise, and the data can be easily converted back into its original form in the event of an audit, where these timestamped attestations can be used to verify the integrity of the internal records maintained by the enterprise.
Case study: banking records on a public blockchain
Imagine that multiple times a day a bank timestamped attestations of transactional activity that occurred on its payment network. It could then have an hourly granularity on anomalies in its accounting and a secure audit could be performed in a millisecond with the click of a button.
Leveraging the blockchain in this fashion comes with very little overhead, as pushing a 32-byte value as a data payload in a transaction adds no more than a fraction of a cent to the overall cost of the transaction.
When an enterprise publishes these ‘data proofs’ to the chain, as that data payload is not evaluated by the nodes to determine the validity of a transaction transferring funds, the data can be mutated or summarised, meaning there is no need to expose sensitive information.
In this respect, the company has now leveraged the major advantage of a blockchain-based system while simultaneously mitigating any of the security challenges and overheads of setting up their own private blockchain. Their legacy database systems may be simply plugged into an API endpoint that automatically creates that summary value and has it notarised by the miners on the network.
Having a public timestamp server allows enterprises to work smarter rather than harder to enhance their internal business practices. This is the whole intention behind the creation of blockchain with its data capabilities and flexible scripting language, allowing any type of transaction to occur for any lawful use case.