What is a corporate blockchain?

    Translation of an article by authors from Carnegie Mellon University . What are the characteristic features of a corporate blockchain? Is corporate blockchain better than centrally controlled database?

    Ariel Zetlin-Jones
    Associate Professor of Economics Tepper School of Business - Carnegie Mellon University

    Bryan Routledge
    Associate Professor of Finance Tepper School of Business - Carnegie Mellon University


    We have in our head the image of an overworked Technology Director ( CTO ) who was called to his office the boss and instructed to create a corporate blockchain, but without all these clever cryptocurrencies. We present how this CTO is puzzled. We certainly are. What is a corporate blockchain?

    Here is our opinion. A corporate blockchain is a DBMS or register that differs from those a company has. Cryptography allows this DBMS to maintain any desired level of confidentiality or secrecy . The blockchain token associated with this DBMS provides incentives for its permanent content ( mining ). This token, however, can be illiquid., and is more like miles in the program of accumulation and promotion of airlines than a currency. In conclusion, corporate blockchains require some centralized control at the borders, where this DBMS interacts with the outside world. To understand why we put all this together, let's explore a hypothetical corporate blockchain to track student grades — let's call it GradeChain.

    Who owns Blockchain?

    For faculty, student grades are important entries. They are currently stored in the Learning Management System (LMS) in a centrally controlled database. Professors can rate. Students can only access in their grades.

    To be a blockchain, we argue that it is not enough to tweak the LMS protocol by introducing the concatenated blockchain data structure . This approach leaves LMS the owner of intellectual property, platform and access. Vitaly Buterin remarked in a similar context that " ... this is completely not the case. ". One omission is alarming in this approach: assessments (data) are associated with an organization that can close, change direction, change its tariffs, etc. Perhaps for this reason, let the assessments be transferred from the LMS to the archivist of the university for permanent storage. The blockchain will then not be “in possession”, but will keep the estimates confidential and permanent.

    Asymmetric cryptography used in blockchains allows you to achieve privacy. Professors use students' public keys to encrypt their grades. Encrypted messages including evaluations are stored on all copies of the register. Only a student with the appropriate private key can decrypt the message and see their grades. Similarly, professors sign encrypted grades with their private keys. Users are able to verify the authenticity of the encrypted message using the professor’s public key. Many additional functions can be added here: making grades visible to student mentors and employers, etc. All these variations are based on cryptography.

    Your blockchain in action

    The call for blockchains, especially corporate blockchains, occurs on the border of the blockchain and the outside world. For example, we need some mechanism for linking students 'public keys with study sessions and marking professors' public keys. We will also need a system to help professors who have lost their keys - because this will happen. Perhaps in this case, the university archivist can help by acting as such an oracle . The need for a single public key database divides the described approach in spirit with the Bitcoin blockchain. We are not sure whether this is a problem or a reasonable compromise for the corporate blockchain.

    To achieve performance in the blockchain, the register must be self-sufficient. We need incentives for minersin order to maintain copies of the register, monitor (anticipate receipt) of new assessments, confirm information, create new blocks and reach consensus. Without a third party that monitors or checks the work of miners, it is important that these incentives are provided as part of the blockchain itself.

    GradeChain could provide these incentives by creating GradeCoin, which miners will receive for adding blocks of information. The registry will then need to keep more and balances on the accounts along with information about the estimates. For this to work, GradeCoin must have value, but it does not need to be a fully liquid currency.

    One possibility is that GradeCoin will be a service token that provides services only inside the blockchain - for example, students use GradeCoin to calculate their average score. Perhaps GradeCoin can be converted into a credit at the rate (“automatic”). Here it is important to be careful not to undermine the role of marks as a sign of students ’understanding of the course material. Such GradeCoin has the features of miles in the program of rewards for airlines convertible into status or increase the level of comfort in a closed system.

    As an alternative or addition, GradeCoin can be exchanged for a limited list of goods and services outside the blockchain. For example, GradeCoin can be used to get priority on elective courses, football tickets or coffee at a local cafe. Again, note the similarity with the miles in the airline programs, which are used to pay not only for air tickets, but also for car rentals or hotel accommodation.

    However, although an oracle is required to enroll students for courses, the value of exchanged GradeCoin will be based on records in the real world, for example, in a local cafe that accepts them for payment. Allowing even more liquidity is possible by obliging miners to listen and record transfers or sales, but this is not mandatory.

    Potential for corporate blockchain

    Corporate blockchains that capture precisely the innovative aspects of the blockchain are a set of protocols that no single entity “possesses” and which use cryptographic methods to ensure the confidentiality and secrecy of corporate data. Although it requires some careful design, it is realizable. In addition, the registry requires an internal token to encourage registry support. And this set of service tokens is more like illiquid airline miles than liquid currencies.

    Is corporate blockchain better than centrally controlled database? For now, we’ll leave it to pondering our congested CTO.

    The original article was published on January 28, 2019 in a blog.Blockchain Pulse: IBM Blockchain Blog .

    Translation: Nikolay Marin ( NikolayMarin ), Chief Technology Officer and the IBM in Russia and CIS countries.

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