What You Need to Know About Blockchain Today

Adam Page
Adam Page in Blockchain, Digital Transformation, GDPR May 13, 2018

There’s a definite buzz around blockchain these days. The success of cryptocurrencies like bitcoin and experimentation with additional uses, such as providing assistance to Syrian refugees and preventing voter fraud, have made companies take note of the new technology. As they are assessing its potential uses within their own organizations, a lot of questions are arising. What’s the current state of blockchain, and what do we need to know right now?

First, What is a Blockchain?

According to ASUG’s State of the Community 2018 survey, only one in six ASUG members is very familiar or somewhat familiar with blockchain. So, let’s begin with some background information.

Although it started as a method to transfer the cryptocurrency bitcoin, blockchain is actually a separate process for recording and verifying transactions of all types that’s also known as a distributed ledger technology (DLT). For example, a transaction is represented digitally as a “block.” Each block contains a link to the block that precedes it, as well as a time stamp and some transactional information. It then becomes part of a chain, which provides a transparent and permanent record of the transaction by locking into place all the information stored up to that point. As the Wikipedia article on blockchain puts it, “By design, a blockchain is inherently resistant to modification of the data.”

Public and Private Blockchains

A blockchain can be public, like bitcoin, giving an unlimited number of users access to the same data and blocks. While an increase in number of users raises the risk of someone tampering with the system, the size of the user pool is also self-regulating. If someone alters the data in an already-created block, it would likely affect subsequent blocks and alert other users to the discrepancy. This makes a public blockchain a relatively safe and secure method of storing transactional data.

A blockchain can also be private and created for a specific company. This example is a case with a limited number of users within a regulated and controlled environment. Fewer blocks will be created, making them easier to monitor and less likely to encounter tampering. And if tampering does happen, users are likely to find and report any issues.

How Blockchain Can Improve the Cloud

As companies evolve their migration strategies to move to the cloud, a common concern is the security of the data stored there. Who can get access to your data? Who can potentially alter or download it, especially during periods of downtime?

Blockchain is one way to manage your data security. It’s possible to attach a blockchain to any transactional data you store on the cloud as you move, say for example, your accounts payable and receivable information from an on-premise server to SAP S/4HANA Finance. Creating a blockchain to protect this data (and limiting the universe of people who can access it) can alleviate the security concerns many businesses face.

Big Buzz, but What’s the Use?

Right now, actual adoption is still low. According to a Wall Street Journal article, as of 2017, only 1 percent of CIOs surveyed by Gartner reported an actual blockchain deployment at their company. Another 22 percent are planning a blockchain project either soon or down the road, while 34 percent report no interest in the technology. Among SAP users, ASUG’s State of the Community results indicate that only about one in four ASUG members (24 percent) believe blockchain will have a significant impact on their company in the next two years. Short-term, there is not a lot of momentum for blockchain yet.

Yet interest remains high: 43 percent of CIOs have blockchain on their radar, even with no current action planned. Similarly, of those ASUG members familiar with blockchain, 43 percent are extremely or very interested in the technology. Given that it’s seen as a transformative technology, companies would be wise not to ignore its potential.

A Topic to Watch: Balancing Blockchain with GDPR

While blockchain and GDPR are each generating plenty of headlines on their own, this recent Diginomica article details how these two topics could potentially be in conflict. Among the new rules outlined in the EU’s General Data Protection Regulation (GDPR) is the right to be forgotten, meaning that you can request your personal data be removed when a company no longer needs it for the purpose for which it was collected. The nature of a blockchain, however, is to permanently time stamp transactional data, which often includes personal or company information.

How can a company keep accurate and secure records within a blockchain while still being GDPR-compliant? One option mentioned in the article is to store personal data in separate “off-chain” databases, while keeping the actual transaction within the blockchain. Regardless, this is an issue worth watching over the coming months, especially before planning any blockchain implementations.

Blockchain Takeaways for ASUG Members

SAP has a vested interest in blockchain technology, offering blueprints for bringing it to your business through SAP Leonardo, along with emerging technologies like machine learning, the Internet of Things (IoT), and big-data analytics. ASUG members may not need to rush out and invest in blockchain today,  but it would be wise to start conversations now about how blockchain could help secure certain processes within your company in the next 1-3 years.

As SAP Leonardo industry accelerators continue to develop, it will be important to see what role blockchain plays, or if these are more suitable for machine learning and IoT deployments. ASUG members should also ask a lot of questions to make sure SAP has solutions or workarounds to make blockchain implementations GDPR-compliant.

To catch up on blockchain for SAP users, make sure to add an ASUG session on blockchain to your agenda at this year’s ASUG Annual Conference.