Blockchain is the latest big business buzzword. Previously reserved for cryptocurrency connoisseurs and early adopters, blockchain is now blazing trails through the corporate world as companies recognize its potential utility for business operations and management. From automated ordering to identity verification and financial transactions, this “new” encryption method is so secure, cracking it would take more than four and a half billion years. Say hello to blockchain.
What is blockchain?
First things first, blockchain technology has been around long enough to inspire its own jargon. Familiar words, such as “ledger” and “hash,” mean entirely different things in the blockchain world. So, let’s start by breaking down the obfuscation for a basic understanding of what blockchain is — and what it can do to store and secure data.
A blockchain ledger is the online or onsite server space where transaction data is recorded. If an entry is made in error, another entry must be made to correct it, and that’s where its similarity to a physical ledger ends. All ledger entries, or “blocks” of transaction data, are saved and stored in a sequential “chain” to provide a complete history of every transaction. Thus, “blockchain.”
Now, store this ledger in a thousand different places — each with its own state-of-the-art security. When one instance of the ledger is updated, the change is recorded on every existing version in real time. This data redundancy makes it nearly impossible to falsify blockchain ledgers. Malicious actors would have to alter every single version of the ledger in less time than it takes the ledgers to automatically cross check changes — and that’s assuming they could make it past blockchain’s hash-based security measures.
Blockchain data security
Hash-based security takes data and turns it — regardless of file size — into a block of random characters of the same length. War and Peace and an eight-character password are the same length after they’ve been hashed. This is done with the use of secure hashing algorithms (SHA). Among the most popular of these algorithms is SHA-256 — which converts data into a unique collection of 64 random alphanumeric characters (i.e., 256-bit).
The following samples of “hashing” were created with an online SHA-256 algorithm calculator. They do not represent actual stored data.
If we run the title of this article, Blockchain for Product Managers: Identity, Security, and Customer Satisfaction, through a SHA-256 calculator, it can be represented by the hash:
But change one or two characters, and it changes the entire result. So, Blockchain for Product Managers: Identity, Security & Customer Satisfaction translates to:
And the text of the article can be represented by the hash:
Hashes are unique to individual data storage systems, and they make it functionally impossible to access secure data with brute force cybersecurity attacks.
Start with redundant data storage with change transparency visible to all stakeholders. Secure data with hashing to deter any aggressive, illegitimate attempts to access plaintext content. Finally, secure access by giving each stakeholder a unique, personal key to the ledger. Unique identification keys trace all ledger changes to a specific user, and if the key is acquired by a malicious actor, the origin of the security breach is easy to pinpoint — and easy to fix.
But blockchain takes data security a step further. When every ledger participant has a unique key, the key serves as both access management and identity verification. It doesn’t matter if John has never met Clara from the XYZ Corporation. Her key tells him it is her, and because the blockchain ledger verifies her identity — and maintains a complete log of all transactions and data changes — John doesn’t need to personally trust Clara to do business with her and her company. In the language of blockchain, these are known as “trustless exchanges.”
Stakeholders are not limited to people within a given organization. Provide customers with a key to enable secure payments, and complete transactions by adding automation features to accelerate order fulfillment. With these additional tools, companies can, for example, place cargo for delivery when the ledger is updated to reflect payment received. Fortify security even further with “smart contracts.”
Smart contracts are conditional statements — also known as if/when-then statements — built into a blockchain ledger’s code. For example:
- If/when a supplier schedules a product delivery, then the customer receives a notification.
- If/when the customer sees the scheduled delivery ledger update, then they make a secure payment to the smart contract.
- If/when the payment terms of the contract are met, then delivery is set in motion.
- If/when the product reaches the customer, then the contract’s terms release payment to the supplier.
Because of the nature of the ledger, no outside parties are involved in the transaction, and it is impossible to fulfill the terms of the contract if the funds — or the product — are diverted.
Blockchain for brand and product managers
So, what does blockchain mean for brand and product managers? Smart contracts save money, reduce errors, and build a more efficient and secure order fulfillment process. Smart contracts are easy to implement, verify, and validate, and storing transaction data on a distributed ledger with the best cybersecurity available protects all parties at every stage of a business deal. Secure transactions and optimized fulfillment are good for your business, its customers, and your product brand.
Blockchain has the potential to fundamentally change business at a level on a par with the internet. To learn more about blockchain technology and its implications for brand and product management, visit aipmm.com.