How Networking Will Change, and Be Changed By, Blockchain

Blockchain could transform some traditional business models, but it requires sophisticated networking capabilities.

By Arthur Cole | Posted Sep 6, 2017
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Blockchain is quickly emerging as one of the most significant developments in enterprise technology since virtualization. While its support for cryptocurrencies like Bitcoin and Ethereum are well known, it has the potential to affect a wide range of applications, particularly if some thorny network issues can be overcome.

Blockchain is an open, distributed digital ledger. Whenever a digital transaction is executed between two or more parties, it is recorded as a block and then mirrored to repositories around the world. As more blocks are added to form a chain, the system compares each and every copy of the chain to ensure the integrity of the record. This makes the blockchain virtually unbreakable, because a hacker would have to break into perhaps hundreds of hardened data centers simultaneously to alter an existing chain.

Naturally, this requires some fairly sophisticated networking to ensure that blocks are processed efficiently and the chains can be updated in tandem. Issues like throughput, connectivity and packet security rise in importance when financial transactions or any other interaction that requires a trusted system of record come into play.

Microsoft is already looking to capitalize on enterprise-class blockchain applications. The company recently launched an open framework called Coco that speeds up the deployment of private blockchain networks. The system supplements existing blockchain environments like Intel SGX and the company’s own Virtual Secure Model (VSM) by improving throughput and latency characteristics and adding things like confidentiality models and distributed governance. It also provides support for non-deterministic transactions that tend to show up in supply chain management and other functions. In addition, Microsoft is working on a blockchain development framework called Project Bletchley, as well as a modular blockchain fabric and an Ethereum blockchain as a service feature for the Azure cloud.

At some point, however, organizations will want to network multiple blockchains together as digital services scale into production environments. A Canadian company called Nuco is hoping to address this need with a middleware solution called Aion that facilitates communication between blockchains. The system provides a common protocol that creates a messaging bridge between chains, plus a set of tokens that can be used to reward companies for their participation in the chain. In this way, contributors gain a generic means of augmenting their blockchain-based activity and can even monetize the information they share.

Meanwhile, organizations are also eyeing blockchain as a means to change the way existing data networks are utilized. A non-profit organization called DFINITY Stiftung is planning a demonstration this fall of an open network that uses blockchain to create a massive virtual mainframe out of decentralized cloud resources. The setup will essentially harness multiple thousands of compute nodes under an open and secure framework to allow the Internet to become a single integrated cloud. The platform uses an algorithmic governance system that features autonomous software to enable an “open source business” that can compete with traditional firms like Uber and eBay.

Meanwhile, entrepreneur Mark Cuban is backing a project that utilizes blockchain to upend traditional social media networks. The Mercury Protocol uses an Ethereum-based global messaging token (GMT) to pay users for certain actions like creating content, inviting friends or completing tasks. In this way, social media networks can actually become money-makers for their users rather than a means for providers to cull data from their populations.

At the moment, most enterprises are viewing blockchain with a fair amount of caution. On the one hand, it stands to make complicated digital processes much easier and a lot less costly, but on the other, it has the potential to disrupt a fair number of established business models.

Networking challenges are likely to mount as the technology enters production environments and emerging IoT environments, but it seems likely that applications that rely on trusted data sets will incorporate blockchain before long rather than stick with more restrictive — and costly — proprietary solutions.

Arthur Cole is a freelance journalist with more than 25 years’ experience covering enterprise IT, telecommunications and other high-tech industries.

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