Blockchain technologies have led to innovations that have captured the public imagination.
The high price of Bitcoin and artwork tied to Non-Fungible Tokens (NFTs) make compelling headlines. Aside from these popular news stories, blockchain has technical underpinnings that will have far reaching effects beyond those reported in the news.

A Brief History of Blockchain
A blockchain is a distributed ledger composed of records (“blocks”) that are cryptographically linked (“chain”) running in a peer-to-peer network which includes built in governance models (control and consensus policies) defining who can participate in the network and add records to the blockchain. Governance models vary among blockchains, along with features including consensus algorithms, availability of programmable smart-contacts, and functionality related to privacy and performance.

Many of these fundamental ideas have existed for a long time. The practice of using written ledgers to record business transactions has an extensive history pre-dating their digital equivalents. David Chaum anticipated blockchain in a 1982 PhD dissertation titled “Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups”. His dissertation envisioned a system that could be trusted to allow transactions between organizations that did not trust each other. Similarly, cryptography has a long and storied history that has evolved quickly since the dawn of digital processing. The foundational elements involved in blockchain technology have been useful and effective concepts for most of modern history.

Note that – up to this point, we have not even mentioned money or currency! The underlying blockchain technology tends to be equated with an associated cryptocurrency because the first true modern blockchain implementation supported the Bitcoin crypto currency. Bitcoin was created in 2009 based on a whitepaper written in 2008. Blockchains enable the existence of modern cryptocurrencies, but blockchains in general do not require the existence of a cryptocurrency to function or be useful.

If cryptocurrencies and economic activity are not the main “point” of blockchains, what is their true value and use?

Blockchain Features
The data in a blockchain is structured as an immutable ledger. Data added to it cannot be changed or removed – just like an accountant’s ledger. This record is valuable for establishing provenance and general auditability. Such a data structure can be used to create identity systems, registries, payment systems and supply chain applications which provide a transparent, unified data store available to all parties involved. Systems designed to use a common ledger can provide savings over equivalent solutions housed in a series of separate databases that are not auditable and cannot be easily reconciled.

An enormous amount of effort is expended today creating fault tolerant distributed systems that ensure no data loss and consistent access to the data. Blockchains are distributed systems by design. Variations in governance models between implementations result in differences as to how many nodes participate in a given blockchain, but well implemented distributed processing is a “solved problem” in the blockchain space. There are trade-offs with this peer-to-peer distributed design. A significant concern is transaction processing speed. Older blockchains such as Bitcoin and Etherum are relatively slow which has spurred the development of newer, faster blockchains implementing novel governance models designed to preserve data integrity while providing much higher performance. This in turn has encourage established blockchains to innovate and provide higher performance.

Etherum 2.0 has been under development with the promise of better security and higher performance. Etherium is also well known for championing another significant innovation related to blockchain technology – smart contracts.

Smart contracts are programs that run on the blockchain network. The code is public and auditable, so participating parties can use an agreed upon contract to automatically process business transactions. This reduces risk in terms of trust required between parties or involving an external authority. The term “disintermediation” has been used to describe this shift in trust from external authorities mediating transactions to a peer-to-peer model where the blockchain network and contract are trusted.

Smart contracts have significant value beyond trustless networks and associated disintermediation. In a typical financial transaction, multiple parties maintain separate ledgers to account for each transaction. If a common blockchain replaces multiple ledgers, there is a single “source-of-truth” reducing the amount of work reconciling systems. The process is simplified, more transparent and auditable. This can be a huge advantage even on private blockchains within an organization or in consortium blockchains which are limited to parties involved in a set of business transactions.

Business Strategy
Although the value of blockchain networks can be considered as technical innovation in isolation from economic or other concerns, there is a significant lesson to be learned from the success of Bitcoin. Bitcoin has a “first-mover” advantage which has established its credibility to a degree not yet attained by other blockchains. Businesses with the foresight to recognize valuable use-cases for blockchain technology and bring them to market will have an advantage that will leave competitors in the difficult situation of trying to catch up – and in many cases forcing them to join established systems where network participation has reached a critical mass.

Synchronoss has been actively engaged in blockchain-based projects. One example involves Synchronoss’s Total Network Management (TNM) solutions. TNM’s order lifecycle management (iNOW) can leverage consortium blockchains to eliminate the root cause of billing errors and streamline operations for cost reduction. This is accomplished by processing payments on a distributed ledger rather than in a multiple independent private data stores maintained separately by billing participants. The blockchain serves as a “single source of truth” that can reduce work currently done related to validation and dispute resolution and ultimately eliminate invoicing altogether. Another example is an award-winning cross-carrier payment service PoC involving blockchain demoed at Mobile World Congress. Built on Synchronoss’s Advanced Messaging Platform (which includes SMS, email and RCS) the system allowed in-store, mobile and digital purchases to be made involving third party businesses using RCS-enabled smartphones. Mobile payments were processed via an RCS channel and data was stored on a private blockchain.

Blockchain assets and economic impacts will continue to make headlines. Behind the scenes, technical developments will be built on related technologies that provide reduced cost, increased auditability, and better customer service. It is simply one more area where Synchronoss will continue its tradition of leveraging the best technical solutions for both carriers and customers.