OOW17 - Oracle leaps on blockchain bandwagon – is it revolution or mania?
- Summary:
- The blockchain bandwagon heralds the hottest accounting innovation since double-entry bookkeeping, some say. At OOW17, Oracle just joined the stampede
The company claims the new service will help customers:
... increase business velocity, create new revenue streams, and reduce cost and risk by securely extending ERP, supply chain, and other enterprise SaaS and on-premises applications to drive tamper-resistant transactions on a trusted business network.
Amit Zavery, senior vice president, Oracle Cloud Platform, elaborates in prepared comments:
Blockchain holds the promise to fundamentally transform how business is done, making business-to-business interactions more secure, transparent, and efficient. Oracle Blockchain Cloud Service provides enterprise-grade blockchain capabilities and is able to accelerate innovation for on-premises ERP and cloud-based SaaS and PaaS customers. Enterprises can now streamline operations across their ecosystem and expand their market reach with new revenue streams, sharing data and transacting within and outside the Oracle Cloud.
Proponents say blockchain makes business interactions more secure, transparent, and efficient within organizations, and between organizations and their partners through a mutually distributed ledger. All the records of the ledger, known as blocks, are written continuously, chronologically and publicly on the database, which means the system is potentially safer and more efficient than previous transactional systems because all parties to transactions are always, literally, on the same page. No single third-party controls the process.
Revolution or mania?
The origins of the blockchain are something of a mystery. The first mention of the accounting method was in a seminal paper called Bitcoin: A Peer-to-Peer Electronic Cash System published in 2008 and credited to someone named Satoshi Nakamoto. Since no one seems to have actually met Nakamoto, it is assumed that the name is an alias for a person or group of people. The name has faded over the past six or seven years but, considering the speculation in Bitcoin and other cryptocurrencies, the paper has touched off either a revolution or a tulip mania, depending on who you ask.
Oracle’s point of view, as expressed in comments yesterday by co-CEO Mark Hurd, leans towards blockchain playing a significant role in the enterprise:
The core of blockchain is to be able to move data back and forth and do it in a secure way. The most common application of blockchain is typically in the financial industry and the movement of data back and forth. But you can go into multiple industries with blockchain. Any time you have a secure transfer of data.
I won't begin to start to lay out all of the various applications of that sort of transfer. You can go right down the line of things that are designed not to be shared. [There are] a lot of these different applications of blockchain. But at its core it's the ability to transfer and share meaningful information in a secure and thoughtful way. So there's limitless applications I would say - that's maybe too strong - but many, many applications of blockchain to the market.
A ledger on steroids
The system uses complex mathematical accounting functions to arrive at a definitive record of who owns what, when. Properly applied, a blockchain can help assure data integrity, maintain auditable records, and even turn financial contracts into programmable software. It’s a ledger, but a ledger on steroids. The solution also requires distributed computing resources, which public clouds can enable by harnessing the power of data centers around the world.
Most of the big mainstream tech companies are already chasing this business. IBM has been touting blockchain services that run on its cloud for more than a year. And Microsoft is releasing software tools and frameworks to make development of blockchain applications easier on its Microsoft Azure public cloud.
To bolster its entrance into the emerging space, Oracle recently joined Hyperledger. Hosted by The Linux Foundation, Hyperledger is an open source collaborative effort created to advance cross-industry blockchain technologies. By leveraging open sources and maintaining interoperability with open standards, Oracle says it wants its customers to benefit from all open-source innovations, and avoid vendor lock-in. The research firm Marketsandmarkets writes:
The major forces driving the blockchain market are transparency and immutability, and reduced total cost of ownership. The blockchain market is growing rapidly because of the high adoption of this distributed ledger technology across various applications such as payments, smart contracts, exchanges, digital identities, and documentation.
The research firm estimates the global blockchain market will grow from $210.2 million in 2016 to $2.3 billion by 2021, an annual growth rate of 61.5%.
My take
While bitcoin and other cybercurrencies may or may not retain their value over the long term, the blockchain concept can be applied to many vertical industries and may be where the real revolution lies because it solves the problem of recording transactions that are verifiable, permanent and unalterable unless with the collusion of the entire network. It solves a distributed computing problem of many years standing called the Byzantine Generals Problem.
The Trump administration (and several other governments) have indicated interest in using blockchain in government as a tool to use in reducing instances of fraud and waste, cutting spending and beefing up cybersecurity defenses and the method has been gaining adherents even among those who dismiss Bitcoin as a possible modern day Ponzi scheme.
For Oracle, which for now badly lags Amazon, Google and Microsoft in cloud computing, blockchain offers a chance to play a little catchup with a hot new service. Oracle also plans to offer Oracle BlockChain Cloud Service as part of Oracle Platform for Open Banking, and provide seamless connectivity between Oracle Flexcube and other banks to enable greater security, scalability, and transparency in the information exchanged.
