Telcos need to get their hands dirty on blockchain: Hyperledger

“The [telecoms] sector to some extent expects the vendor community to deliver pretty boxes that have the software inside it. [Blockchain] is something that requires a much more white box kind of approach." – Brian Behlendorf, executive director of Hyperledger / Image credit:

Blockchain has plenty of potential game-changing uses that telcos can capitalize on, either by creating their own services or enabling others. But they’ll need to educate themselves, dive in and get their hands dirty on the code rather than expecting vendors to sell them a blockchain box.

That was the message from Brian Behlendorf, executive director of Hyperledger, the organization backed by the Linux Foundation developing open-source distributed-ledger technologies. Speaking during a morning keynote session at this week’s Mobile World Congress in Barcelona, Behlendorf made the case for telcos adopting blockchain, starting with the point that despite all the media hype around Bitcoin prices, cryptocurrency is just one application of blockchain.

“Any business application that involves some kind of transaction of a digital asset from one party to another can be facilitated by blockchain,” he said. “The network is a witness to all transactions, which can be automated via smart contracts, and it’s auditable.”

One way telcos could employ blockchain is to fight roaming fraud. Behlendorf explained that a common distributed ledger could be set up between, say, a dozen operators to embody all their roaming relationships with smart contracts so they can see who is allowed onto the visitor network and who isn’t.

Another potential blockchain app is digital ID management, which could potentially solve the issue of fragmented siloed digital IDs where, for example, your LinkedIn login will work with your Uber app but you can’t use it for electronic government services such as tax payments. It could also serve as a decentralized alternative to centralized systems such as India’s Aadhaar ID system, which has allegedly experienced problems with personal data leaks. Blockchain would enable your digital ID data and your various digital relationships to be stored locally (on a phone, say) and verified via blockchain.

“Telcos have billing relationships with so many people, so they can be a trusted partner in enabling this,” Behlendorf said.

The trick is that the technology is so new that telcos are still basically in the research stage of understanding blockchain and haven’t yet built up the competency to implement it yet.

“The industry understands the importance of open standards pretty well to now get into building common code, but that’s where it’s a bit more of a challenge,” he said. “The [telecoms] sector to some extent expects the vendor community to deliver pretty boxes that have the software inside it. [Blockchain] is something that requires a much more white box kind of approach and get your hands dirty with it, and talk with other organizations who are also working on it.”

Behlendorf said that cost isn’t a barrier, since the Hyperledger license is free and the processing can be done on inexpensive commodity hardware. “This is not about burning a lot of CPU power like you may have heard. In an enterprise setting, you’re not using proof-of-work, which is how Bitcoin and other systems work.”

The main cost of blockchain is investing in the personnel and training them to understand how the code works so they can start building with it. “Right now it’s really about research, training and finally getting the product teams talking to the business teams and the tech teams to look at how they can operationalize something with real customer data that we can come away from and say that created something of value, even if it’s intangible.”

Behlendorf said that despite public concerns about the security of cryptocurrency exchanges – thanks to headlines such as last month’s cyber heist involving cryptocurrency exchange Coincheck – he credits the various cryptocurrency communities with demonstrating the scale at which these technologies work for at least one particular use case (payments), which in turn has sparked excitement among developers who see blockchain as an opportunity to build digital systems that stay trustworthy even if some of the actors on that network have nefarious interests.

“We haven’t done a good job of that in the technology industry – we’ve operated too much from a default reservoir of trust that we assumed would always be there. And people don’t trust technology companies anymore. They don’t trust big servers or big data,” Behlendorf said. “We have to engineer systems that inspire trust in the process because they can be verified, rather than trust because a company says ‘we’re not evil’.”

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