Part 1: AI Plus Blockchain? Accenture Is Doing It Wrong!
Blockchain technology often confuses people, and this confusion mainly stems from the several misconceptions that I have already mentioned in the two previous articles (8 most common misunderstanding of blockchain part 1 and part 2). The misconceptions are hindering laymen and sometimes experts to understand the technology and build real solution on it.
Knowing the kind of mistakes we are committing is just as important as knowing how to fix them. Today, I attempt to explore how to build a real application on blockchain by taking the Accenture report (issued on 11th Oct, 2018), which contains numerous mistakes, as an example. This article is written in four parts; the first two parts are about the mistakes in the paper, and the third and fourth parts provide suggestions on how different industries can tap into the value of blockchain.
1. Blockchain does not help data sharing
“Now imagine a world where, through a blockchain-based system, every party involved in the move could see the data and information pertaining to the end-to-end relocation process with appropriate permissions granted by the stakeholders— in this instance, the family. Organizations could access just the data they need, and because the information reflects blockchain’s enhanced trust levels, parties no longer need to engage in messaging and reconciliation. As organizations widely implement these kinds of models, the possibilities for AI systems will grow significantly” — page 4
In layman’s terms, the above sentence suggests that companies surrender the data they own (or steal), encrypt it by users’ private key and upload it on blockchain. After that, these companies can access this data only with users’ permission. In the event that a user loses his/her private key, his/her data will be lost permanently because nobody controls the system. How this system even makes sense is unknown, but it sounds legitimate with the word blockchain.
People often think blockchain helps data sharing because of two keywords: securityand trust, which are also misconceptions that I am going to explain in points 4 and 5.
2. A smart contract is not a contract for businesses in digital form
“In the future, wider access to data across an ecosystem and the advances in automated business logic via smart contracts could enable new and greater access for AI machines to traverse business ecosystems and deliver more comprehensive solutions to customers.” — page 5
A smart contract is merely a program on blockchain. A smart contract that is running on a public blockchain is an immutable, censorship-resistant program. By contrast, a smart contract running on a permissioned chain is merely another regular program.
Smart contracts running on a public blockchain are sometimes called decentralised applications (DApp). Decentralising applications can be helpful. For example, we can look at decentralised gambling applications (which account for 40% of total blockchain transactions [Standard Kepler Research]). These applications do not have licenses; users do not know the operators, and no protection is in place for gamblers. Yet, users can trust them because decentralisation guarantees the immutability of the code. That is, the agreed program code cannot be altered.
Decentralised applications place the core logic on blockchain and establish fully automated execution. Consequently, these applications behave like ‘contracts’, and users can trust the program to deliver what is claimed. However, the mere placement of a program code on blockchain does not decentralise the application.
Moreover, we need to understand that decentralisation is not necessary to achieve automation unless the goal is creating an application or service that cannot be controlled or wiped out by anyone (e.g. a gambling software without a license or an application for use by North Korean generals in buying and selling properties in New York). I do not see much business use cases here. Thus, I will not spend considerable time on it, given that this article is written for business owners.
Mistakes number 3 to 5 will be presented in Part 2, stay tuned!