Innovations in IT are disrupting the nature of the business transaction. The Microsoft Coco Framework and blockchains may be the most disruptive technology yet.
Advances in information technology continue to change the way enterprises conduct business. Breakthroughs in big data, the prevalence of IoT, and the burgeoning implementation of artificial intelligence are just a few examples of the technologies that have disrupted the enterprise status quo over the past few years. But those are not the only information technologies making an impact on businesses.
Over the next decade or so, business enterprises could find themselves increasingly dependent on the workings of blockchain technology. Blockchain has the potential to digitally transform an enterprise's transactions with suppliers, customers, and partners by creating a method for the secure and transparent transfer of assets and by establishing a framework for transaction assurance. Writing and executing a transactional contract in the near future may not require any expert human interaction at all—it will be handled by a cross-organizational collaborative blockchain-based protocol.
SEE: The executive's guide to implementing blockchain technology (TechRepublic PDF)
To facilitate the use of blockchain technology, Microsoft has introduced a new proof-of-concept program it calls the Coco Framework. The Coco Framework is an open source system that helps interested organizations develop blockchain networks specifically designed to work with enterprise transactions. Microsoft believes the program will accelerate the adoption of blockchain technology in the enterprise.
Most current blockchain implementations are not conducive to enterprise implementations for one simple reason—every transaction is visible by every node in the network. For example, with Bitcoin, every transaction is posted for all to see and every node in the network executes every transaction. It is this safeguard that ensures the integrity of its public blockchain. It is what makes the Bitcoin system work.
However, in an enterprise scenario, transactions must remain confidential. The Coco Framework aims to achieve this by designing blockchain systems for a controlled set of nodes that form a confidential, secure consortium. One way to achieve this alternative ledger structure is by leveraging the power of trusted execution environments (TEEs), such as Intel SGX and Windows Virtual Secure Mode (VSM), in conjunction with distributed systems and cryptography.
According to the August 2017 announcement of the Coco Framework, a ledger structure created in this manner would deliver:
- Throughput and latency approaching database speeds.
- Richer, more flexible, business-specific confidentiality models.
- Network policy management through distributed governance.
- Support for non-deterministic transactions.
The Coco Framework project is open and compatible with any existing blockchain implementation. Microsoft has already partnered with several companies to implement enterprise ledgers using Ethereum. This technology is quickly moving from concept to prototype to everyday reality within the enterprise, but many are not ready for the implications of such a system.
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The potential for innovation in the business enterprise because of blockchain technology cannot be overstated. The way business transactions are handled between customers, vendors, and partners will never be the same. Transactions will happen faster and scale instantaneously with business needs, all the while remaining secure and confidential.
Once this technology is fully realized, it will be possible for one enterprise's AI to perform a transaction with another enterprise's AI without any employee ever becoming involved. The terms of each transaction will be negotiated, contracted, and executed on the fly all based on prescribed parameters.
Imagine a scenario where the IoT monitoring the manufacturing process of Company A determines it needs 100 Widgets delivered by the next day. The AI of Company A will contact the AI of Company B to place the order and secure the transaction using the trusted, confidential blockchain system already in place. The AI of Company B will instruct its automated systems to construct and deliver the Widgets. Employees from both companies will not have to know or deal with this transaction and can therefore perform other tasks vital to their respective organizations.
This is where the world of enterprise transactions is heading, and Microsoft is looking to facilitate every aspect of that scenario based on the idea that enterprises will need the computational power of the intelligent cloud to pull it off. Microsoft believes this is where the technology is going, and your enterprise better prepare itself for this new reality.
- How blockchain could revolutionize IoT security (TechRepublic)
- Microsoft's Coco Framework aims to make blockchain easier to use for business (TechRepublic)
- Quick glossary: Blockchain (TechPro Research)
- Blockchain: The smart person's guide (TechRepublic)
- Blockchain explained in plain English (ZDNet)
Is your enterprise ready for automated transactions? What sort of culture shock do you foresee? Share your thoughts and opinions with your peers at TechRepublic in the discussion thread below.