Developers find blockchain niches to counter big-data deals
As mega data collaborations among multinational companies threaten to dominate payment technology, developers are digging even deeper into decentralized models as a workaround to sell both greater data analysis and more security.
“What we’re doing is the antithesis of the big data deals,” said Kiran Pachhai, lead engineer of the Elastos Foundation, a Beijing-based startup that just finished work on a distributed ledger project. “The consumers have total control over their data. They own it and it’s protected by the blockchain.”
Sparked by a reported deal between Google and Mastercard, fintechs have been scrambling to build ways to provide consumers and merchants actionable analysis to inform marketing and transaction efficiency without invoking privacy fears.
The fintechs, which are basing much of their future success on providing users with ownership and transportability of their own data, aren’t concerned as much about the details of the Google and Mastercard deal.
They are more more concerned with the concept or idea that centralized international corporations are mining huge amounts of transaction data, and turning it into advertising and sales without user buy-in. In an earlier interview, Gee Chuang, one of the developers of the Ink Protocol, said these large data deals threaten that control.
"This is a widely cited use case for blockchain technology. It can definitely help increase security and trust within e-commerce and other P2P transactions, but so far it has not been widely deployed yet," Chuang said in an email Wednesday. "I would say the first real world use cases are still emerging now, and we believe this will be one of the first killer apps for distributed ledger tech … however we are not quite there yet. We hope to see this tech widely used in the next few years.”
Blockchain has powered cross-border payments by removing third parties such as correspondent banks, which in turn removes fees and time from processing.
Other uses for blockchain include bank security and charitable giving. But more widespread use has proven elusive, particularly since distributed ledgers require at least some cooperation among companies.
One potential avenue for blockchain development is to support payments and fulfillment for smaller online merchant communities, which could use a decentralized network as an alternative for large international e-commerce sellers that use a high percentage of third party suppliers and often come up in discussions of major collaborations between incumbent firms.
Pachhai contends Elastos’ complex and layered blockchain will provide the same kind of alternative that blockchain has provided for cross-border payments. By using elements of cryptocurrency processing, Elastos will power what it calls “pillars” to support decentralized commerce and security.
This includes a blockchain network that separates app functionality from a main chain and side chains. The main chain executes payments while the side chain executes the smart contracts that trigger the transactions. Other pillars include a software development kit that supports apps and developers who build e-commerce sites and payments on top of Elastos; the Elastos Token, which can be used for investing, trading and payments; and the Elastos Carrier, a decentralized P2P internet service.
Elastos does not yet have formal users, though it does have technology collaborators such as Coolcoin, Coinlink, Bitmain and Coinspot.
Among the use cases Elastos envisions are payments security, since Pachhai says personally identifiable information is not stored centrally. The project also hopes to power order fulfillment by placing a transaction stamp on different steps in e-commerce such as order placement, payment and shipping. E-commerce companies and fintech developers will use Elastos similar to an app store.
“Blockchain gives you the benefit of not having a single point in terms of database communication,” said Gabriel Wang, an analyst at Aite Group. That boosts transparency into transactions and data for a wider range of users, he added.
The lack of a "single point" aids in both security and user control, Wang said, noting that even geographically dispersed traditional databases communicate in a single direction. “With a blockchain, there is no master database relationship.”