Advisen

Mysteries - and opportunities -- of blockchain unveiled for Advisen CRIC attendees

By Erin Ayers, Advisen

SAN FRANCISCO -- At its heart, blockchain captures and secures the “journey of data,” providing opportunities for management of risk and development of new business models that meet the changing demands of society, attendees of Advisen’s Cyber Risk Insights Conference heard here.

Keynote speaker Cristina Dolan, founder and CEO of InsideChains, explained that blockchain represents “one small part” of the technology evolution. It enables the gathering of data across many different siloes, records it, and secures it, she noted. The trusted ledger technology itself evolved from bitcoin, “the grandfather of blockchain,” and there are many, many versions of blockchain, both public and private.

If data is the new oil, blockchain facilitates drilling that well. Gathering data comes with a host of obstacles, including regulatory requirements and costs to mine data and “normalize it.” Blockchain ameliorates some of those concerns and offers security to the process.

“It’s very expensive to normalize and mine it. Once you have it together, you don’t want it stolen,” said Dolan. “So, you can understand why people who are criminals want to steal data because it has so much value once someone has taken the time to organize it and clean it.”

Data has value not only to businesses, but criminals as well, she noted, adding “It’s cheaper to steal data than go to a museum and try to steal a Picasso.”

And while blockchain itself is a secure technology, that doesn’t mean the use of it is foolproof. Human behaviors, such as losing keys, accounts for a lot of risk these days.

“When it comes to risk, it’s not necessarily the technology, it’s the ecosystem around it and the people and how they use the ecosystem,” said Dolan.

The risks appear to be acceptable ones, though, as use of blockchain to gather data has significant potential that is already in play for many businesses, particularly the insurance industry. Gathering data throughout a supply chain, recording it, and securing it allows businesses to see where risks arise and manage those risks for the future. For example, smart sensors on ships that record temperatures can indicate problems for food shipments and reduce the risk of spoilage.

Dolan cited another example of fleet management – blockchain can capture drivers’ hours of service to ensure compliance with regulations as well as using GPS, time stamps, traffic and accident data to assist with managing both the fleet and ultimately the cost of insurance.

Dolan concluded by telling the audience that blockchain provides greater efficiency, transparency, and opportunity, but requires diligence on the part of users.

“If you don’t manage it well, there’s huge liability, especially if you’re in the financial space,” she said.

Other speakers through the day highlighted other risks and rewards from blockchain, including some “game-changing” uses for blockchain. Applications such as sharing underutilized resources like computing resources or storage, smart contracts, and chain of custody records to improve risk management are made possible via blockchain, according to Evgueni Erchov, associate director of cyber investigations at Kivu Consulting.

In addition to the uses, the security of blockchain came up frequently – is it unhackable?

“Unlike encryption or tokenization, you can’t just throw math at it,” said Dave Sikora, CEO of ALTR. And private, permission-secured blockchains are the way forward for companies who want to tap into the opportunities of blockchain now. Public, permission-less blockchains exist, but companies would never put their data on open blockchains, he added.

Sikora also emphasized the need to treat data like money and protect access to it.

“The reason we see so many breaches is that organizations don’t treat data like money,” he said. “We ask, ‘how many people have access to your money? Now, how many people have access to your data?’”

Editor Erin Ayers can be reached at eayers@advisen.com.