3 Ways Blockchain is Impacting Analytics
As a revolutionary technology, blockchain has a potentially significant impact on data and analytics organizations, who can incorporate it into their processes.
When most people think about blockchain technology, they automatically associate it with cryptocurrency such at bitcoin. The reality is that blockchain is so much more than a component of this and other decentralized currencies. It is a protocol that describes how transactions are defined, connected, transmitted, and collected. Inherent to its design are the processes needed to establish consensus when updating a data store in a way that guarantees its non-repudiation.
As the blockchain technology breaks free from its early beginnings, companies are finding new and innovative ways to put it to work to enable business processing. The realm of data and analytics is no different. These teams are also looking for ways to integrate blockchain into their processes to further support their businesses.
Three ways data and analytics teams are using blockchain are in data monetization, data and document integrity, and fraud prevention.
Smart Contracts and Data Monetization
When a company recognizes that it has data valuable to others, it looks for ways to monetize that data. This requires establishing a relationship between the seller of the data and the potential consumer.
As part of the blockchain concept, there has arisen the notion of a smart contract — an entry in a blockchain that contains a snippet of code. When an action occurs in the blockchain, that code is executed. These code snippets are limited to reading from the blockchain and writing to the blockchain, but with these two features, complete transactions between parties can be automated. If the smart contract needs to interact with information from the physical world, a blockchain oracle can be used. A blockchain oracle is a third-party intermediary that provides information that can be connected to the smart contract, providing knowledge about activity in the physical world.
With these smart contracts, data consumption can automatically trigger a payment for access. These smart contracts create near-certainty of a trusted exchange of value between two parties, who may be known or anonymous. The smart contract is immutable and irrevocable. This concept minimizes, or even eliminates, third-party intermediaries as the gateway to your data and allows for a consensus-based transaction, even when the parties are not known to one another.
Because the payment for data services uses cryptocurrencies, it eliminates the concept of national borders and their associated currency. This greatly enhances the ability to sell your data in an international environment without the need to support cross-currency transactions or currency conversion fees. Eliminating the steps in monetizing your data can reduce its cost, which can lead to lower costs for the consumer and higher profits for the provider.
Non-fungible tokens, or NFTs, are one of the most popular examples of data monetization. An NFT is defined as unique, non-interchangeable information that represents a piece of digital media. This could be any digital asset, including fine art, videos, songs, photos, documents, or even data sets. These assets could be digital-only, or they could be digital representations of physical assets. In the end, the digital representation of the asset is just another form of data and NFT creators have successfully leveraged the blockchain to create a booming segment of the economy.