Blockchain is a subject that’s getting a lot of attention these days, and for good reason. Blockchain is an undeniably ingenious invention. By allowing digital information to be securely and transparently distributed but not altered, blockchain technology is creating a backbone of a new type of digital record-keeping. Originally devised for the digital currency, Bitcoin, the tech community and forward-looking organizations are now finding, or looking for, other important and disruptive uses for the technology.
Is records management ready for blockchain? The answer for me is that it depends on the specific use case for blockchain with regards to records management, and whether the added value is worth the cost. On one hand, you could conceivably use it as a database to securely retain all of the metadata for all of your records. The problem, however, is that the approach would be astronomic overkill; expensive both from a cost perspective as well as a data usage and bandwidth perspective. Imagine replicating an entire content management database to hundreds or thousands of computers in a network, with multiple systems running complex mathematical algorithms to validate the data each time a new piece of information is added. And, always adding information – never purging.
Chain of Custody
Blockchain may not be a panacea for records management, but there are applications where it can be a powerful tool. For instance, if you need a way to securely send a document from a repository to a third party, and you want to verify that nothing has intercepted it or modified it along the way, then blockchain would be a good fit. The information is encrypted securely and if it had to go through any third parties you can ensure that whoever is along the chain has been included in the trail of custody — you have a ledger of who touched it and anything that was added to the document along the way. Blockchain works to authenticate the document and the document contents.
Risks
With all the benefits of blockchain, there are some hidden downsides that often get overlooked. According to the science journal Nature, blockchain technologies like Bitcoin and others are power-hungry and the impact of CO2 emissions is predicted to push warming above 2 °C within less than three decades. This has both scientists and economists worrying about growing electricity use. A new study published in Joule argues that, globally, bitcoin crypto-mining consumes at least as much electricity in a year as all of Ireland (about 24 TWh). While other experts disagree, the fact is that blockchain is not free and may indeed have hidden costs and implications not only to businesses and organizations, but the large whole of society as well.
A powerful aspect of blockchain is secure and validated encryption, but anything that is encrypted must have a key, and if the key is lost then so is the data. A recent Wall Street Journal article details the case of a Canadian cryptocurrency exchange where the customers’ holdings are trapped in an electronic vault after the firm’s founder allegedly died without revealing the access keys to unlock his laptop.
Bruce Schneier of Wired goes so far as to make the case that there’s no good reason to trust public blockchain technology.
Smart Contracts
One of the hottest features of blockchain is its ability to facilitate “smart contracts.” Smart contracts allow certain digital processes to take place only when certain conditions have been met and are being used in manufacturing and Supply Chain Management to automate the moving of materials based on predefined conditions. One real-world example in records management would be a freight company (like FedEx or UPS) using blockchain smart contracts to prevent the company from accepting material from a shipper that has failed to verify that their product has met certain criteria or regulation. This type of custodial documentation chain is invaluable, for instance, during the recent incidents with transportation of lettuce tainted with salmonella. Where did the lettuce come from, who handled it, and what happened along the way? Additional examples in Healthcare, insurance, legal and government operations all come easily to mind.
Best Practices
Any company planning a blockchain initiative needs to know that more is involved than just the business case for the technology. There are technical and operational issues that must be considered as well. Here are a few important questions to ask as you plan your strategies.
- What data do you plan to put into the blockchain?
- Will it be a public or private network?
- Does blockchain solve a problem that cannot be solved otherwise?
- How will encryption keys be protected?
- How are you going to synchronize what’s happening in the blockchain with the rest of your enterprise systems?
- How do you extend your smart contract logic — the basis of most business-oriented blockchain projects — into your other business process logic?
- How will you analyze the data?
- How many assets are you trying to record on the blockchain?
- How many participants do you have?
- What is the complexity of the smart contract?
- Who can see what part of the ledger?
- What is the value for us in using Blockchain?
Moving Forward
It is my hope that the records management community begins to have more discussions and exploration about the use of blockchain in records management. It is important to temper the promise of blockchain with the realization that there are costs and implications that go beyond the promise of digital transformation. Blockchain is something we need to seriously consider before we dive in and start using it.
Disclaimer: The purpose of this post is to provide general education on Information Governance topics. The statements are informational only and do not constitute legal advice. If you have specific questions regarding the application of the law to your business activities, you should seek the advice of your legal counsel.