Blockchain and the potential impact on the IT Channel

Crypto Currency and Non-Fungible Tokens (NFT) have become a phenomenon in our online worlds, some people have made millions, many more have lost out and scams been run on those seeking to benefit from these new asset types. This new technology is part of Web 3.0 (1) and is underpinned by the Blockchain, what is it and how might it have an effect on the IT Channel?

What is blockchain?

Blockchain is a technology that allows people to store and exchange data in a secure, transparent, and decentralised way. Blockchain can be used for many purposes, such as tracking money, assets, contracts, identities, and more.  Data in the Blockchain is distributed across a network of computers, rather than being controlled by a central authority. This decentralisation makes it a disruptive solution and one that fits well with solutions running in the Cloud.

A blockchain is a system of records that are linked together using cryptography. Each record is called a block and contains some data and a reference to the previous block, forming a distributed ledger. The blocks form a chain that shows the history of all transactions that have occurred on the network. A blockchain is shared by all the participants in the network, who can verify and update the data using a consensus mechanism. Once a block is added to the chain, it cannot be changed or deleted.

How does blockchain work?

To understand how blockchain works, let’s use an example of a simple blockchain network that tracks money transfers between users.

Suppose Bungle wants to send Zippy 10 Rainbow Dollars on the network. Here are the steps that would happen:

  • Bungle creates a transaction that specifies the amount and the recipient of the money. He signs the transaction with his private key, which proves his identity and ownership of the funds.
  • Bungle broadcasts the transaction to the network, where it is validated by other nodes (computers) that run the same blockchain software. The nodes check that Bungle has enough Rainbow Dollars and that the transaction follows the rules of the network.
  • The validated transaction is added to a pool of pending transactions, waiting to be included in a block.
  • A node that wants to create a new block, called a miner, selects some transactions from the pool and tries to solve a mathematical puzzle that involves hashing (a process of generating a unique code from some input). The puzzle is difficult to solve but easy to verify, and it ensures that only one block can be added at a time.
  • The miner who solves the puzzle first, broadcasts the new block to the network, which contains the selected transactions and a hash (a unique fingerprint) linking to the previous block. The other nodes verify that the block is valid and append it to their copy of the chain and it becomes part of the shared ledger.
  • The block is now part of the blockchain, and Bungle’s transaction is confirmed. Zippy receives the money and can use it for his own transactions.
  • The more blocks that are added after the transaction’s block, the more secure and irreversible the transaction becomes.


What are the benefits of blockchain?

Blockchain has many advantages over traditional databases or centralized systems, such as:


  • Security: Blockchain uses cryptography and consensus to ensure that only authorised users can access and modify the data, and that no one can tamper with or delete the records.
  • Transparency: Blockchain provides a public and verifiable record of all transactions that have occurred on the network, which increases trust and accountability among the participants.
  • Decentralisation: Blockchain does not rely on a single entity or authority to control or manage the data, but rather distributes it among multiple nodes that cooperate and compete with each other. This reduces the risk of corruption, censorship, or failure.
  • Innovation: Blockchain enables new possibilities and applications that were not possible before, such as smart contracts (self-executing agreements), digital tokens (representations of value or ownership), and decentralized applications (services that run on the network).

What are some examples of blockchain use cases?

Thirty years ago, the options for private individuals to sell their second-hand goods was limited to a local market via newspapers and market stalls. Along came eBay with a set of tools to allow nationwide/global marketing and tools to protect buyers and sellers to enable trust in transactions between two parties who had never met. Blockchain takes this concept to the next level providing strong identify management, proof of asset ownership and an undisputable/immutable record of the transaction. There are many business areas that we can identify and many more as yet unforeseen scenarios that could benefit from this technology, as outlined below.


  • Supply chain management: Blockchain can enable more efficient and accurate tracking of goods and materials, from their origin to their destination, reducing costs and risks of fraud, theft, or human error.
  • Smart contracts: Blockchain can facilitate the execution of self-enforcing contracts that are triggered by predefined conditions, such as payment, delivery, or performance. Smart contracts can reduce transaction costs, increase trust, and enhance security among parties.
  • Digital identity: Blockchain can provide a decentralized and immutable way of verifying and managing one’s identity online, without relying on third-party providers. Blockchain can also enable more control and privacy over one’s personal data, as well as more secure and convenient access to various services. This aspect could become a core tenant of any process requiring identify confirmation from person and business transactions through to voting systems.
  • Financial services: Blockchain can enable faster, cheaper, and more inclusive access to financial products and services, such as payments, remittances, lending, insurance, and asset management. Blockchain can also create new opportunities for innovation and competition in the financial sector, as well as new challenges for regulation and governance.
  • Healthcare: Blockchain can enhance data sharing, privacy, and security of medical records, prescriptions, research, and more.


What are the potential challenges with Blockchain / Web 3.0?

Blockchain also faces some limitations and barriers, such as scalability, interoperability, security, legal uncertainty, and social acceptance. Therefore, blockchain is not a panacea for all business problems, but rather a promising technology that requires careful evaluation and adoption. In many cases Government and Industry Body Regulation will need to be created or adapted to support the disruptive solutions Blockchain enables.

What are the implications of Blockchain on the IT Channel?

The large number of use cases for Blockchain across many vertical lines of business creates a significant opportunity for the IT Channel. Being in a position to help your customers deal with such a disruptive technology to re-engineer existing business processes or create new ones, positions the IT Channel provider as a true trusted advisor and not just a technology reseller. According to Gartner ‘Blockchain is clearly heading out of the Gartner Hype Cycle’s Trough of Disillusionment, and now is the time to act‘ (2) .

The full realisation of Web 3.0 will compound the capabilities of Blockchain with other trends including AI, IOT, VR, Edge computing and 5G communications. Each of these technologies will enable a significant, incremental improvement and combined they present the opportunity to revolutionise what IT enables businesses to achieve. Twenty-five years ago, the signs of change were there but few people would have expected the change that the Web 1.0 technology would make to the way we conduct business. It’s looking like Web 3.0 might enable an even bigger shift, the IT Channel providers that grasp this opportunity are likely to be the long-term winners.

In summary, Blockchain is not a technology lead play for the IT Channel, it’s a disruptive business process improvement play that interlinks many different technologies and is grounded in some interesting technology principles that all technology companies should really have an opinion on.  Whether you subscribe to cryptocurrency being the next financial services sector or not, the reality is that Blockchain based customer processes are definitely part of the mix beyond standard data structures, and if you want to capitalise on this you need to really determine to what extent you should invest, and build the skills to support that investment for when Blockchain becomes more prominent in the mainstream IT Architectures.