Blockchain has existed for over a decade. Despite all the popular hype around its use in cryptocurrencies, many companies and industry bodies are now exploring potential business applications for the technology. There are blockchain trials in areas such as payments, processing and settlement, microtransactions, asset management, identity and access management, and automated compliance.
The benefits of using blockchain in these areas include cost reduction (through the removal of central agencies and intermediaries), new business model generation, and tokenization (replacement of traditional fiat currencies with those of blockchain investors and founders). Many of the most developed use cases involve financial transactions. However, due to the inherent security attributes of decentralized, redundant ledgers, hashing/encryption, and other privacy-preserving techniques used by blockchains, security-related applications are also significant.
The question is whether the value of eliminating the friction point for a particular workflow in IoT is worth the investment in implementing a new technology and in dealing with new complexities. For more widespread adoption of blockchain as part of IoT deployments, the technology needs to overcome two main technical challenges; scalability and interoperability. The longer a specific blockchain is in use, the longer its chain gets and the cost of sustaining the blockchain can rapidly escalate, both in terms of storage required and compute time.
Although there are some technical and business standards for specific use cases such as international trade transactions and smart contracts, at present different versions or variants of blockchain are fundamentally incompatible with each other. Barring regulatory intervention or concerted industry pressure, there is little likelihood that different blockchain consortiums will make their technologies work with one another.
Although there is a lot of interest among leading telecoms wholesalers in the use of blockchain in smart contracts and inter-carrier settlement, there is also a healthy degree of skepticism. The proponents of blockchain technologies promise greater transparency, traceability, and security, through the use of distributed and immutable transaction ledgers that create a "shared source of truth among parties." However, questions remain about the technology's ability to scale and provide the necessary "telco-grade" resilience. Furthermore, the lack of standards and regulation, particularly for interworking between different blockchain implementations, and between blockchains and existing systems and processes (such as SWIFT), raises serious concerns among carriers.
Blockchain certainly has potential as a tool in carriers' digital transformation as they seek to reduce costs, delays, and fraud. However, many issues still need to be resolved before we can expect to see widespread adoption of the technology in inter-carrier contracts and settlement. More industry collaboration is required to help shape the development and adoption of blockchain in international telecoms.