24 April 2018
Priya Lakshmi

BlockchainandAI Enthusiast

Priya Lakshmi - Wipro

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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Un-’block’ your business 1.0: Blockchain and Crowdsourcing- A marriage made in heaven

21 December 2017  |  7827 views  |  0

The rise of the gig economy has given rise to many marketplaces and businesses – eBay, Uber, AirBnB and the like that support this shared services economy. Uber and AirBnB disrupted the current business models of hotels and taxis but it is not too far away that technology like Blockchain can disrupt this very model and put the control back in the hands of the supplier and the buyer. Blockchain based marketplaces like OpenBazaar have started doing exactly this, instead of paying a central intermediary for each transaction, the users pay transaction fees to the ‘miner’ that approves the transaction and miners can be anyone on the network. In this blog, we will see how businesses can marry blockchain and crowdsourcing in a perfect two way marriage to both solve the problem of finding talent for such a nascent technology and at the same time leveraging blockchain to setup this very eco-system and reward the developers with cryptocurrency.

Almost every large enterprise has started experimenting with blockchain and some of them have even deployed enterprise grade blockchain based solutions for either a new line of business or to achieve efficiencies in the current operations. As soon as organizations get serious about any new technology, the biggest question (apart from regulatory, interoperability and standards in this case) is the ability to consistently support this new baby and therefore finding enough talent to sustain their new ventures.

 

Why is crowdsourcing the right partner for blockchain?

Blockchain implementations require deep talent in newer technologies like Go, Python, Rust etc. A typical job specification for a developer will start with the words ‘FULL STACK’ and go on to add things like good knowledge of cryptography, decentralized technologies, data structures, threat analytics, anomaly detection, Ethereum, Node.js, Javascript, AngularJS, Bootstrap, Java, Python, Go, Rust. Ok, now that sounds like a super human or a unicorn profile. Every business owner or manager seeking that sort of profile already knows that they need to make a compromise while finding one. The other key challenge is since the technology is still in experimenting stages for many, it may not be wise to permanently hire these developers on to your books as it is not sure whether the organization will be able to offer a career path to these individuals. Traditional sourcing models of in-sourcing (permanent hires) or outsourcing (requiring an IT services partner to hire) may not be the most optimized solution in this case.

Crowdsourcing offers the answer to this difficult problem. Computer science graduate and post graduate students who are passionate about the technology have registered themselves onto various crowdsourcing platforms and offer their service to code over evening and weekends to earn extra money (maybe for some beer or that gift to their girlfriend!). These technical gurus bid for any work put on the platform and the buyers of the service get the option to choose from among the various outputs based on quality vs price. For blockchain projects, crowdsourcing could be used to develop the user interfaces, developing smart contract code and for tuning any existing code for scalability.

While this sounds like an ideal solution to the lack of skills problem, so many people (customers and others) I have spoken to ask me how could they be sure of the security of a code sourced from an ‘unknown’ person in the crowd ? How can they make sure they are operationally compliant and will not end up explaining to their regulators that they used a process that they cannot directly trace or control? These are in today’s marketplace resolved using intermediaries just like the AirBnB and Uber businesses.

What does Blockchain offer to this marriage?

So here enters our perfect marriage partner – the blockchain. Blockchain allows any two parties to exchange value in a decentralized secure manner. Every transaction that happens on a blockchain is secure (with cryptography) and therefore immutable. And it is timestamped and therefore offers an excellent audit trail of what happened when. In addition, blockchain also offers ‘incentives’ to earn in cryptocurrencies which can be used by the community of developers to exchange ‘value’. These qualities help alleviate the concerns raised on being able to clearly track and audit the entire code generation and approval process.

The developers, the code approvers (or ‘miners’)  and the software buyers can register onto a public marketplace built on blockchain to sell, approve and buy software development services. Similar to the model of OpenBazaar (blockchain based eBay), a small transaction fee could be charged which will be paid to the people maintaining and operating the network. The blockchain network operators could also have inbuilt code checks using CheckMarx, Blackduck etc that check for hacks, viruses and IP breaches on any developed software that is being sold on the network. Developers registered on the platform can bid for work being posted by the buyers – just like OpenBazaar users buy and sell products. Buyers registered can post coding opportunities and offer to pay with cryptocurrencies. Any developed code could then be posted onto the blockchain for ‘approval’ using the consensus mechanisms. The code approvers could then earn cryptocurrencies on the blockchain that can then be used to buy code from others. Code approvers could be other developers or even other buyers on the network.The network could use a Proof of Stake consensus to ensure that the code approvers actually stake their cryptocurrency to ensure that the code is water tight and therefore no breaches or leakages are ever passed on to the buyers.  

Could organizations start by leveraging this shared economy principles internally and solve IT budget issues?

While the marriage described above can work perfectly fine using public Blockchains, enterprises are still only comfortable using permissioned Blockchains (thanks to DAO attack and the recent hacks on wallets and the like! – there will always be some bad players). So why not use the above idea and ‘start’ with setting up an internal blockchain based crowdsourced platform and allow all the development community (internal staff, vendor staff , contractor staff , temps) to register onto it and code for some extra currency (cryptocurrency!). This way any coding challenge (from any department) could be resolved by an expert from any other department without always having to ask for new budgets to hire someone new to solve the problem. But one would ask, why do I need blockchain for that? Fair point and the answer is twofold – one you can pay the community with cryptocurrency so you don’t need new budgets but still incentivise people and two you still have external staff on it so you do need the security aspects of the blockchain ! And one could always start using this for blockchain projects to solve the skill (and budget) problems!

 

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