AWS CEO Andy Jassy on stage at AWS re:Invent 2018

One of the most common questions I get about blockchain is “What else is it good for besides cryptocurrency?” 

This is a fair question. Blockchain fulfills a need for distributed, immutable ledgers. The technology brings trust to environments where falsification and counterfeiting are especially dangerous. That’s why it was initially used for virtual money. The real fear of counterfeiting in digital currency led to the development of a system where change was difficult and trust built in.

Similar Problems, With a Key Difference

Other applications have the same problem, especially supply chains. For example, when someone buys a part for an airplane, they really need to be sure it is a real manufacturer part built to certain tolerances and using specific materials. A counterfeit part can kill people.

There is a big difference between cryptocurrency and supply changes though. Unlike the paper and coin money that most everybody uses, cryptocurrency is extranational and non-sovereign. No country or even bank controls this money. Non-sovereign currency is an open and uncontrolled environment — anyone can make the money — and hence the trust mechanism must be distributed. In the case of cryptocurrency, both the trustworthy ledger and the distributed nature are important, hence blockchain.

Supply chains, however, are mostly closed. Partners, suppliers, transporters and consumers are all generally known. The problem still exists of an unscrupulous member of the supplier chain substituting bad products for good and the need to be sure where and when products are, which is why the ledger is important. The distributed part is not nearly as important because the participants are known.

Related Article: Your Strategic Blockchain Questions, Answered

The Benefits of Blockchain, But for Closed Systems

The revelation that many blockchain capabilities don't actually apply to many blockchain applications was what drove the new AWS product, Amazon Quantum Ledger Database, or QLDB. AWS CEO Andy Jassy introduced the product at its recent AWS re:Invent conference. QLDB brings the immutable, cryptographically verifiable aspects of blockchain to a centralized database. It is an append-only database like blockchain but held centrally like a traditional database.

Amazon QLDB will enable many of the same applications as blockchain but with less effort. For example, financial clearinghouses could use this technology instead of blockchain because there is a central authority. Peer-to-peer payments is an example of the type of financial application that could benefit from this technology. The same holds true for tracking products from manufacturer to consumer. Ultimately, it is in the retailers’ best interest to know where a product came from and who it was sold to with confidence. The same could be said of tracking patient histories in healthcare organizations.

None of these applications need to implement a distributed ledger since they are closed systems. They do need to establish trust amongst participants. This is what makes Amazon QLDB such a great idea. It allows companies to ingrain trustworthiness in their applications without having to manage all the blockchain overhead and developmental complexity.

Blockchain is a great technology but is too much for many applications. Amazon QLDB provides just what the developer needs for certain classes of applications.

Related Article: Blockchain Will Stall Until it Finds Its Killer App