Blockchain hardware in your data center might not solve any problems

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Blockchain could soon descend from the cloud to live in enterprise data centers.

Blockchain, an emerging technology that tracks the transactions of digital assets without a central authority, has primarily run from the public cloud. Now vendors have begun to explore how they can tap into this interest by supporting blockchain hardware uses on enterprises’ own IT infrastructure.

“It makes perfect sense to me, because the way I look at blockchain is as a replacement for a transaction engine and database,” said Patrick Moorhead, president and principal analyst at Moor Insights & Strategy in Austin, Texas.

Hewlett Packard Enterprise (HPE) in recent months has made moves to bring blockchain benefits to enterprises’ direct control. Earlier this month, Cisco joined the governing board of the Hyperledger Project, with an eye toward management and interoperability of network appliances. At Dell EMC World in May, meanwhile, the large hardware vendors barely mentioned blockchain.

And last week, Microsoft and Intel launched the Coco Framework, which runs blockchain on Microsoft Azure using Intel hardware. It’s designed to run on premises or in the cloud and be compatible with any ledger protocol, according to the companies.

Most of these efforts are still very nascent, and the vendors don’t yet have a lot of expertise, said Peter Harris, co-founder and research principal at Chain Business Insights LLC in Austin, Texas.

IBM is the early leader in blockchain in part because it has many financial services and retail customers with transaction-heavy applications — but HPE has many airline and drug company customers with similar reliance on transactions, and some of those projects include an on-premises component to the blockchain hardware deployment, Moorhead said.

For example, the Digital Trade Chain Consortium, made up of seven European banks, has built a trade finance platform that uses IBM Blockchain and Hyperledger Fabric. Five of the banks use IBM Cloud and two built it in their own data center, said Keith Bear, vice president of global financial services at IBM.

The banks need nothing unusual to run the technology locally — it could be built on commodity hardware and x86 architecture, Bear said. The only reason to use blockchain on premises versus in the IBM Cloud is determined by a company’s own cloud policy or what its IT team is equipped to take on locally.

There is definitely a segment of the market that is looking to run blockchain in enterprise data centers and now they are looking around for help to do that.
Peter Harrisco-founder and research principal, Chain Business Insights LLC

All consortium banks agreed on the core blockchain functionality and interfaces with internal systems. The Digital Trade Chain Consortium uses IBM High Security Business Network (HSBN) in an IBM Cloud data center, based on LinuxONE, for the ordering service for all consortium members. HSBN is home to the secure infrastructure for the foundational elements of blockchain. Those that built their portion of blockchain locally must integrate with the blockchain API, monitoring and logging services and hosting, Bear said.

Meanwhile, HPE has conducted a pilot with the Commonwealth Bank of Australia to buy and sell investment units on blockchain. But companies implementing production deployments of blockchain tend to use public cloud or generic infrastructure and wonder why it doesn’t scale, said Raphael Davison, global director of blockchain at HPE.

“If you take an app, put it on generic hardware and you kill the [java virtual machine], the transaction doesn’t go through, it just disappears,” Davison said.

HPE’s strategy to support blockchain is to use technology it acquired when it purchased Tandem in 2003, Davison said. Tandem is known for its NonStop transaction processing technology, which is commonly used for financial applications.

“If I am in the data center, I am betting my job on those transactions running, and today they are running on the NonStop,” Moorhead.

Blockchain on prem shouldn’t scare IT

Blockchain software does not appreciably differ from other enterprise data center applications, Harris said — but there is no specific reason that blockchain would run in an enterprise data center over the cloud, either. IT leaders will make the same decisions about where it runs as they would with a database or ERP, with considerations for security, performance and manageability, among other factors.

“It really comes down to a view of the world where you have decided you want a more controlled environment,” Harris said. “There is definitely a segment of the market that is looking to run blockchain in enterprise data centers and now they are looking around for help to do that.”

Almost all financial services companies have examined blockchain, but it is not yet deployed widely, said David Linthicum, senior vice president at Cloud Technology Partners.

In fact, the push for blockchain in an enterprise data center comes from hardware vendors and is not driven by customer interest, he said. Blockchain’s distributed, complex nature could potentially cause performance problems and stress an enterprise’s network, he said.

Robert Gates covers data centers, data center strategies, server technologies, converged and hyper-converged infrastructure and open source operating systems for SearchDataCenter. Follow him on Twitter @RBGatesTT or email him at rgates@techtarget.com.

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