Blockchain is a distributed ledger protocol (DLP) used to record transactions across many computers so that, allegedly, the record cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network (see point #2 below). The theory is there is no single point of failure in that one person, organization or computer is really in charge of validating each transaction. Multiple, independent, distributed “computers” process the transactions and arrive at the same conclusions, thus entered into the ledger.
Annually, Gartner Group publishes the “Hype Cycle for Emerging Technologies”. Two or three times a year we give technology webinars debunking technologies that have appeared on the Hype Cycle – 2017 is shown below. Blockchain is leaving the “Peak of Inflated Expectations” and moving into the “Trough of Disillusionment”. Our prediction is that it will not make it out of the trough.
Blockchain’s decentralized design has transformative potential but, the technology is unlikely to have significant effects on any industry until post-2025. Today, blockchain technology does not have scalability, functional scope, performance, efficiency, flexibility, interoperability and operational manageability.
Functional scope is critical to us in the offshore oil and gas, exploration and production business. We often utilize 1980s software engineering practices and we are expecting to implement a 2025 technology?
Why do you care?
- Thought leaders and conference flacks in our industry are acquiring companies, publishing articles, hosting conferences and making pronouncements about how blockchain will “fuel the next oil boom!” and other such claims. It is getting publicity and becoming the latest buzzword.
- Blockchain is NOT as secure as advertised. For example, starting on Friday, 18 May 2018, a hacker mounted several attacks on the Bitcoin Gold (BTG) cryptocurrency DLP and amassed over $18 million worth of BTG coins in the process. How did he attack the exchanges? He took control of more than half of the BTG servers and modified the details of blockchain transactions.
- Blockchain is a solution looking for a problem in exploration and production. You are not going to use it to manage seismic data. You are not going to use it for alarm management. You are not going to use it to analyze downhole sensor data. E&P just doesn’t have much need for transactional processing.
- Finally, you care because you have better ways to invest your time and money in E&P. Things like advanced data visualization to be able to look past the next salt dome.
What can you do about it?
Please contact us if you’d like more information. We’d be more than happy to chat, do a webinar lunch & learn for your team or just send you some more references. Friends don’t let friends use inappropriate technologies.
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