Basically, many companies, especially in financial businesses, are looking at blockchain technology to simplify (and vastly cheapen) their “back room” operations. (Say goodbye to thousands and thousand of jobs!)
For this use case, they don’t want a public ledger a la Bitcoin, they want the same thing but on a private network. This variation begs the question as to what parts of the Nakamoto project do they need, and how are they going to use it? Furthermore, given the massive amounts of IT they already have, what is the “special sauce” provided by the blockchain, per se?
These are proprietary efforts, so there are limits to what I know. But let’s see what we can infer from one of these press releases.
R3 and Axoni announced a successful (in their own view) demonstration of how ot use a private blockchain to manage financial data, specifically records surrounding bond offers. The demonstration illustrated how multiple parties can have a “real time” trusted access to information about “which parties on the ledger have created, issued and proposed amendments to the data record”.
Judging from other similar projects, the actual documents and data exist in other systems, e.g., “curated” by one party or another. The blockchain seems to carry a cryptocgraphically signed version history of these documents. The idea is to be able to know, instantly and reliably, which is the current version of the information in question.
Assuming I have the idea basically right, then the system is making use of public key cryptography in an important way, though this isn’t “blockchain” technology, strictly speaking. The blockchain appears to serve as a reliable write-once store, and the consensus mechanism gives everyone confidence that everyone has the same information. It can still be wrong or dishonest, but everyone has the same bad stuff.
(How “real time” this might be depends a lot on what you mean by “real time”.)
I don’t see that they need the currency and mining protocols at all in this usage. The private network does the consensus protocol as part of the cost of participation, and there isn’t really any point to the alleged “incentives” of the Nakamoto mining process.
So how are they actually using the blockchain? There must be protocols similar to version control that post updates, properly sealed and signed. This presumably uses digital signatures to effectively notarize the documents and data objects, certifying who did what, when. The actual documents are not posted, but cryptographic checksums assure that anyone can confirm if a particular copy is valid or not.
The blockchain serves as a write-once bulletin board for these notarizations that cannot be tampered with. The consensus protocol essentially creates time stamps without trusting any single party or system. The time ordering is very important for accurately tracking changes and determining the “current version” of information.
The most important point, though, is that the systems must incorporate processes for efficiently pushing out information, properly sealed and signed, and for reading off the blockchain, properly checking seals and signatures.
These processes must, at their heart, have rules for who can sign what, and mechanisms for confirming the authority of the public signatures. Everything depends on managing secret crypto keys, and on having a mechanism for establishing which parties are trusted to do what.
These are challenging problems, but surely possible within a private network. They are not, however, specifically “blockchain” problems, nor does a blockchain help solve them.
So–is a blockchain necessary to build this system? Probably not. There are other ways to create distributed databases on a private network, and they probably perform similarly.
I would guess that a blockchain might be relatively inexpensive compared to other approaches, though given all the other components (they use a secure private network, for goodness sake!) who knows if that is significant.
Perhaps the distributed, Nakamoto consensus based timestamp mechanism is the most important feature. The fully distributed, non-disputable ordering of the records is a unique feature of Nakamoto style blockchains, and it is very useful.
In other words, a blockchain based ledger may actually be a very useful way to do this kind of version control across multiple independent parties.
But you have to implement the rest of the picture, including the human protocols to reliably use the system. The blockchain is only a tiny piece of the needed system.