Chatbots and Blockchain
Is blockchain pure hype or a game-changing solution that you should consider adding to your existing chatbot solution? We answer that question in this article.
March 19, 2019
Ever since Bitcoin reached a high of nearly $20,000 per coin December 2017, commercial interest in the underlying blockchain technology has surged. Not since the dot-com heyday has there been such overwhelming coverage of a single transformative technology. So, what does blockchain have to do with chatbots, and why should you care? Although chatbots are becoming increasingly commonplace, the question remains as to whether they’ll be secure enough to become truly ubiquitous. This is where blockchain can help.
A 2017 study by HSBC of 12,000 customers worldwide showed that only 7 percent of people surveyed would trust a robot to open a bank account for them, and 20 percent would trust a robot to open their parachute. Like most new things, there is always a bit of hesitancy to jump on board.
Adding blockchain to chatbots can create a backend capability that, for example, shows the end user the number of successfully completed transactions performed by that chatbot. For a company, this also reflects the company’s trust score on that blockchain network.
But first, what is blockchain and how does it work?
Blockchain, although sometimes synonymous with Bitcoin, is a stand-alone technology that powers a variety of ledge-based applications (like cryptocurrencies). At its core, blockchain is an encrypted immutable distributed ledger providing evidence that a transaction occurred. This is called Distributed Ledger Technology (DLT).
Allowing everyone to have access to this ledger increases accountability without having to utilize a centralized database, like a bank. Every blockchain network has a trust score for each one of its users. This score varies based on real-world performance. Blockchain was implemented to solve the age-old problem of trust between buyers and sellers or between information requesters and providers.
It works like this: when information is sent from one source to another, a new timestamp is created, which is added to a ledger, and simultaneously replicated across many trusted copies. This ledger is accessible to anyone on the supply chain. At each stop, also called nodes, the information gets a unique timestamp, which allows the information to be accurately traced. It’s like a passport or the checkout slip in the back of a library book. The only difference is that the human element of validating each transaction has been removed, allowing for massive numbers of transactions to occur at once, and validation checks occur across many-multiples of copies, making it extremely hard to falsify.
This system of chain and nodes is the foundation of cryptocurrency. When Bitcoin was created in 2009, this digital currency needed to be tracked and monitored to provide security and trust for Bitcoin’s users. And, by using blockchain technology, Bitcoin eliminated the need for a third party or centralized bank to make sure that your money is safe and that your transactions are successful.
The added bonus to using blockchain is that everyone on the supply chain can see where their currency came from and where it goes after they spend it. Banks only allow you to see your transactions. This limits you to seeing the journey of your money from the time you receive it to the time you spend it.
So where do chatbots come in?
Blockchain technology is foundational for cryptocurrency, but cryptocurrency is just one of many applications for which blockchain technology is useful. Many other industries are also utilizing this technology to make their products more credible. Here are a few examples of chatbots and blockchain technology working together:
Point of sales
If you’re creating a chatbot that will take orders and execute purchases, incorporating blockchain timestamp technology into a sales bot allows the customer to trust that their money will be transferred and that their products will be received. If a bot uses blockchain to complete a transaction, the bot can receive a reputation score, which can be presented to future customers to establish that this is a trusted format for making purchases.
Many products come with a warranty, and customers enjoy the peace of mind of knowing that their purchases are protected. But a customer must keep a physical copy of the warranty. Keeping track of the warranty—and finding it when the time comes to use it—can be pretty inconvenient. Companies looking to fix this can create a bot that digitally registers warranties for that organization’s products. A customer only has to take a photo of the warranty’s QR code and send it to the company’s bot, then blockchain timestamps and stores the warranty information. This protects both the company and the consumer from fraudulent claims.
Much like the warranty bot and blockchain pair, bots are also able to handle contract execution. A customer or business can use a bot to send and manage contracts between two parties. After the documents are properly filled out and filed, blockchain’s timestamp technology acts as a digital notary.
Is the chatbot market ready to embrace blockchain?
Not many small companies have access to a staff that can support and secure a large blockchain supply. Establishing a blockchain network is a complex undertaking, better suited for larger projects and organizations.
The market is rapidly changing, though, and, in the near future, this solution will be more approachable to smaller development teams. Soon enough, entire industries will have access to an open-source blockchain network, offering a simple and easy onboarding process for new companies.
These networks are currently being created at an enterprise-level in shipping, institutional investing, healthcare, and global supply networks. And services providers have tremendous opportunities to create blockchain networks that serve broader markets.
There is a wealth of potential blockchain-chatbot projects out there. Possible applications include:
- Chat logs, phone logs
- Medical records
- Receipt management
- Personalized financial planning
- Asset management
- Supply-chain management and inspection
- Smart contracts
- Insurance adjustment
- Photo and video validation
- Identity indemnification
- Product Authentication
With the rise of chatbots and worries around security, we anticipate the ascent of blockchain-chatbot implementation. Starting to think now about ways that the two can work together will serve you well in the future.