Eleven ways Ethereum can benefit enterprise
Ethereum blockchain’s decentralised architecture provides a secure network that operates without intermediaries
According to Credit Suisse, the average lifespan of an S&P 500 company is under 20 years, down from 60 years in the 1950s, according to Credit Suisse.
The root cause of this massive corporate cull: Technology.
In order to survive enterprises must adopt new and emerging technologies – and the firms that do so will survive.
In the context of blockchain technology, enterprises have very different needs from individual users on a peer-to-peer network. In order for enterprises to fully adopt blockchains into their daily systems, companies require blockchain permissioning, privacy, performance, and finality (outcomes must be certain). These four functionalities are necessary for the management of sensitive data in high volume, quality tracking, and safety and regulatory compliance.
What is Ethereum?
Ethereum was launched in 2015 as a much more extensible and performant version of the Bitcoin payment system’s underlying blockchain technology. The Ethereum blockchain’s decentralised architecture – multiple distributed nodes simultaneously running the software that creates an immutable ledger — provides a network that is secure and that operates without intermediaries.
The power of the Ethereum blockchain is its programmability: agreements are embedded in the code so that transactions automatically execute. These digital agreements, or “smart contracts,” can have limitless formats, conditions, and even call on other contracts, making Ethereum useful not just for payment settlement, but for arbitrating transactional events in trade finance, supply chains, government registries, energy grids, real estate, law, and many other sectors.
Why enterprise Ethereum?
Enterprise Ethereum is designed to be low-cost, open, flexible, and offers the following qualities, either natively or through companies or protocols built on top of the foundational blockchain layer.
Data coordination: Ethereum’s decentralised architecture better allocates information and trust so that network participants do not have to rely on a central entity to manage the system or mediate transactions.
Rapid deployment: With an all-in-one SaaS platform like Kaleido, enterprises can easily deploy and manage private blockchain networks instead of coding a blockchain implementation from scratch.
Permissioned networks: Kaleido’s Blockchain Business Cloud enables enterprises to form consortium networks (private blockchains) in which privileged nodes can function as gatekeepers or regulators (i.e. stop executions, see encrypted state information in plaintext, etc). PegaSys, ConsenSys’ protocol engineering spoke, is currently developing Pantheon, an Apache 2.0-licensed Ethereum Java client which can be used for both public and private network use cases.
Network size: The mainnet proves that an Ethereum network can work with hundreds of nodes and millions of users. Most enterprise blockchain competitors are only running networks of less than 10 nodes and have no reference case for a vast and viable network.
Private transactions: Enterprises can achieve granularity of privacy in Ethereum by forming private consortia with private transaction layers. Constellation, Quorum’s privacy module, utilises parameters to allow participants to exchange private transactions. PegaSys has open-sourced Orion, a Java-based private transaction manager that facilitates transactions between authorized parties.
Scalability and performance: With Proof of Authority consensus and custom block time and gas limit, consortium networks built on Ethereum can outperform the public mainnet and scale up to hundreds of transactions per second or more depending on network configuration.
Finality: A blockchain’s consensus algorithm secures confidence that the record of transactions remains tamper-proof and canonical. Ethereum offers customisable consensus mechanisms including RAFT and IBFT for different enterprise network instances, ensuring immediate transaction finality.
Incentive layer: Ethereum’s cryptoeconomic layers allow business networks to develop mechanisms that both punish nefarious activity and create rewards around activities such as verification and availability.
Tokenisatio: Businesses can tokenise any asset on Ethereum that has been registered in a digital format which opens the door for new incentive models, such as fractionalise of previously monolithic assets like real estate.
Standards: Ethereum has multiple open source standards, including protocols around token design (ERC20), human-readable names (ENS), decentralised storage (Swarm), and decentralised messaging (Whisper) that keep the ecosystem from balkanizing. For enterprises, the Enterprise Ethereum Alliance’s (EEA) Client Specification 1.0 defines the architectural components for compliant enterprise blockchain implementations.
Interoperability and open source: Consortia on Ethereum are not locked into the IT environment of a single vendor. Amazon Web Services customers, for example, can operate private networks with Kaleido’s Blockchain Business Cloud.
What does the future hold?
The long-term option value of enterprise Ethereum will be through integration with the public mainnet, which offers global reach, extreme resilience, and high integrity. In the near future, the concept of “private” versus “public” blockchain networks might well become a historical footnote. Enterprise solutions will maintain private transactions, yet work together to build shared, secure, and future-proofed IT infrastructure, rather than each enterprise duplicating and reduplicating infrastructure for its own use cases.