Five Years Of Enterprise Blockchain: What Have We Learned? And Where Next?
Enterprise blockchain is five years old. Happy birthday!
Many readers might be tempted to ask what there is to celebrate…isn’t enterprise blockchain a busted flush?
Yes, yes…I know…
That’s exactly what you’d expect the CTO of an enterprise blockchain firm to say!
Yet it’s strange how an industry as hyped as ours hasn’t always trumpeted its actual successes.
Our industry’s five-year anniversary provides a pertinent moment to reflect on what has been achieved to date, what we got wrong, what we got right, what we learned along the way, and what the future holds.
Formation of consortia
The big starting point for our industry was the formation of consortia comprising businesses whose interests had been piqued by the potential of this technology.
There had, of course, been firms focusing on this concept before, but it was only when the big consortia got up and running that things really began to move.
Momentum had been growing for some time: the advent of Bitcoin and other blockchains inspired many people to think about business-level applications. Could we now imagine ‘industry-level’ systems of record? Could we be witnessing the emergence of two parallel revolutions?
But it’s easy to speculate. Far harder to catalyze and coordinate the technological upgrading of entire markets if the participants in those markets have no good way to communicate and collaborate with each other.
The first solution to this problem was the “Distributed Ledger Group” – which quickly came to known simply by the name of the firm that pulled it together: R3. It hit the headlines in September 2015 after a year of work by the founders to bring together the financial services industry to work together.
A different approach was taken by the Hyperledger project around the same time in 2015, kicking off with major code contributions from IBM and others.
The formation of R3 and Hyperledger are why I date the birth of the enterprise blockchain industry to this time: it’s when the power of collaboration really kicked into gear.
A few months later, the Enterprise Ethereum Alliance was formed and we were off to the races: three very different approaches but all based on the same insight…if this “enterprise blockchain” thing was going to achieve its potential, the firms who are going to benefit from it have to figure out how to work together!
And it meant we could now see a path to a world where we could contemplate sharing information in ways that had not previously been viable, driven by the shared goal of improving business processes at the industry – rather than individual firm – level.
Launch and maturity of the first enterprise-focused blockchain platforms
The work of the consortia soon led to the launch of the first purpose-built enterprise blockchain platforms, all of them open source.
The R3 consortium, as it still was back then, before transitioning to being a pure software firm, embarked on the journey of building a new platform from scratch, rather than trying to adapt an existing platform that had been designed to solve different problems. The result was Corda.
Hyperledger did something similar, beginning its work with an IBM-donated greenfield platform to create Fabric, before broadening its approach to enabling an ‘umbrella’ of loosely-related codebases.
The Enterprise Ethereum Alliance took a different approach, devising standards for how a diverse set of Ethereum-inspired, mostly pre-existing codebases, might be made more suitable to the business world. It was a bet, in effect that the undeniable momentum and community that drives the permission less side of the Ethereum world can overcome the compromises that need to be accepted when applying technology to business problems for which it was never designed.
It’s fair to say that reasonable people hold firm but different views on this question!
Adoption spreads beyond finance
Much of the early activity in the enterprise blockchain space took place in the finance sector – pretty much any participant in the world’s financial markets had at least discussed blockchain in the boardroom by 2016, and many were actively involved in consortia or individual projects.
Indeed, when I was leading the work to design Corda, I assumed financial markets firms would be the primary – perhaps only – adopters of this technology. How wrong I was….in a good way!
Platforms such as Corda and Fabric had been developed to meet the intense regulatory scrutiny and privacy specifications of financial services firms. And because of this, it turned out that these same platforms were almost automatically suitable for other sectors such as healthcare, trade finance, shipping, insurance and more.
I remember being surprised one day when I discovered people were building apps for diverse use cases such as digitizing letters of credit in trade finance; improving the efficiency of marine insurance; managing patients’ healthcare records on a shared ledger; enhancing the security of personal identity data management… none of which I’d envisaged.
I don’t know what it says about my personal sales skills that it was pretty much in all the industries I never talked about – or talked to – that Corda enjoyed its earliest successes…
One of the harshest criticisms of enterprise blockchain is the perceived slowness with which the early experiments evolved into live apps, deployed in real-world business environments.
And it’s true that the early years of enterprise blockchain were marked by extensive and wide-reaching experimentation (and so many press releases…!) But we always knew widespread adoption would be a gradual process. As with any emerging technology, it takes time for industries to adapt and integrate new systems with existing infrastructure.
And as I wrote on these pages at the beginning of the year, while some of the early enterprise blockchain projects seem to have taken longer than people expected, it’s also the case that a lot of the work was a one-time foundational infrastructure build-out. Costs incurred once but from which we will benefit many-times over in the future.
Take, for example, the Spunta Banca DLT platform, driven by ABI, the Italian Banking Association and built on Corda. The system replaces the reconciliation process for interbank transactions in Italy and has been live across the Italian banking sector since April this year. There are now over 100 banks in production, it has processed over 200 million transactions and the number of manual matches needed between banks using this system have been driven down to barely 2.5%, from a far higher baseline.
This article originally appeared on forbes.com To read the full article and see the images, click here.
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