Blockchain is a nascent technology movement that has evolved past its cryptocurrency origins, quickly becoming part of technology partnerships and future-proof solutions across various organizations.
For a lot of people, news of massive cryptocurrency slumps in 2019 had also signaled the end of the blockchain era (although cryptocurrency is one use case of the ever-expanding list of use cases for blockchain). But, several firms were active in the enterprise blockchain space, going through what we in the industry like to call a ‘proof of concept’ phase. This involves working to evolve business problems towards a solution through the utilization of nascent technology – in this case, blockchain. The reality is that this phase tends to attract fewer headlines than the more glamorous news of partnerships and launches.
Nevertheless, now that organizations have worked through their requirements and figured out what they need from their solutions/solutions providers, things are starting to move forward again. In recent news, Reuters reported that JPMorgan is in talks to merge its blockchain unit with ConsenSys (one of the largest blockchain orchestration firms out there are part of the Ethereum blockchain infrastructure).
Elsewhere, Connecting Food, a French traceability startup contracted to several European companies including Herta (which is part of Nestlé) and Coop Italia, secured funding from LeadBlock partners. Digital Asset, a stalwart in the enterprise blockchain sector, underwent a Series C round joined by tech giants Samsung and Salesforce.
Research powerhouse Gartner also predicts that "practical blockchain" will be among the top 10 strategic technology trends for 2020. Although with the recent COVID-19 crisis and a looming global economic recession most likely in the cards, this prediction is probably up for revision.
"Practical" is the keyword here because, after the hype of 2017, businesses should first consider which problems they want blockchain to solve before moving into any implementation. An example of this is something I have talked about a lot, when organizations are looking to innovate instead of first understanding their need set.
There is a specific set of conditions where blockchain comes into its own and can deliver a return on investment. Where multiple parties are wishing to transact or exchange value, who want to establish an immutable source of truth between them and reduce dependence on intermediaries, then blockchain can provide a solution. There are several industries where it’s already proving valuable under these conditions. Trade finance, Education, supply chain, digital copyrights and voting are just a few of the key areas that are open to disruption/innovation through blockchain powered technology.
Choosing a setup
If you've already determined that your use case meets these criteria, then you may be considering an enterprise blockchain implementation for your business. The next step is to decide whether you need a public or private blockchain and whether you want to use an external provider to support your implementation or develop your own solution.
Businesses need to understand that there's no "one size fits all" here, and different firms have taken different approaches to suit their own needs. For example, JPMorgan decided to develop its own in-house blockchain platform entirely from scratch. However, for most organizations, this will be a daunting prospect. It means hiring in all the necessary development expertise and could take months or even years to get an application live due to the time taken to build the underlying infrastructure. You’d need to be pretty sure of getting a return on investment before committing to this route.
Blockchain as a service
Due to the expense of a bottom-up build, even very large firms generally tend to either partner up or use a Blockchain-as-a-Service solution. The first means they can outsource the expertise and leverage existing working platforms, while the latter allows enterprises to leverage existing blockchain architecture and expertise to implement their own blockchain-based solutions.
Blockchain-as-a-Service (BaaS) is now also becoming increasingly available to organizations of all sizes. Swiss-based Jelurida offers BaaS under its Consensus-as-a-Service model. The Jelurida team has been around in the blockchain sector for the last six years, now offering clients access to its public blockchain infrastructure, Ardor, and Nxt. The company's flagship platform, Ardor, is an established blockchain offering privacy and customizable security features.
Users can set up their own “child chain” as a subunit of the Ardor main chain, and on it, they can run any number of different applications, including implementing their own token. There’s also the option to set up a separate private blockchain based on Jelurida’s existing code base, without having to develop a platform from scratch.
Jelurida has worked with European household goods manufacturer Henkel on their digitization strategy and supports child chains for Max Property Group.
Established big-name firms have also seen the potential in the burgeoning blockchain sector and branched out into offering BaaS. Under its AWS banner, Amazon is one such example. Amazon Managed Blockchain takes care of the entire implementation on behalf of clients, using public or permissioned platforms, either Hyperledger or Ethereum. Once an application is set up, the client can invite anyone with an AWS account to join their network.
Microsoft Azure offers a similar service. Again, the reason behind this endeavor is that firms need this room of experimentation to fail-fast and arrive at a proof of concept with respect to their blockchain business cases. So, it makes sense to launch scalable Blockchain-as-a-service platforms that can help create next-generation technology.
Back in 2017, enterprises tended to lean towards permissioned blockchains such as Hyperledger, partnering with long-established tech firms like IBM. These partnerships have generally proved to be a win-win. For example, Walmart was an early adopter of IBM's Food Trust platform, which has since gone on to gain clients, including Nestlé and Carrefour. For its part, Walmart has been able to reduce the tracing time for products logged on the platform to a matter of seconds.
However, we have since seen several successful implementations on public blockchains too. Ethereum hosts Komgo, which is a blockchain-based platform for commodity trading. Backed by 15 of the world’s biggest banks, it now handles over $1 billion in financing from its members.
Teaming up with a partner organization for a successful implementation also brings other benefits, such as recognition for becoming industry leaders. The Avaya Happiness Index combines blockchain architecture with automated data analysis to provide insights into consumer sentiments. The solution was a partnership between Avaya International and Avanza Innovations and was voted as a Gold Winner for Innovation at the 31st Edison Awards in New York City in 2018.
With the initial proof of concepts now successfully established, enterprise blockchain is once again on the rise. Therefore, it’s currently a good time for any firm to consider including blockchain in their digital transformation activities as a way of staying ahead of the competition.
A lot of organizations are still struggling to understand that a decentralized service like blockchain has the potential to overhaul conventional business models (finance, supply chain, marketing, etc.). Businesses that thrived on being a bridge between entities – offering, communication, transparency, commerce will struggle to survive as soon as blockchain becomes a standard.
Right now, the imperative has to be to understand how your industry will be impacted with respect to this/other emerging technologies and putting your best people on it to future-proof your business. In a bid to stay relevant you either fail trying or just fail. Choose wisely.