11 Ways Ethereum Can Benefit Enterprise
11 Ways Ethereum Can Benefit Enterprise
Here’s how Ethereum blockchain solutions can future-proof business networks.
What Enterprises Need
Enterprises have very different needs from individual users on a peer-to-peer network. Enterprises need to manage sensitive data in high volume, track quality, and hold themselves accountable to safety and regulatory standards in their industries, be it issuing IDs, executing trades, tracking cargo containers, or labeling pharmaceutical products. Security, certainty, and accountability at scale are paramount for a high-performance enterprise. Enterprise needs ultimately fall into four categories:
- Permissioning. Enterprise use cases often require that only authorized parties can join the network, and that participants have different read, access, and write roles.
- Privacy. Specific transaction data — product name, quantity, price, address, personally identifiable financial information, etc. — should be withheld from or made available to network participants depending on their roles. A freight forwarder, for example, might not need to know the contents of a certain shipping container, but only that the container has arrived. Banking regulations also restrict who may have access to transaction data.
- Performance. Enterprises must have the infrastructure to process thousands of transactions per second and tolerate periodic surges in network activity. One sales order with a thousand lines, for example, triggers a cascade of transactional events. In today’s networked economies, enterprises must be able to collect, validate, and publish an ever-increasing volume of diverse transactions.
- Finality. Institutions transferring large amounts of money need certainty about the outcome of transactions. Funds must be good, and payments must be final.
What Ethereum Offers: Facts and Benefits
Ethereum launched in 2015 as a much more extensible and performant version of the Bitcoin payment system’s underlying blockchain technology. The value of a blockchain is the native certainty of the network: participants can establish a trusted and immutable record of transactions without the need for intermediaries. The decentralized architecture of a blockchain — multiple distributed nodes simultaneously running the software and building the record — ensures that the certainty of the network is never compromised.
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.
Stability and Popularity of the Ethereum Blockchain
Ethereum has proven to be highly robust against attack while also supporting a diverse range of applications. It is popular for both public and private networks. Here are the facts of the public mainnet today:
- 14K+ live nodes
- 40M+ unique addresses
- 10B daily API requests served by Infura
- $1.5B+ daily trading volume
- 1,900+ decentralized applications (dApps)
- 94% of top 100 blockchain projects are built on Ethereum
- 250K+ developers (more than any other blockchain community)
- 500k+ daily transactions (more than all other blockchains combined)
11 Benefits of Enterprise Ethereum
Ethereum is designed to be low-cost, open, flexible, and suited for cooperation between multiple parties. In terms of coordinating data, Ethereum functions much like a distributed ledger, but its architecture also has unique layers that both strengthen and create new possibilities for business systems. For those who want to understand the different functionalities in-depth, our Protocol Business Architect Brent Xu has written an incredibly thorough, two-part comparison of blockchain vs. distributed ledger technologies. These are the current capabilities of Enterprise Ethereum:
- Data coordination. Ethereum’s decentralized architecture better allocates information and trust so that network participants do not have to rely on a central entity to manage the system and mediate transactions.
- Rapid deployment. With an all-in-one SaaS platform like Hyperledger Besu, enterprises can easily deploy and manage private blockchain networks instead of coding a blockchain implementation from scratch.
- Permissioned networks. The ConsenSys Quorum open source protocol layer enables businesses to build on public or private Ethereum networks, ensuring your solution fits any potential regulatory and security requirements.
- 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. Network size is critical for enterprise consortia that are bound to outgrow a handful of nodes.
- Private transactions. Enterprises can achieve granularity of privacy in Ethereum by forming private consortia with private transaction layers. On ConsenSys Quorum, private information is never broadcast to network participants. Private data is encrypted and only shared directly with relevant 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. Protocol-level solutions like sharding and off-chain, layer 2 scaling solutions such as Plasma and statechannels present opportunities for Ethereum to increase its throughput in the near future.
- Finality. A blockchain’s consensus algorithm secures confidence that the record of transactions remains tamper-proof and canonical. Ethereum offers customizable consensus mechanisms including RAFT and IBFT for different enterprise network instances, ensuring immediate transaction finality and reducing the required infrastructure that the Proof of Work algorithm demands.
- 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.
- Tokenization. Businesses can tokenize any asset on Ethereum that has been registered in a digital format. By tokenizing assets, organizations can fractionalize previously monolithic assets (real estate), expand their line of products (provably rare art), and unlock new incentive models (crowdsourced data management).
- Standards. Ethereum is where the standards are. Protocols around token design (ERC20), human-readable names (ENS), decentralized storage (Swarm), and decentralized messaging (Whisper) keep the ecosystem from balkanizing. For enterprises, the Enterprise Ethereum Alliance’s Client Specification 1.0 defines the architectural components for compliant enterprise blockchain implementations. The EEA is planning to release version 2.0 of the spec soon.
- 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. Like the Java community’s spec-driven philosophy, the Ethereum ecosystem welcomes contributions to the codebase through Ethereum Improvement Proposals (EIPs).
The Future of Enterprise Ethereum
Less than a year ago, standing up a permissioned blockchain network was still a time-consuming and expensive endeavor, and involved assembling a team of blockchain developers and spending months and millions of dollars writing custom code. ConsenSys Quorum, however, has radically simplified the creation and operation of private blockchain networks for enterprises.
The long-term option value of enterprise Ethereum is interoperability with the public mainnet, which offers global reach, extreme resilience, and high integrity. Mainnet compatibility will significantly reduce the amount that enterprises currently invest in IT infrastructure and security.
In the near future, the concept of “private” versus “public” blockchain networks might well become a historical footnote, as John Wolpert often opines. 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. Shared infrastructure will free up innovation and unlock assets that were previously frozen between siloed organizations.
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Busting the Myth of Private BlockchainsIt’s time to talk about layers.
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