Real world use-cases for blockchain abound in the enterprise. IBM alone is working with hundreds of enterprises on blockchain implementations. The latest tally from insiders is that there have been tens of thousands of blockchain pilots run within corporations. This is a much larger number than the hundreds of ICOs that have taken place over the last year.
Enterprises are interested in these blockchain capabilities primarily to:
Vertical specific applications include: transaction settlement (finance & insurance), cross-border trades (finance), food provenance and authenticity (health/safety), biometrics monitoring (health), Personal Health Record (PHR: health), and virtual clinical trials (pharma/health).
Let’s review public blockchain. Most public blockchains (like Bitcoin or Ethereum) store data so that it is easily accessible to anyone. Such transparency is one of the benefits of a public blockchain. So for example, within the Bitcoin blockchain, given a transaction ID it is possible for anyone to see that Person A (Alice) sent a certain amount of Bitcoin to Person B (Bob). Additionally, if I’m running a node, I can see and use the business logic that runs both consensus as well as the transactions within the Bitcoin network.
Running a public blockchain within an enterprise, however, is more problematic. Doing so could enable a company’s competitors to track all of its business activities as well as understand the business processes used in its operations. Since smart contracts code the logic of a business process, it can include pricing, discounting, bundles, frequency of transactions, dependencies, etc. This information is the intellectual property of a business and a non-starter for public consumption.
As a result, enterprise blockchains employ two important concepts not found in most public chains: permissioning and private transactions. A permissioned blockchain is one in which the nodes are run only by ‘trusted’ participants and only authorized users can take part in transactions. Private transactions are typically run through corresponding private smart contracts that hide the business logic from all but authorized users. Enterprise blockchains use different approaches from cryptography to access control to ensure that private transactions are visible to only authorized parties.
Many industry groups have created consortia to work together on blockchain technology frameworks and projects. Private transactions and permissioning enable competing groups to work together without the fear that competitors can gain access to company secrets. For those who have worked with B2B enterprise software, these considerations should be quite familiar. Some of the key groups and consortia that are active today include:
On public chains using Proof of Work (PoW) consensus, all of the nodes run the same computations in a competition in order to validate the transactions. Regardless of the number of nodes, they all function like a single computer. On the other hand, in permissioned chains subsets of the nodes can run less intensive consensus protocols, which enables parallel processing of the consensus.
The combination of trusted nodes, parallel processing, and less demanding consensus protocols (typically Byzantine Fault Tolerant [BFT]) leads to higher performing networks. Permissioned chains or permissioned distributed ledgers are therefore typically more “performant” than public chains.
The EEA just published its architectural stack recommendations for enterprise blockchains. The diagram below provides a summary:
Source: Enterprise Ethereum Alliance
The key additions to a standard public chain, highlighted in purple above include:
Part two of this article will be posted tomorrow and will discuss some of the Enterprise Blockchain Platforms in more detail.
