The Incomplete Puzzle of Enterprise Blockchain
In our article Transforming Financial Services with Blockchain, we elaborated some recent adoption of blockchain technology by financial markets. Big institutional players, as well as governments, are trying to get their feet wet and are experimenting with international crypto startups and distributed ledger technology.
While we came to the conclusion that many financial business fields are starting to engage with the blockchain space, we also recognized that there are still some disincentives slowing things down. By analyzing the handicaps, that are blocking further development on enterprise blockchain solutions, and the potential solutions of the market, we intend to obtain a firm grasp of what the space actually desires to achieve wide adoption.
The stumbling blocks
One of the first obstacles that interested enterprises encounter, which is actually not quite as often discussed as it should be, is on striving a balance between transparency and privacy. Full transparency is often seen as the key element and game-changing feature behind Blockchain. Although most authorities are likely in high spirits about a hundred percent clarity, there are still plenty of other entities that are not satisfied by the development. Think about it like this: would you upload a document with all your credit card transactions online? Probably not. For most companies and individuals, privacy is still a very basic needs that should always be protected. On the other hand, anonymity in the blockchain world often carries negative connotation. Almost every government in the world naturally insists on the observation of our transactions histories. As long as the market lacks a proper solution for this dilemma, the debate around transparency and accountability in the blockchain world can definitely be seen as a balancing act with serious difficulties.
Aside from that, there is another important hurdle that that almost every blockchain architect is facing right now: accountability. Imagine a Blockchain banking network which posses privacy so that the privacy needs of each individual bank running their business on the banking Blockchain network is assured, the transactions carried out on the network are to be audited, and mechanisms should be in place for regulatory bodies to carry out their duties.
Offerings in the market
Since the vast majority of these challenges are not a secret anymore, there are already several organizations working on adequate proposals to solve these issues. The blockchain scalability issue is one that is being addressed by especially many brilliant minds in the space. One apparent solution to the accountability issue is to make a copy of corresponding transactions for the auditors or regulatory bodies. However, this will require a new way to ensure that the transactions continue to maintain their privacy to other corporates on the network, and at the same time, ensure that no significant overhead in terms of bandwidth as well as computational requirements would be incurred to the stakeholders especially the regulatory bodies and the corporates which are complying to the accountability requirements.
On the transparency and privacy side, there are fully transparent blockchains like Bitcoin, or fully anonymous systems like Monero that come with many usability trade-offs. Bitcoin and similar cryptocurrencies are often seen as dangerously transparent. Else way, anonymous blockchain constructions like Monero have been heavily criticised in the past, due to the fact that they emerged as a currency of choice in illegal businesses in the dark net. Some developers of transparent blockchains are currently working on zero-knowledge protocols, which aim to verify transactions without being aware of every single information and might improve privacy handling in the future. Still, as of now there is no cryptographic currency that enables and abides governmental regulations, such as AML and taxation policies. By introducing a design that keeps those aspects in mind, the concerns from enterprises would be solved and they could in turn promote the technology to more users.
Offering by Abelian
At Abelian, we strongly believe that the cryptocurrency world is desperately in need of a blockchain structure that features highly adjustable privacy settings, in order to achieve a wide adoption by institutions. Privacy is an essential need for most human beings, yet tax bureaus and other authorities around the globe demand insight into our transaction history. With our “Accountable Privacy” initiative, we aim to provide a cryptocurrency platform where the user decides how anonymous his transactions are.
Confidentiality options range from fully transparent, like Bitcoin, to complete anonymity, like Monero. With the feature to disclose transactions to a specific third party, like an authority, we are realizing a privacy coin that finally complies with governmental rules. In ABE, we incorporated proven technologies that include the linkable ring signature and cryptographic commitment schemes. To achieve full privacy with accountability, we plan to employ an efficient lattice based verifiable encryption system. In detail, addresses with complete anonymity will come with a secret tracking key, that allows potential holders, like authorities, to decrypt crucial data, such as values of coins or identifying information. In addition, we applied a quantum computing resistance that will protect the blockchain from being compromised in the future.
It is expected that there will be clashes between the privacy aspects of cryptocurrency and the needs of monetary authorities, tax offices and the like, as they may need to evaluate user transaction records for compliance reasons. As mentioned in the linked article above, there are several business areas that will profit from introducing accountable privacy, including trade finance, asset valuation and management.
We are also aware that scaling is a significant aspect of every blockchain architecture, which is why we are striving to adopt a highly scalable and innovative approach to make the Abelian Coin platform highly scalable. Our intention is to start the platform with an 8MB block size and 512-second block interval, whereas we will still continue investigating for the best scaling solutions in the following time.
Furthermore, the Abelian blockchain will serve as a platform for custom token issuance, including approaches that could be similar to Ethereum’s ERC20 standard, but in a side chain, or Bitcoin’s colored coins. While we believe that costum asset classes would be a great enrichment for our blockchain, we are not yet convinced what the best solution might be. We are still evaluating both approaches in the community and will select the most suitable standard to provide a seamless token creation and management experience.
