Enterprise Blockchains: Where do we go from here?
Back in 2015, a large amount of hype was generated around blockchain, the technology underpinning Bitcoin, where industries had touted it as the bellwether that would trigger a global IT infrastructure upgrade.
Fast forward 2020, has blockchain managed to live up to its staggering expectation from five years ago in the enterprise landscape? Most would say no, and we are here to break it down.
Why hasn’t blockchain taken off?
Nobody is questioning the technology itself. Blockchain is revolutionary and can massively help to streamline organisations’ business operations. Blockchain creates value across every industry, from healthcare, government and public services, to manufacturing, finance, logistics and retail. Economists expect most businesses to be using the technology in some form by 2025, and most CEOs put digital transformation using blockchain in their top three priorities for 2021. Over the years we have already seen examples in almost every industry that have, in varying degrees, tried to apply the technology to their daily operations.
Why is blockchain such a critical platform to next-generation technology? Blockchain is the essential network infrastructure in the coming era of intelligent connectivity, where everything will be connected via Internet of things (IoT) and 5G, powered by Big Data and Artificial Intelligence (AI), experienced through Augmented Reality (AR) and Virtual Reality (VR). Not only that, blockchain technology also represents an IT infrastructure evolution — from a platform for communicating information to a platform for creating and transmitting value. It is transforming the way we do business.
Yet, existing enterprise blockchains are plagued by limitations that have hindered their wide-scale adoption by most enterprises, who try-out blockchain Proof Of Concepts (POC) and then quickly abandon the projects. The most common enterprise blockchains, Ethereum and Hyperledger, are 2 applications based on Bitcoin, which was never meant for enterprise use to start with. Most enterprise blockchains today are merely expressions of these 2 first movers. They are in effect square plugs trying to fit into round holes — they are inadequate solutions and have held back the enterprise widescale adoption of blockchain due to their limitations:
1. Lack of scalability
2. Slow speed
3. Poor performance (latency)
4. Lacking data privacy and protection: no GDPR compliance
5. Questionable immutability
6. Data leakage/ data breach
7. Lack of Interoperability in a fragmented market
8. Blockchain Trilemma compromise between scalability, decentralization and security
A study by Gartner has even forecasted that up to 90 per cent of current blockchain technology in the enterprise world will need to be replaced by 2021 due to their existing limitations.
From the late 20th century onwards, there has not been any significant breakthrough in the IT infrastructure. This issue has largely been overlooked because application vendors such as Facebook, Google, Amazon, Alibaba and Tencent have been able to be successful by exhausting the current infrastructure layer, but very few have realised the capacity has been stretched to its limits. Yet, most blockchain companies are just applications riding atop the exhausted infrastructure rather than providing an improved IT infrastructure, which is what the world needs now more than ever.
A blockchain framework built from the start
The corporate world is changing at a breakneck pace, and blockchains from yesteryears can no longer keep up. For a blockchain to satisfy all present-day enterprise expectations and requirements, a new infrastructure has to be designed from the ground up (not on top of existing blockchain networks) by specifically emulating the enterprise decision-making process. For a blockchain to see mass adoption, the following five aspects are indispensable:
A one-stop-shop service
Companies are no longer looking to deploy blockchain technology in a single part of their business, so modern blockchains must have the capacity to bolster and enhance every aspect of a company’s operations. And that means that the solution must have all the features and no compromise.
For example, a fashion apparel manufacturer should not limit their blockchain usage to only improving provenance tracking and supply chain management, but should use it to enhance inventory management, identity management, billing, human resource etc. Blockchain nowadays should have the capability to bootstrap every area of a business single-handedly.
Complete feature set with no compromise
Numerous blockchain companies assert that they’ve addressed The Blockchain Trilemma and/ or other limitations, be it the lack of scalability and speed or data leakage issues. That being said, a blockchain should encompass all the technological attributes below while not compromising on any of them.
• High throughput: at least 100,000 transactions per second should be the present-day blockchain speed standard
• Low latency: immediate real-time confirmation time of less than 0.01 second
• Unlimited scalability: supports an unlimited number of endorsed nodes with no degradation in speed and performance
• Invincible security with no data leakage
• Interoperability capability: enables seamless migration of applications from other blockchain projects like Hyperledger and Ethereum
Unless a blockchain can accommodate all these features without meeting halfway, it will be difficult for enterprises to fully embrace and utilise that system.
Compliant with international privacy regulations
Because of the immutable nature of blockchains, any data stored on the system cannot be deleted. This puts blockchain in direct opposition to GDPR and businesses’ privacy compliance.
All businesses nowadays are expected to abide by privacy legislations and ordinances (e.g. the European’s Union GDPR) within their operations. A technology that claims to be the answer to disorganized business operations but does not comply with data protection laws is no longer a solution. Blockchains thus must have the “right to be forgotten”, i.e. giving individuals the right to request that their personal data be removed from a record. Without this feature, implementing a technology that goes against basic privacy laws will simply be out of reach for most companies.
Blockchains must comply with GDPR and other international privacy ordinances
Provable immutability
Blockchains pride itself by being completely immutable, but we all know this concept is somewhat “questionable” and not 100 per cent accurate, in that forked chains can be deleted and blocks can be removed due to collusions among a majority of endorsed nodes in consortium blockchains. As a result, the capability of being able to prove the immutability of data and doing so without revealing it is warranted and essential for any modern-day blockchains. Striking a balance between privacy and/or anonymity as well as transparency should not be overlooked.
A hybrid infrastructure
Owners want to have authority over their data — the lack of the capability for them to control their data once it’s uploaded onto a public blockchain steers organisations away from deploying them. On the other hand, private blockchains that allow organisations to retain full data control will always be censured as being too centralized. Only a hybrid blockchain infrastructure can compensate the characteristics of both modes, allowing owners to verify the integrity of the data without having to reveal it.
It’s no secret that company leaderships around the world want to deploy blockchain to meet operational needs and drive digital growth. Some 53% of polled global executives in a recent Deloitte survey view blockchain as one of their top five strategic opportunities, and 77% of them agree that they will lose competitive advantage if they don’t adopt blockchain.
The market demand is there, but without a transformational approach to the infrastructural framework to satisfy enterprise requirements, blockchain will only remain promising, not living up to its once-trumpeted potential.
