The Division Between Private, Enterprise Blockchain Solutions and Public Blockchains Is Blurring

There is a movement to better interoperability, although some standardisation would also be necessary. Enterprise blockchain could be the driving narrative of 2019 after taking a backseat to public blockchain momentum over the last 18 months. The market seems to be returning to the fundamental value proposition of DLT (to facilitate broad interaction between many assets with different counterparties across different geographies).

Clint Eastwood as retired American pilot with a stolen MiG-31 — a fighter that flies at 6 times the speed of sound, invulnerable to radar with a lethally sophisticated weapons system that the pilot can control through thought impulses (something like a blockchain, but not that complex).

In one of the worst Cold War movies I’ve ever seen — Firefox (©Warner Bros, 1982) Clint Eastwood portrays a veteran American pilot who becomes involved in a top-secret mission to steal a high-tech Russian fighter plane known as the “Firefox.” Covertly entering the Soviet Union, the pilot received help from dissidents within the country, most notably a group of scientists who have been working on the plane. As Clint Eastwood reached his goal of heisting the aircraft, enemy pilots with the same prototype quickly followed, leading to a sequence of soaring dogfights.

What literally shocked me is how the pilot Client Eastwood portrays in the film was able to reach the Arctic ice pack to land (!!?), make a rendezvous with a US submarine (!!?) whose crew was able to repair(!!?), refuel, (!!?) and rearm(!!?) the stolen aircraft. What on earth the producers of the movie were thinking? There is no way for literally any scientist to reverse engineer a supersonic jet in few minutes only and to produce the necessary parts for it. Even refueling the aircraft would be a considerable challenge since Russians and Americans were and still are using complexly different in terms of density, gel point and flash point jet fuels.

MiG-31 in a rendezvous with a US submarine close to the North Pole. My laughter reached asphyxiation levels.

OK, let’s get serious. Current developments in the blockchain field and the convergence between the public and the private blockchain solutions display an alternative story to what was once considered as naïve and impossible. I will immediately quote John Wolpert from Consesys with his remarkable thought in one my all-time favourite articles The Value of Being Stupid about Blockchain:

“By 2020, the concept of “public” versus “private” blockchain networks will be relegated to a historical footnote. We will not pit public networks against private networks. Instead there will be public transactions and private transactions, confidential contracts and open contracts, and they will coordinate their scope across bilateral, multilateral and public environments depending on the needs of users — just as messages today pass between private and public environments using common Internet protocols.”

I could only humbly concur with this statement and backup it with information from the recent industry news. We might be in the end running Ethereum contracts on a Fabric node, “refuelled” with Corda tokens. Who knows?

Fabric Introduced Support for Ethereum Smart Contracts

Hyperledger Fabric (one of the leading permissioned blockchain solutions available) will now support Ethereum Virtual Machine (EVM) bytecode smart contracts. Contracts would be written in languages such as Solidity or Vyper. This was recently announced in a public statement by the Linux Foundation. It is reported that Fabric also to have a corresponding web3 provider which can be used to develop decentralized applications (DApps) using web3.js.

In other words as Kevin Rutter highlighted, I would be able to play Super Mario on a PlayStation. The lines between the public and the private blockchain categories, once starkly drawn, are starting to fade. Even prominent supporters of the “all public” blockchain are beginning to understand the rational reasons for the private networks (or we should start saying “private networking on public blockchains”), how control over corporate governance is important and how public networks portray an expensive game with low performance and no cost benefits. A bird whispered in my ear, that Ethereum mining has produced 261,064,667 tons of CO2 by date (that’s the equivalent of annual CO2 of 16 million US citizens or 150 million Indians).

Enterprise Ethereum Alliance and Hyperledger To Collaborate

It seems that the lads at Linux Foundation were not sleeping (and perhaps this is the reason to see only Brian Behlendorf and nobody else during conferences) because earlier this month it was announced that both organisations (Hyperledger and EEA) decided to work together toward the common goal of solving real business challenges with decentralized technologies.

Now what does it mean and why I believe it is important? Back in the early days of the permissioned blockchain networks, referred by Mike Hearn as when “nobody wanted to listen” banks were forming different alliances and consortia, based on their expectations of how the technology would be further developed. In order to fix the issues we are facing with reconciliation and data siloes, we kind of ended up with the same uncoordinated and fragmented system and as the 2016 DTCC report noted:

“The industry is at risk of repeating the past and creating countless new siloed solutions based on different standards and with significant reconciliation challenges — essentially a new system with the same challenges we face today.”

Cooperations like in the case of EEA and Hyperledger display maturity and that the market is going back to the DLT/blockchain’s fundamental value proposition — to facilitate broad interaction between many assets with different counterparties across different geographies.

Corda Interoperability

This box is ticked long time ago and I’m sorry that it took so much time for the other enterprise networks to realise the needs for interoperability. It is interesting to hear that the platform we are working with at INDUSTRIA and my personal favourite — Corda is already supporting multiple business applications and multiple enterprise tokens all on the same shared network. With no fanfare Corda and Hyperledger interoperability became a fact as well as the implementation of the Hash Timelocked Contracts on Corda.

What I would be eager to see in near future is the development of the global Corda Network (make sure you see James Carlyle’s keynote for CordaCon 2018) and how a network that respected privacy could be deployed in real-world businesses with all the complexity that entails on a very universal, global and open level and as the R3 CTO, Richard G. Brown stated:

“The win comes when we break down silos; when we enable data and assets to move without friction; when we avoid duplication; when we eliminate reconciliations and unnecessary integrations.”

Standardisation and Some Closing Words

The application of blockchain standards will ensure that companies will gain from the advantages for a bigger market for products, improved compliance (where necessary) and achieving economies of scale. Major impact would be the improved compatibility and interoperability with simplifying product development and speeding time-to-market.

Blockchain and DLT are still in the early stages of development and implementation. It was a worrying fact, that industry is at risk of repeating the past and creating countless new siloed solutions. Blockchains and DLTs show much potential because they provide capabilities that cannot normally be met in any other way. Saying this the industry lacks standards related to terminology, reference architecture, security and privacy, identity, smart contracts, governance and interoperability.

At this early stage, blockchains are more about financial services and current market products often lack consistent standards plus the ability to interact easily with each other. Interoperability constraints for financial institutions limit how efficiently assets can be exchanged between counterparties and how efficiently assets or funds can be exchanged for other assets. Given the extent of the research on data siloes and reconciliation with regards to the blockchain technologies and the DLT, the focus should be made (as the examples above) on interoperability.

The term interoperability in the blockchain and DLT space does not yet have a single globally-agreed upon definition. It can mean interactions with existing systems (integration), interactions of different assets on the same ledger (e.g. delivery versus payment), interactions between ledgers with different network protocols on the same platform, or interactions between different platforms (e.g. Ethereum-Corda- Fabric interactions).

There will be further nuances depending on whether network participants need to keep two ledgers in sync, or simply allow the ledgers to provide information to each other. Blockchain and DLT interoperability needs to solve more than today’s problems of inconsistent static data representation — in a world of shared smart contracts, solutions must provide active alignment of states changing (representation of events and processes) as well as for states at rest, with cryptographic proof.

I’m quite sure that the creation and further adoption of standards (there are working groups at ISO/TC 307) in the industry will boost innovation in the all sectors without sacrificing freedom and independence of the developers. It will potentially save us from further issues, associated with developing, governing and utilizing blockchains and DLTs.

Recent developments in the field (like the announced collaboration between EEA and Hyperledger) display how important is the standardisation process between and the creation of cross-industry blockchain technologies. Some interesting insights were given by the executive director of Hyperledger Brian Behlendorf:

“Standards, specifications and certification all help enterprise blockchain customers commit to implementations with confidence since they have better assurances of interoperability as well as multiple vendors of choice.”

I agree with that.

So if you’ve gotten this far, you’re probably asking what was the “Firefox” movie metaphor all about. I clearly don’t know, but it was funny.