The emergence of Blockchain Consortia
We are moving to an era where permissioned ledger systems are going to become commonplace
Most of us are pretty well aware of the public blockchains like Ethereum with the built-in functionality of smart contracts apart from the well-known features of transparency, security & privacy. The past year has seen the emergence of consortium blockchains or permissioned ledgers which are mostly working to explore the use of DLT (Digital Ledger technology) in different sectors of the economy. The majority of these have emerged in the financial sector.
Most of the Consortium blockchains have restricted rights where nodes that participate in the network consensus are chosen in advance, but they are highly scalable networks. These consortia have given rise to the notion of small-scale business networks supporting internal or B2B applications.
One might wonder than with so many enterprise-level blockchain solutions being launched — Are they working against each other to create a niche in the market or are they working separately to achieve a common goal of blockchain adoption in the broader ecosystem?
Seems like it’s the latter with the recent announcement of two of the biggest consortia — Enterprise Ethereum Alliance (EEA) & Hyperledger joining hands for formal collaboration. Let’s review these and some of the other popular ones & how they are helping scale the micro-level business solutions with blockchain technology.
Enterprise Ethereum Alliance (EEA)
The EEA was launched in Feb. 2017 with a core team of 30 founding members, which included the likes of JP Morgan, Microsoft, Intel, Accenture etc. The aim of this consortium was to develop global standards organization & accelerate the adoption of the open sourced architecture of Ethereum to the enterprise level solutions. Despite being the youngest consortium, the current membership of the Alliance has swollen to over 300 companies making it the biggest one out there.
A large representation of the Fortune 500 companies in the consortium has given it immense credibility. EEA will define & implement standards among its members, assist with deployment requirements according to their business needs, evolve concurrently with the changes in the parent Ethereum blockchain & finally helping new entrants with the experience of the existing standards. On the flip side though, it does not host any enterprise level product to carry out these functions.
This consortium has been led by the tech giant IBM which has presented an enterprise-level software solution for different business needs. The project was launched in December 2015 with Linux foundation at the helm of affairs and its flagship blockchain based software solution Hyperledger Fabric was released in July 2017, which is being used by the Shipping giant Maersk for the supply chain management. Currently, Hyperledger is one of the largest industry-focused blockchain efforts.
The consortium has 259 general members from all across the business spectrum & 18 Premier members which include Baidu, JP Morgan, Intel, AMEX, SAP among others. IBM is working on multiple blockchain projects across the globe with major industry players & governments which gives it a unique position. On the downside, Fabric does not have the capability of adding digital tokens or Cryptocurrencies to its platform & it is also a little too dependent on IBM.
The startup R3 was founded as a consortium of banks utilizing the distributed ledger technology to process secure & fast financial transactions. Founding members included the two of the biggest U.S banks — JP Morgan & Goldman Sachs.
The project came out with its own version of blockchain software solution called Corda after which it got the support of dozens of additional partners. And although it has had some high profile exits like Goldman Sachs & Santander and additional funding worries, the consortium membership has ballooned to 219 at the time of writing.
Corda has the functionality to conduct ICOs just like the public Ethereum blockchain & offers the same tool implementation & support like Hyperledger’s Fabric. The architecture, however, of the enterprise solution is complex & difficult to implement & also needs a strong governance model, contrary to the decentralized nature of public blockchains.
Ripple (xCurrent & xRapid)
Mention of the RippleNet here becomes necessary although it is not strictly a consortium as such but functions like one. Ripple is a private company with an international payment system called RippleNet which utilizes a decentralized network (XRP ledger) employing the Interledger Protocol (ILP) to conduct these transactions.
The two enterprise-level solutions used for this purpose are called xCurrent & xRapid. This venture has more than 120 partners worldwide. A similar venture from JP Morgan The Interbank Information Network (IIN) is based on Quorum blockchain — a permissioned variant of the Ethereum blockchain which has the support of 75 multinational banks.
Apart from these major players, other consortia have cropped up in different industries in an effort to tap the benefits of blockchain technology. A couple of notable ones are listed below:
- Mobility Open Blockchain Initiative (MOBI) — Automotive giants like Ford, General Motors, BMW & Renault along with automotive parts manufacturers Bosch and ZF & IBM and Accenture have joined hands to apply blockchain technology to the automotive sector.
- A consortium of the State-owned development banks of the BRICS countries has come together to form a research group to explore & deploy DLT to international transactions and digitize the economy. Signatories include Vnesheconombank, the Brazilian Development Bank, the Export-Import Bank of India, the China Development Bank & the Development Bank of Southern Africa
This widespread interest in the implementation of the Blockchain technology at the enterprise & B2B level gives credence to the theory that DLT has real-world use cases and the integration of the current systems with it is just beginning.
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Originally published at www.datadriveninvestor.com on October 10, 2018.