Blockchain Is Built For Enterprise, So Why The Slow Start?

Blockchain has the potential to be one of  the most powerful distributed ledger technologies invented, surpassing the utility, immutability, and security of current enterprise databases. Blockchain implementations lend itself to unlimited use case improvements to include finance, identity, supply chain management, etc. 

An enterprise developed  blockchain solution can mitigate many trust pain points. Blockchains and smart contracts can improve efficiency and transparency in ways that are not possible with legacy systems. As AI and other codebreaking technologies proliferate, legacy systems are only going to become even more vulnerable and susceptible to attack by bad actors.

Blockchain solutions are capable of being an alternative or complement to Microsoft, Oracle, and SAP, so when will it be ready for prime time? 

Built for the enterprise, but not completely

There are challenges regarding blockchain that need to be resolved before it exits its nascent state of evolution.

Ethereum is designed to deploy smart contracts and has long been thought to be the blockchain most adaptable to the enterprise market particularly considering the efforts by Consensus, baseline protocol, Quorum. As well as R3, which has been working since 2015 on a distributed ledger technology (DLT) called Corda and of course Hyperledger backed by IBM and others within the Linux Foundation. Plus Polkadot by Parity, etc. 

All of these projects haven’t yet made a significant breakthrough towards enterprise market adoption. Key issues that still need to be solved include high or variable gas fees, decentralization without compromising scalability, lack of trust with enterprise proprietary data on a public main net, governance, and enterprise grade support. Resolving these issues good enough to satisfy enterprises will be needed to sell as the next-generation distributed ledger technology developed to solve the problems of centralized data processing and storage. 

Even assuming Ethereum was shored up in a way that made it this end-all, powerful decentralized world computer, enabling widespread adoption and revolutionizing various industries, it has to be able to work across different organizations so that everyone can plug into it. Otherwise, you not only have all these existing issues to deal with, you have to find a way for everybody’s preferred blockchain to have interoperability and the ability to “speak” to each other.

And, there’s the issue of converting legacy system infrastructure to a decentralized model with the coming of Web3. Enterprise architecture is notorious for staying ingrained in past infrastructure  and being slow to convert, for example, airline reservation systems - consider the financial loss to revenue when booking system tanks.

The one enterprise technology to rule them all

Way back when in the ancient days of the internet, enterprises were doing their purchasing online long after individual consumers were doing precisely that on the likes of Amazon and eBay. Walmart, the big box king that came to the internet very slowly, is still doing just a fraction of Amazon’s online business even after a number of e-commerce acquisitions in the previous decade.

So how do we get blockchain architecture to a place where it can be adopted significantly within the enterprise? 

Blockchains must meet the challenge of scalability without compromising decentralization. That means competing with legacy companies on transactions-per-second. Blockchains are starting to get there, approaching or even surpassing the thousands of financial transactions per second handled by the likes of Visa and MasterCard. One of the new technologies now available is called DAG (Directed Acyclic Graph) which enables simultaneous parallel transactions per seconds delivering millions of transactions per second. 

Now that speed parity has been realized, it’s a matter of demonstrating to enterprises that scalability has not compromised decentralization. In addition, Layer 1 architecture needs to be offered with options for consensus mechanisms that enable permissioned, permissionless, and hybrid offerings in order to protect sensitive data and still allow consumers to be on a public mainnet.  There needs to be enterprise grade support and systems integrators developing offerings for each unique vertical market. The benefits are not all that different from the boon provided by open-source software and how Red Hat leveraged Linux.
 

As Bill Gates once said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” While Ethereum-based smart contracts have come a long way from zero existence a decade ago, ideally the next decade will be one where blockchain actualizes its potential as a next generation technology whereby enterprises improve their operations and service offerings globally and increase profits and efficiency with greater trust