Blockchain platforms have evolved from their cryptocurrency origins. They are now being built to target enterprise use cases across many different industries (from financial services, through manufacturing and the supply chain, to healthcare, insurance, government, telecoms, and more). They’re also becoming far better integrated with business systems and complementary technologies like IoT and business analytics platforms – and coming ready-built as managed services, wrapped in enterprise-friendly tools and utilities to make it easier to adopt in production environments.
Moving from proofs-of-concept to production
Many organisations are now looking beyond their proof-of-concept and pilot projects, towards making blockchain work for them in a production environment. This transition tends to succeed when there’s support and sponsorship from senior line-of-business / organisational representatives; and where there’s an understanding of the project’s context in the market or ecosystem in which it’s designed to operate (as well as across a single business). Organisations are also looking to vendors with enterprise credentials to help their blockchain projects make the jump to production and make blockchain work for them in the way the rest of their IT works.
Enterprise IT demands enterprise blockchain
The main technology market focus is now on the practical aspects of production-readiness that help customers move from proofs-of-concept to deploying at scale, across ecosystems. Blockchain deployments need to behave more like traditional IT capabilities, so blockchain becomes ‘just another part of the IT estate’. This requirement manifests in two areas:
- Development and test considerations – i.e. safer, easier, more robust coding environments for smart contracts and decentralised applications; integrations with key enterprise systems (such as systems of record, identity management, and IoT platforms); and interoperability with other ledgers (because, pragmatically, organisations will inevitably find themselves members of many blockchain networks across the business over time).
- Operational considerations – from setup (such as network provisioning, configuring and member on-boarding); through resilience (high availability, backup, disaster recovery, monitoring, etc.); security (encryption, transaction privacy, etc.); and performance (both of the network, and of the choice of consensus mechanism, the use of any sidechains for parallelism, etc.).
Blockchain platforms have evolved
First-generation blockchains can be typified by the Bitcoin blockchain network – public and open, relying on expensive and slow consensus mechanisms, and with limited on-chain functionality (though supporting the creation of ‘trust anchors’ that provide proofs-of-existence for hashed documents, databases, and so on). Ethereum’s smart contract platform heralded the arrival of a second generation, built to execute autonomous, decentralised applications. A third generation is now taking the capabilities and characteristics of earlier incarnations and tailoring it for enterprise suitability – and that means wrapping blockchain services in the enterprise tooling outlined above, as well as developing targeted SaaS applications that utilise blockchain for specific use cases (like tracking and traceability).
The blockchain story so far: three generations
We covered the emergence of blockchain and what the technology is (and isn’t) good for in our earlier report Blockchain for business: What is it and why should care?
What we’ve also seen is that, in the relatively short time that organisations have been developing blockchain technology applications, the technology has seen three major generations evolve. Each generation marks a step-change in capabilities, and a turning point in blockchain’s applicability and adoption in mainstream business use cases.
The three sections below outline the three generations of blockchain technology to date.
From crypto origins, through token value exchange, to digital fingerprinting and ‘trust anchors’
The first generation of blockchain is typified by the technology that underpins the Bitcoin cryptocurrency. It’s open and public; it uses a Proof-of-Work consensus mechanism, requiring the incentivisation of miners(and so is expensive, and slow to run); and it was designed primarily to record transactions for the exchange of tokenised value (e.g. Bitcoin transfers between wallets).
On the surface the transaction cost, block size (and what you can store in blocks), scalability and speed of, say, the Bitcoin blockchain would appear to limit its appeal in the enterprise… unless your business is accepting retail payments in cryptocurrencies. Even if you’re looking for a platform to facilitate payment transfers, you’re better off considering something with a more modern architecture like Stellar, or Ripple (which doesn’t rely on mining for its consensus) because Bitcoin’s throughput just wouldn’t keep up. However, even these examples have limited scope for further enterprise use beyond crypto token exchange – they’re intended to rival inter-bank transfer systems like the SWIFT network, and in their current iteration they’re not targeting wider use cases beyond financial payments.
However, the fact that Bitcoin is the most mature, longest unbroken, public blockchain also brings other benefits that organisations can take advantage of. It provides a chain upon which to ‘anchor’ data with a cryptographic fingerprint. Other public blockchains can be used for this too (we’ll explore this more later).