Blockchain for Business Excels Public Ledgers
Blockchain has emerged as a type of the public ledger technology with Bitcoin being the most recognizable usage. So far there are 9 major public ledgers five of which serve mainly as a currency. The further development of the technology has resulted in the emergence of the private blockchains specifically for the enterprise sector. In this post, we will argue that its evolution has contributed to the dominance of the private blockchains.
What’s the Status of Public Blockchains?
Public blockchains like Ethereum, Bitcoin, and Litecoin are open for the new users to join and participate within the network. The users may carry out the transactions across the globe with access to the distributed ledger. The nodes within the public blockchain network have equal transmission power ensuring full distribution in addition to the significant decentralization. More examples are:
The success of public blockchains has a direct correlation with the performance of the cryptocurrencies associated with the mentioned blockchains. The three most prominent public ledgers, mentioned above, have been facing issues because of the weaker performance of the related cryptocurrencies, namely ether, bitcoin, and litecoin respectively. Such a tendency results in the weaker position of the public blockchains.
Although there are over 2000 projects on the CoinMarketCap, most of them had just forked the source code of Bitcoin (or seven other prominent protocols) or launched on the Ethereum network to raise funds. Moreover, Ethereum and three other platforms for decentralized apps (or Dapps) have been going through own struggles:
- Ethereum has been postponing its Proof-of-Stake update
- IOTA is not blockchain at all and targets machine-to-machine communication for the Internet of Things;
- EOS changed their constitution;
- Developers at NXT switched their attention to a new project called Ardor.
Overall, communities grew and split, dependence on the exchange rate increased, and the future application of the many public ledgers became vague.
Private Blockchain Dominate the Industry
On the contrary, private blockchains serve a particular business goal for an enterprise and offer a whole range of flexible characteristics. R3 Corda and Hyperledger are the most commonly referred blockchain frameworks. Corporate titans like JP Morgan and Microsoft have invested several millions of dollars in the development of their own private blockchains. Michael del Castillo has compiled for Forbes a list of the 50 largest public companies exploring blockchain.
Notably, there is an ongoing debate whether businesses need a private blockchain at all. There is a common misunderstanding that it is just a “distributed database with timestamps.” In fact, it is an immutable database: one cannot alter or interfere with the data without compromising all the participants. Secondly, blockchain in this context must be referred to as a set of technologies, including a consensus mechanism by which the members of the network agree on the correct transactions or what is added to the ledger.
To excel, numerous consortia were set up, including:
- R3 (around Corda framework)
- Enterprise Ethereum Alliance (EEA)
- B3i or the Blockchain Insurance Industry Initiative
- Post-Trade Distributed Ledger (PTDL) Group
- Hyperledger supporting members
- Blockchain Collaborative Consortium (BCCC)
- ISITC Europe
Apart from that, Outlier Ventures have been tracking 293 ventures that experient or implement blockchain in their business verticals. Many countries have established national blockchain associations too. Most importantly, companies group around technology and business benefits of distributed ledger technologies.
Consortium Blockchain Gain Popularity
The primary benefit of the consortium blockchains, or sometimes called federated blockchains, stems from the synergy effect obtained through cooperation between several business entities. Resource sharing allows further cost efficiency, as well as effectiveness of the core business processes. The sharing of the development costs, human resources, and time necessary for the development of blockchain benefits the firms. Crucially, privacy options are identified equally for all participants.
Hyperledger Fabric is an example of consortium blockchain that has become an outcome of the cooperation between several companies from different industries and sectors, including IBM, Daimler, SAP, Fujitsu, and Intel. In addition, Digital Trade Chain was the blockchain developed specifically for the financial sector by its members. UniCredit, Deutsche Bank, and Rabobank were amongst the developers of Digital Trade Chain. Furthermore, Hashed Health is a consortium blockchain developed for the health services industry by its members.
The Future of Public, Private, and Consortium Blockchains
Blockchain is innovative and useful tech stack for open-source communities and various enterprises. It can possess different characteristics which define whether it is a public, private, or federated blockchain. All in all, blockchain is more than a distributed database and can help participants of the network gain transparency, eliminate middlemen, and increase efficiency. With an ever-growing interest of the corporate sector, private blockchains tend to dominate the industry in terms of available solutions and range of industries.