Blockchain in enterprise: Has the ship sailed for Ethereum?

As the ‘world computer’ Ethereum can’t afford to miss the massive opportunity in enterprise but it appears more nimble competitors may be leaving port without it. This an excerpt from Part 1 of 2 in a research series assessing the implications of blockchain in the supply chain and the consortium model defining future globalization.

Ethereum has been on a long road to scalability and solving the arduous technical issues to becoming the world’s decentralized computer. Amid developer disagreements and fragmented governance Ethereum’s direction and vision for Ethereum 2.0 is struggling to reconcile its many stakeholders, and the price of its native asset ETH has struggled to find much momentum as the public waits for its much anticipated upgrades, Istanbul and Serenity. This new report from BNC Research explores Ethereum’s ‘enterprise’ opportunity, what the challenges are to capitalizing on that opportunity, and profiles some prominent competitors that also have their eye on the institutional use prize.

As the first platform blockchain, Ethereum still has the most network effect and the most promise for real-world enterprise – which is one of its strongest use cases. However, there are now a multitude of competing platforms. Tezos, Tron, NEO and Cardano, for example, seek to improve upon and usurp it, and new distributed ledger technology – Hedera Hashgraph – the self-styled ‘blockchain killer’, has the potential to even obviate Ethereum altogether.

Then there are the legacy technology companies such as IBM, Microsoft, Oracle and Amazon Web Services that are now offering ‘blockchain as a service’ – templating permissioned private and public blockchains for easy set ups and integration with existing company cloud services. These also have the potential to steal the thunder from Ethereum in enterprise as they streamline and simplify the set-up of prviate and permissioned networks. Interoperability between public platform blockchains is sorely needed and blockchain-as-a-service platforms address much of the demand of businesses by integrating with other blockchains and existing enterprise cloud services.

If the enterprise use case is taken from Ethereum that is a huge missed market opportunity and it will be largely left with Dapps – the validity of many is questionable – and a nascent decentralized finance market.

Blockchain consortia and re-globalization

With the rise in trade wars, tariffs and populist politics supply chains in all industries face disruption in the years ahead. To protect trade routes and customer bases built upon decades of free trade agreements, multinational corporations (MNCs) are exploring new technology and governance models that will define a new form of globalization, re-organized by MNCs.

A growing governance trend among MNCs is to organize in industry consortia, and on a supranational level through bodies like The World Economic Forum. Blockchain technology is being used to band companies together in this consortium model which is described by proponents as a ‘team sport’; the most recent and prominent is Libra, but it is just one of many industrial alliances built around blockchain.

Several of the world’s largest companies have joined or are leading blockchain projects in their industry: IBM in IT; JPMorgan in banking; Maersk in logistics; Walmart in retail; and Facebook in media and tech. Enterprise consortia’s use of permissioned and private blockchains combines the benefits of ‘co-opetition’ (cooperative competition) among rival companies with privileged access to data previously kept in walled gardens, creating new streams of data for AI development.  

The rise of multi-stakeholder governance

In global governance, multilateral trade agreements between nation-states are having a diminishing effect as politics gets in the way of decision-making. More effective governance is needed to guide future enterprise and blockchain may provide a framework for industries to work more cooperatively on the direction of globalization in a way that nation-states simply cannot.

Just as blockchain and cryptocurrencies are being used to reorganize the traditional structures within corporations they are also leading to new forms of governance between corporations as industry leaders steer future globalization and global governance.

Download the full report here