The worldwide spending on enterprise blockchain solutions has reached $6.6 billion in 2021. Cryptography technology has rushed into the business world and has revolutionized the way companies connect with each other and share transactional data.
With the use of blockchain software, organizations can finally record and transmit data securely. However, there might be certain roadblocks standing in the way of the implementation of enterprise blockchain solutions. One of them is rather straightforward—this technology is intricate and can be hard to grasp even for the most tech-savvy experts.
That is why we put out this guide to explain in simple terms what the enterprise blockchain is and how it can help your organization solve complex and costly problems. You will become familiar with new blockchain business applications and get to know how leading companies are using this technology to overcome the challenges faced by modern businesses.
Table of Contents
What Is an Enterprise Blockchain?
Blockchain in the enterprise refers to the permissioned blockchain technology which organizations use to streamline the storage, verification, and exchange of digital information within the company or with other businesses.
An enterprise blockchain is a ledger made of encrypted records (also known as blocks) chronologically ordered to serve as a single source of information and throughout a distributed network. In most cases, this is a permissioned ledger, meaning that it is open to a limited number of people, and the company has direct control over who has access to it.
The blockchain is characterized by a constellation of features that make it exceptionally secure and functional:
- Distributed – the ledger exists in a replicated form across multiple nodes (instead of keeping data centralized).
- Immutable – no participant can change or tamper with any validated record.
- Programmable – a set of rules (like Smart Contracts) is stored in the blockchain to automate certain operations.
- Secure – the data is protected with cryptography and other security technologies to make it impossible to hack or cheat the system.
- Token-driven – all the transactions and other interactions that take place in the blockchain network use tokens to carry the secure exchange of value.
Transaction records in the network are not centralized in most cases, meaning that no authority governs the record. At the same time, the network participants maintain the data and can approve transactions. Thus, no single participant owns the blockchain, and the updates are possible only on the condition of consensus amongst participants.
Every network participant gets access to the data stored in the blockchain. In this way, you have the exact ledger copy that resides on the nodes of other participants.
The ledger consists of a number of blocks that include transactions. When a new transaction happens, its record appears on the nodes of all participants. These records are immutable, and new ones are created based on the previous entry, creating chains of blocks. Since every new block is linked to the previous ones, changing its content is impossible. Thus, blockchain technology is secure. If hackers have an intention to corrupt the blockchain system, they would have to make changes to every single block on all the nodes.
Source: https://searchcio.techtarget.com/feature/What-are-the-4-different-types-of-blockchain-technology
How Is an Enterprise Blockchain Different From Other Types?
As we mentioned earlier, an enterprise blockchain refers to the permissioned type, also known as private blockchain technology. The blockchain resides on a closed network, meaning that the organization can decide who has access to it. The distinguishing feature of private blockchain is that a single entity can control it. Thus, it is partially decentralized. This makes it slightly weaker than a public blockchain, as an owner of a central node determines what data to validate. But unlike other blockchain technologies, it has better performance due to the smaller number of nodes.
However, there are other types of blockchain technology, including public (permissionless), hybrid, and consortium. See the chart to see a general picture before we go over these types in more detail.
Source: https://www.blockchain-council.org/
- Public (permissionless) blockchains are available to everyone as they do not require permission to join the network. This adds exceptional transparency to the network as all transactions are public and visible to anyone. A public blockchain is also less vulnerable to hacking because it lacks a centralized node, and numerous participants make it too demanding for black hats to hack the system. But it has proved to be the slowest type of blockchain due to its open status and the enormous number of participants.
- Hybrid blockchains combine the merits of public and private blockchains and are frequently adopted by enterprises. The companies can leverage this technology to segment data into publicly available and restricted information. The node owner can not alter transactions, which mitigates the security risks of the private blockchain. The performance proves to be better than public blockchains, so this technology has taken the best of both worlds and reduced the shortcomings of public and private blockchains.
- Consortium blockchains are similar to private blockchains, but in this case, a few predominant nodes verify, control, and change the transactions. This blockchain has a high-efficiency level as it requires fewer nodes to verify transactions and is less vulnerable to security risks.
To sum it up, private blockchain enterprise solutions differ from other blockchains by the level of accessibility, control, security, and transparency.
Why Is the Enterprise Blockchain Important for Business?
Due to their decentralized and immutable nature, blockchain technology solutions can bring numerous opportunities to businesses in different industries.
Enhanced Transparency
Because blockchains are distributed ledgers, they keep transactions and data consistency through all the nodes. It means that all network participants have access to the same information. This significantly cuts the verification time and enhances transparency within the enterprise. Moreover, every single transaction is immutably recorded and time-stamped, so every participant has a view of the transaction history.
Improved Efficiency
Traditional paper-heavy operations frequently bog down employees’ efforts. They also might lead to significant delays due to mandatory third-party data validation. By leveraging blockchain enterprise solutions, organizations can streamline business processes and simplify the exchange of data. For instance, by keeping the documentation and transaction details on the blockchain, companies eliminate the need to exchange paper. There is no need to duplicate the files as the data will be available on all nodes in the network. So, since blockchain reduces the need for mediators in many processes and keeps data accurate on all the nodes, transactions are carried out faster and more efficiently.
Better Security
According to the RSM’s “Catch 22: Digital transformation and its impact on cybersecurity” report, 72% of businesses that undergo digital transformation believe that they are at risk from cybercrime. At the same time, nearly 21% of organizations do not have a robust cybersecurity strategy, even though they have invested in new digital technologies to streamline operations or improve their products and services.
Blockchain technology experts assure that blockchains offer a more secure record-keeping system. It creates an encrypted record that can’t be changed and is linked to the previous transaction. The immutable nature of the record makes it impossible to falsify data. On top of that, data is stored across a network of computers and can be altered only on consensus from all the participants. Thus, when hackers want to manipulate data, they must hack all the nodes before doing so. Furthermore, if your enterprise relies on a private blockchain, you can be certain that a limited number of people have access to the information.
Automation
To speed up the agreement verification process, companies use “smart contracts.” These are automated blockchain programs that trigger an action when all pre-specified conditions are met. By automating the agreement execution, smart contracts are able to reduce human intervention and third-party involvement. Smart contracts allow all participants to view the contract compliance and outcome without time loss. They also can trigger the next action, like the payment once all the required documents have been provided.
Competitive Advantage
David Essex, an editor at TechTarget, says that investing in blockchain is essential to staying competitive. Blockchain technology has the potential to revolutionize companies and how they run their operations, just like PCs did in the 1980s and the World Wide Web in the 1990s. Thus, those organizations that want to be several steps ahead of their competitors should consider blockchain as an opportunity to advance their dominance and visionary spirit.
Top Blockchain Platforms for Enterprises
A blockchain platform allows developers to create your own blockchain application as your enterprise adopts blockchain technology or creates novel uses of the existing infrastructure. In other words, a blockchain developer platform is a platform that allows enterprise blockchain companies or service providers to deliver a custom blockchain solution based on enterprise-specific needs.
There is a wide selection of blockchain development platform options that address various business needs. Let’s take a look at the most popular solutions for equipping organizations with robust blockchain technology.
Ethereum
Ethereum is an open-source blockchain application platform that helps streamline business operations through optimizing payments, agreement flows and enabling faster data sharing in numerous industries. It offers two solutions for enterprises: Mainnet and Private Ethereum.
Ethereum Mainnet is a public permissionless platform. Because of the public nature, developers can build apps that easily interoperate, ensure enhanced transparency, and involve a lower total cost of ownership.
Private Ethereum allows enterprises to build a permissioned network to make transactions and use smart contracts in a restricted environment.
Quorum
A quorum was derived from Ethereum through modifying the Geth client. It’s an open-source blockchain platform that enables custom-tailored, high-performance apps. It can be deployed in a wide range of industries to meet the needs of real estate, digital currencies, supply chains, and others.
This platform enables software engineers to develop blockchain applications on either a public Ethereum Mainnet or a private permissioned network.
Hyperledger
Hyperledger is a modular blockchain platform that allows enterprises to build a robust blockchain ecosystem through a global, open-source network. Adoption of this technology will change how the company runs the business. It removes numerous layers of inefficiency and brings order and trust to the workflows.
Hyperledger ensures enterprises can make direct transactions transparently and securely through a peer-to-peer network.
Corda
Corda is an open-source platform and leading consortium for financial industries. This permissioned platform supports DLT applications, allowing enterprises to make secure transactions through a private network. It relies on Asynchronous Byzantine fault tolerance (ABFT) algorithms, enabling timely and secure transaction agreements between nodes. It also offers smart contract functionality to facilitate the flow of contracts and digital records.
Top Blockchain Applications in Business
Until recent times, people used to think of blockchain as a way to copy Bitcoin and other cryptocurrencies with real-world applications. However, the distributed ledger technology (DLT) that creates a secure ledger (the focus of this article) has been neglected.
But now, some enterprises have harnessed blockchain’s potential and are increasingly adopting this technology. There are numerous applications for blockchain technology in various fields of business, so let us show you some of the most widespread uses.
Smart Contracts
Based on the Smart Contracts Analysis Report, 2021-2026, the smart contracts market is likely to expand more than threefold by 2026. Meaning more businesses will be using it to cut expenses and optimize transactions.
Source: https://reports.valuates.com/market-reports/QYRE-Auto-31L1599/global-smart-contracts
Since smart contracts involve setting a condition that triggers a certain action once it is met, they can automate numerous operations like money exchange, content access, and digital identity verification, to name a few.
For example, smart contracts can simplify the loan and mortgage management process. Smart contracts can be coded to follow the mortgage agreement. When the borrower fulfills the conditions defined by the algorithm, this will automatically set the process into motion. In this way, both parties will enjoy fast and easy mortgage processing. The system can also handle a mortgage by tracking the frequency of payments. A breach of contract can activate the process of mortgage penalty or any other response defined by the agreement.
Cross-Border Payments
Blockchain technology can facilitate fast, safe, and secure international transactions and bypass the challenges that common payment systems (like SWIFT) have.
For instance, Navin Gupta, a Ripple Managing Director, claims that an average cross-border payment takes around 3-5 business days, and the level of failed SWIFT transactions is high (4%). As a result, there is a lot of frustration that harms potentially fruitful relationships between international organizations.
When both parties use blockchain technology, they communicate payment data through the encrypted ledger in real-time. This allows instant payment arrangement and verification without using intermediaries like banks, which enables lower transaction fees.
The Internet of Things (IoT)
Enterprises optimize their infrastructures using sensors and other cutting-edge technologies by building IoT ecosystems. But with the number of connected devices that enable IoT to revolutionize business, the security risks have never been higher.
Blockchain enables companies to combat IoT security issues. Through integration with blockchain technology, the IoT smart device can operate autonomously without a centralized authority. This helps mitigate security risks as the ledger is completely decentralized, and data is stored on various nodes. You will also be able to check how assets communicate as the blockchain network will be creating immutable and chronological records.
Blockchain technology will also help enterprises cut costs associated with storing and managing data as the information will be kept on either a public or private ledger. Moreover, the distributed nature of blockchain minimizes the risk of IoT downtime. Compared to traditional servers or cloud data storage, the failure of one of them can disrupt the whole IoT ecosystem. This risk is greatly mitigated with blockchain.
The implementation of blockchain in IoT has become so widespread that it has inspired the birth of new technology—IOTA. It’s based on an open-source distributed ledger called Tangle, which makes the system scalable, faster, and even more secure. This solution has overcome some deficiencies of blockchain infrastructure and offers a new method of obtaining consensus between nodes. Tangle validates transactions when two other randomly chosen transactions are authenticated. Due to this, IOTA is scalable and does not require mining or transaction fees.
Document Management
Document management refers to one of the greatest headaches for companies these days. Currently, businesses struggle with managing documents effectively, which leads to information duplication. For example, two employees can use different versions of the same file simultaneously. This results in massive disorganization, confusion, and errors. This is chaos in documentation is a serious drag on companies. Workers are busy searching and distributing files rather than focusing on value-added tasks.
Blockchain offers an innovative means for improving document management, and in doing so, delivering numerous advantages to organizations. Thanks to this technology, companies can fully view all the documents that enter and leave the enterprise.
When using a blockchain system, you can instantly verify the essential data about any file in the network, like location, the author of the file, and when it was last edited. This information is available to all participants of the network or the ones who have access to it, depending on the blockchain type.
On top of that, one of the enterprise blockchain applications is that it helps you avoid duplication and the distribution of various versions of the same file.
Regulatory Compliance and Audit
The regulatory environment is becoming complex. A mid-sized firm, for example, spends around $10,000 per employee to keep up with all regulations and compliances. Thus, organizations are wondering how to stay on top of the ever-changing and complex regulatory morass and reduce maintenance costs.
Blockchain provides clear benefits to the regulators and other parties who are engaged in the regulatory compliance process. For instance, a blockchain ledger can be a game-changer in following KYC (know your customer) and AML (anti-money laundering) rules for banks. Financial institutions have to carry the client through a long onboarding process. Along with collecting data, there are numerous rules about verification. These steps can be eliminated with the secure, tamper-resistant, immutable ledger known as the blockchain. All the information would be available to network participants in real-time, and the changes would be distributed among all the connected nodes.
Enterprise Blockchain Use Cases & Best Practices
Innovators and visionaries in different fields are increasingly understanding and appreciating the advantages of blockchain technology. Business Insider suggests that blockchain is making its way in almost every industry. From government to commerce, many fields are integrating blockchain solutions into their infrastructures.
Financial
Banks and other financial institutions rely on legacy processes to carry transactions and provide payment, loan, and mortgage services. But these operations are cumbersome and time-consuming. For instance, it might take around 60-90 days for an enterprise to secure a loan.
Blockchain technology will streamline financial services, reduce settlement time and counterparty risks. Smart contracts allow for more optimized workflows and faster financial processes.
The blockchain system also makes international transactions easier, safer, and faster. For example, Ornua, an Irish manufacturer of dairy products with a vast global reach, partnered with Barclays, a multinational bank, to conduct their first transaction to the Seychelles Trading Company via a new blockchain platform called ‘Wave’ in 2016. That solution allowed them to bypass the complexity of involving a huge number of other global participants while sharing their data securely. The documentation was shared through a decentralized network protected by encryption algorithms, which reduced the risk of document fraud. As a result, that pilot transaction yielded numerous blockchain benefits, and the technology has seen rapid and powerful development since then.
Manufacturing and Retail
Increased transparency and greater blockchain security make it easier for manufacturers or retailers to build trust with trading partners. By delivering end-to-end visibility in all processes, both parties can solve issues much faster and easier once they take place on a blockchain platform. Moreover, sellers can prevent fraud and counterfeit products by having a clear vision of the manufacturers’ goods. But there are other blockchain enterprise use cases in the retail industry:
- Amazon uses blockchain technology to offer a Track and Trace feature that allows sellers to get better visibility of the location and history of all items in the inventory.
- Walmart relies on blockchain for enhanced food traceability.
- Alibaba uses blockchain to simplify cross-border transactions and provide customers with accurate data about products, including food.
- Aldi has adopted blockchain technology to manage their supply chain
Government
The government and public sector can escape from siloed and inefficient centralized systems and switch to cutting-edge blockchain technology to build a cost-effective, more agile system.
For instance, personal identification will be possible with minimal information (like the name and date of birth) as the data will be stored in a network. Voting would be much easier and more secure as each ID would be attributed to one vote only.
Energy
Like in any sector, blockchain aims to transform the energy sector by injecting innovation into the main processes. For example, this technology is beneficial for utility providers. It allows for tracking the chain of custody for grid materials, executing supply transactions, and maintaining compliance with industry rules. It also facilitates wholesale electricity distribution, oil and gas resource exploration, asset management, document ownership, and much more.
Healthcare
Without a doubt, blockchain IT solutions have a wide range of applications in the healthcare sector. From the secure and accurate medical data transfer to more sophisticated uses like helping researchers unlock genetic code, a blockchain system will ensure every piece of data that enters the network is secure, immutable, transparent, and traceable.
Media and Entertainment
The media and entertainment sector mainly harnesses blockchain technology to reduce costs, fight fraud, and protect intellectual property rights. For instance, it is used to stop the spread of fake news by giving a single source of information or to distribute premium content through robust networks.
One of the examples of business applications of blockchain in media refers to Eluvio, Inc., a 4K streaming and ticketing platform. It is the first direct-to-consumer content distribution model that allows fans to enjoy streams of their favorite artists. The content is sold through blockchain-backed contracts without distribution fees.
Opportunities and Obstacles of Blockchain Adoption
We’ve already said enough about the opportunities blockchain technology brings to enterprises. The spectrum of uses is tremendous, but they all come down to safer and better interactions between participants in a digital environment.
At the same time, a lot of contradictory information about blockchain is floating around. In the ‘The Real Business of Blockchain’ book released by Gartner Inc, David Furlonger and Christophe Uzureau express the idea that there are a lot of anecdotes about organizations that switched to blockchain technology and failed to obtain the desired results. They explain this by the fact that blockchain technology is very young, and enterprises don’t yet know how to extract the real value from it. As a result, companies only experiment with blockchain elements they are capable of comprehending and implementing. Thus, their limited results capture a small fraction of the tech’s potential.
To sum up, the key obstacles that prevent enterprises from successful blockchain adoption lie in three basic factors.
Hesitation & Obsolescence
Blockchains are a relatively new technology, and senior executives do not put much trust in them. They have concerns about whether it will live up to their expectations and bring the desired outcomes. It’s natural human behavior to stay away from the unknown and the risks it carries, so top-level managers refrain from adopting blockchain in their enterprises until there is more proof of success in the market.
Skills Gap
If you are wondering how to create blockchain applications or would like to implement this technology in your enterprise, you will need qualified personnel to manage the whole process. But you might encounter serious issues here as only a few people have the skills to bring about smooth technology adoption. The demand for these talents is tremendous, so you’ve got to hunt for experienced people and be ready to offer competitive compensation.
But the number of blockchain tech companies is constantly increasing. So, if your enterprise has a serious intention to adopt this cutting-edge technology, then the opportunities are opening up. For example, if you want to build a blockchain application, Ergonized will help you empower your blockchain network with functional apps.
Security Concerns
Even though blockchain boasts of impenetrable security, there are reasonable grounds for postponing adopting blockchain technology at this point of its development. Some coding flaws and loopholes might provide malicious actors with the possibility to hack into the system.
Other Issues
There are several other challenges slowing down the spread of blockchain technology in the market. The system is still slow and cumbersome. It lacks scalability as it is still not capable of supporting large-scale users. Your organization might also find it challenging to integrate it with the legacy system.
If you are a green organization, you probably won’t be satisfied with blockchain. Blockchain consensus mechanisms are supported by mining, which leads to greater use of electricity.
While some of the obstacles can be easily overcome with blockchain professional services, others are still major stumbling blocks to the more widespread implementation of this technology.
Afterword
Top companies like Amazon, Alibaba, Walmart, Microsoft, and others are exploring the benefits of blockchain technology these days. The whole business world has turned its attention to these enterprises and is carefully watching how things will go.
The blockchain system offers an enormous list of benefits, and the number of companies delivering blockchain technology services is constantly increasing. However, some challenges have yet to be tackled.
But no matter what, companies should follow blockchain technology closely and be ready to invest in it one day.
To get an idea of whether your organization is ready for blockchain adoption, schedule a call with Ergonized’s experts. We provide IT consulting services and help you leverage novel technologies so that your business reaches the peak of its revenue and performance.
