Enterprise Blockchain Solutions - Overview, Opportunities and Challenges
Enterprise Blockchain solutions have experienced greater adoption by enterprises over the last three-four years. In fact, it has become an essential component of the software stack for businesses that need to issue digital assets. As per ConsenSys, companies use blockchains to solve three main scenarios:
- Efficient data processing: The blockchain platform acts as a layer for information processing and coordination. The distributed systems design can optimize existing legacy structures. Organizations can enjoy more efficient data coordination than paper-based and centralized systems.
- The need for a secure business environment: One of the greatest use cases of the blockchain is that it digitizes trust and agreements. Several big companies in major industries like financial services and global trade have already started using blockchain-based platforms for their daily operations. Immutable and programmable smart contracts can be used to automate business logic easily.
- Create digital assets: Tokenization and creation of digital assets are among the most innovative use cases of blockchain technology. If a company needs to issue and manage digital assets continually, then blockchain integration is the best option. Central bank digital currency (CBDC) and real estate tokenization are good examples of this use case.
How are different enterprises are using blockchain
One of the biggest problems that the banking sector is currently facing is cross-border payments. On average, an internal bank-to-bank money transfer can take up to 2-5 working days. This can be a problem in today’s world, especially when you consider how many people are now employed in remote location jobs.
If you have ever done any freelance work, you would know how long SWIFT transfers can take if you are doing bank-to-bank transfers. Worse than that is if you get paid via PayPal. If your company sends your payment on Friday, you may have to wait until Tuesday to get paid because these financial institutes are always closed on the weekends.
The reason why it takes so long for settlements is that there are a lot of middlemen involved who deal with the transactions in batches.
With Blockchain, settlements become user-optimized, saving a significant amount of time and money for both parties involved.
The blockchain completely removes the need for middle-men because the transactions are settled near-instantly (if a permission chain is used).
To show you the effectiveness of blockchain-integration, consider this example.
SAP recently collaborated with ATB Financial and fintech startup Ripple to send the first international blockchain payment from Alberta, Canada to ReiseBank in Germany. The bank used the SAP HANA Cloud Platform and the SAP Payment Engine application to take advantage of Ripple’s pioneering blockchain network.
The $1000 CAD (€667 EUR) blockchain payment, which would typically have taken from two to six business days to process, was completed in about 20 seconds. The proof of concept has since improved and can now complete the transactions in just 10 seconds.
Insurance fraud is a major problem that is affecting the healthcare industry. This happens when dishonest providers and patients submit false claims/information to receive payable benefits. To get an understanding of how serious this problem is, try to wrap your head around this: According to Boyd Insurance, Medicare fraud in the U.S. alone costs about $68 billion a year.
What’s the solution?
- With blockchain technology, medical records can be cryptographically secured and shared between health providers.
- The medical industry suffers from isolated solos. The blockchain will help in increasing interoperability in the health insurance ecosystem.
- It can help boost privacy in the network. A patient can have a unique hash ID which can be stored in the blockchain. If anyone does look into the data, they won’t be able to see the patient’s name, just their hash ID. It is infeasible to determine the name from a given hash.
- Ensure that patients are always in control of their medical data. Only the patients can decide how their data is shared.
- By using the blockchain, the insurance companies can use the blockchain network for the patients’ medical records and ensure that they are correct.
- The medical records stored inside the chain can’t be manipulated in any way. The data stored inside the blocks is time-stamped and regularly updated to reflect changes.
- The patients can also add more info to the audit and value to their insurance claim.
#3 Real Estate
Real estate is the largest asset class in the world. London-based real estate advisor Savills tallied up the value of all global property and concluded that it overall came to a staggering $217 trillion. The head of Savills world research, Yolande Barnes, said, “To give this figure context, the total value of all the gold ever mined is approximately US $6 trillion. This sum pales in comparison to the total value of the developed property by a factor of 36 to 1.”
How blockchain-integration will change real estate
- Decentralized Digital Records: The current centralized structure is hard to maintain and is extremely vulnerable. A shared platform reduces the possibility of corruption.
- MLS with Single Truth: Since all the nodes in the network will continuously maintain and update a copy of the blockchain, they all share the same single truth. As such, the chances of different pricing across different platforms is minimal.
- Property Tokens: By tokenizing properties, it will be possible to make the market more liquid and reduce the barriers to entry. One of the most exciting outcomes of tokenization is fractional ownership. By owning the tokens of a property, it could be possible for you to own 1/6th of a property, instead of the whole house. This is a win-win scenario for both the buyers and sellers.
- Smart Contract: A smart contract is an automated and self-executing contract built on top of the blockchain. This allows two parties to directly interact with each other without having to go through a third party or an intermediary. A smart contract could replace the existing rental contracts and make the whole process automated and must more efficient.
- Immutable Data: The blockchain’s immutability and transparency will help reduce corruption. Brickbase’s vision is to use the blockchain to store title search data. “Title search” is a process that can be easily corrupted. By leveraging the blockchain technology, it will be possible to produce title search data that is incorruptible.
#4 Digital Identity
The digital identity industry can benefit immensely from blockchain integration. There are three main issues plaguing this space right now.
- Digital units shouldn’t be easy to replicate.
- Digital files should be tamper-proof.
- Digital processes should be trustless.
Digital Units Shouldn’t Be Easy To Replicate
Anything that’s of immense value should be challenging to replicate. This holds true for money and should hold true for identity as well. To understand what we mean by this, consider the following fact. When you are spending $100, it should be impossible for you to buy two items with the same dollar bill. Meaning if you purchase item A with a $100 note, you can’t simultaneously buy item B with that note.
This isn’t a problem when you are dealing with actual paper currency, but what about digital money? A similar argument holds up for digital identity as well. What is keeping your identity from being easily replicated and used by anyone around the world? This problem is called “double spending” and blockchain technology has already mitigated this issue.
So, how do we do decision-making in blockchain technology? Let’s take a look:.
- Each decision needs to be verified by the blockchain network via a consensus mechanism.
- Special nodes like “validators” are in charge of validating the decisions.
- If someone tries to double-spend by – let’s say using their vote twice – then the validators will reject those votes. Once a transaction gets verified, the details get added into a block.
The same logic applies to digital identity.
Digital Units Should Be Tamper-Proof
Along with being difficult to replicate, the units should be tamper-proof as well. Back in the day, when paper storage was prevalent, personal record files used to be physically stored in registers, this brought in a host of problems.
- Anyone can steal the registers.
- The records were tamperable.
- Registers are susceptible to wear and tear.
As we have already seen, even after moving to digital identity, these problems have persisted.
- The server where the files are stored could always be hacked.
- Anyone could bribe an official and make them change the records.
Thankfully, this is another issue that the blockchain can easily mitigate. By leveraging cryptographic hash functions, the blockchain becomes immutable. No matter what you do, these functions will prevent data to be tampered with once it is inside the blocks of the blockchain.
Digital Processes Should be Trustless
Finally, preserving valuable data such as identity should be a trustless process. To be fair, every large-scale institution runs through a strict set of processes, but they can be disrupted via general negligence or a malicious attack.
To secure valuable data such as personal identities, that process securing it should be trustless. A lot of actors need to follow specific steps every single time to ensure the safety of the process and to eliminate any corrupt human behavior.
Does that sound familiar?
It should because that’s pretty much how a blockchain’s consensus mechanism works. A blockchain is a distributed system that includes nodes from all over the world. Since there aren’t any central governance bodies, how exactly do you make any decisions within the system?
Decision-making within the blockchain is done via consensus algorithms. Simply put, the entire blockchain network gives its consent to a particular proposal. If the network agrees to go ahead with it, then its implemented, otherwise it’s scrapped. Since the network is in charge of decision-making, there is no need to trust a central governance body.
Enterprise blockchain platforms
Alright, so now we have seen how blockchain-integration can help different enterprises, let’s look at some platforms that can help these organizations achieve their goals.
#1 R3 Corda
R3 is a consortium of some of the biggest fintech firms in the world. Together, the consortium created a distributed ledger platform called “Corda.” When it first started, R3 had nine financial companies: Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, Goldman Sachs, J.P. Morgan, Royal Bank of Scotland, State Street, and UBS.
Currently, it has more than 300 participants. Some of the more notable names are – Bank of America, BNY Mellon, Citi, Commerzbank, Deutsche Bank, HSBC, Mitsubishi UFJ Financial Group, Morgan Stanley, National Australia Bank, Royal Bank of Canada, Skandinaviska Enskilda Banken, Société Générale, and Toronto-Dominion Bank.
R3 Corda has found utility in the finance space, along with supply chains, healthcare, and government. The core concepts behind Corda’s models:
- Machine-readable contract codes govern an agreement between two or more parties.
- All the transactions go through a life cycle.
- Co-ordinate actions without the need for a central authority.
Corda Node Structure
The image above is the nodal architecture in Corda. Every single node has five main components:
- A vault that stores past and current states. It also logs the transactions processed by the existing nodes.
- A network interface to promote cross-node communication
- RPC interface to communicate with the node owner.
- Access and install “CorDapps” or Corda Dapps through a plug-in registry
- A service hub that enables the Flows to call for services from other nodes or to access any relevant information.
What are CorDapps?
CorDapps are the decentralized applications that run on top of the Corda platform. It has the following key components:
- States: All the parameters over which the agreement is reached has to be clearly defined.
- Contracts: States the valid ledger update.
- Services: Must provide utilities within the node.
- Serialization Whitelists: This restricts the types your nodes will receive off the wire.
#2 Hyperledger Fabric
Hyperledger Fabric is one of most enterprise blockchain options out there. Fabric develops blockchain-based products, solutions, and applications aimed for use within private enterprises. Since these are simple plug-and-play solutions, integration with enterprise workflow is a breeze. Hyperledger Fabric’s permissioned architecture enables businesses to segregate confidential information and speed up transactions. Fabric 2.0 was released in January 2020 with faster transactions, updated smart contract technology, and streamlined data sharing.
How does Fabric work?
The framework is coded using Go. The smart contracts within Fabric are coded using “Chaincode.” Every peer of the network runs in Docker containers. To write Chaincode contracts, one must be well-versed in four main functions:
- PutState: Create new asset or update existing one.
- GetState: Retrieve asset.
- GetHistoryForKey : Retrieve history of changes.
- DelState: Delete the asset.
Fabric’s modular structure separates the transaction processing workflow into three different stages:
- Chaincoded smart contracts for distributed logic processing
- Transaction ordering.
- Transaction validation and commitment.
This segregation is useful because:
- It reduces the amount of trust-level and verifications required.
- Improve network scalability.
- Improve overall performance.
- Readymade integration of various modules.
- Easy reuse of existing features.
Enterprises like Walmart, Sony Global Education, Honeywell, etc. have worked with Hyperledger Fabric before.
#3 RSK’s Extrimian
Rootstock (RSK) is a smart contract platform that is connected to Bitcoin´s blockchain through sidechain technology. Rootstock allows you to create applications compatible with Ethereum (the web3/EVM/Solidity model) while still enjoying the Bitcoin blockchain’s security. At its very core, Rootstock is a combination of:
- A Turing-complete resource-accounted deterministic virtual machine (for smart contracts) is compatible with the Ethereum’s EVM.
- A two-way pegged Bitcoin sidechain (for BTC denominated trade) based on a strong federation
- A SHA256D merge-mining consensus protocol (for consensus security relying on Bitcoin’s miners) with 30-seconds block interval. (for fast payments).
Rootstock will also be using its tech stack – the Rootstock Infrastructure Framework Open Standard (RIFOS) to help build a healthy economic system on top of Bitcoin. It’ll facilitate the use of blockchain technology by making it as simple for everyone as possible.
RSK and Grupo Sabra
RSK’s parent company IOVlabs has partnered with Grupo Sabra, a solutions company, to create Extrimian. Grupo Sabra has a proven track record in implementing real-world enterprise blockchain applications.
Extrimian provides a platform and ecosystem called RSK Enterprise Cloud to enable governments, entrepreneurs and enterprises to build their own dApps. Extrimian’s main aim is to “facilitate the mainstream adoption of blockchain technologies and to build digitized value networks.”
RSK Enterprise Cloud offerings
RSK Enterprise Cloud is a BaaS (Blockchain-as-a-Service) platform that empowers governments and businesses to develop decentralized solutions. It does so by providing the following:
- Flexible connection: Easily integrates enterprise IT with decentralized networks.
- Ecosystem: Powerful pre-integrated solutions and services from RSK’s ecosystem helps accelerate development.
- Governance: Governance-as-a-Service platform helps implement a governance operating model for an organization’s consortium network.
- Fully managed: Extremian’s multi-cloud, fully managed and world-class BaaS shifts resources away from platform operation.
As per Guillermo Villanueva, CEO of Extrimian and co-founder of Grupo Sabra, the RSK Enterprise Cloud “is a platform created by developers for developers that comes as a result of more than six years implementing Blockchain projects within our enterprise and government customers. We faced all the complexity of working directly with the base blockchain protocols and realized that Extrimian was the missing piece to enable mainstream adoption.”
Extrimian is just another one of the many contributions RSK is making to the blockchain ecosystem. Additional contributions are related to DeFi, Self Sovereign Identities, Blockchain for Social Impact, Blockchain for Supply Chain, Decentralized Exchanges, Decentralized Storage and many other blockchain use cases.
Conclusion – Enterprise blockchain solutions
Enterprises around the world have started experiencing the business-changing potential of blockchain technology. Platforms like Extrimian and Hyperledger lowers the barrier of entry considerably and helps organizations realize their business’s full potential.
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