“The floodgates are about to open on Enterprise use of Blockchain and Ethereum in particular. It’s been a long time coming, but the required technology pieces are falling into place to finally make Blockchain Enterprise Ready.”
Although people have a general understanding of Blockchain, many haven’t considered the tremendous impact that Blockchain is going to have on Enterprise companies. Large corporations with thousands of employees are realizing that Blockchain can help them lower costs, verify and secure data privacy, improve access to information, decrease bureaucracy, and even transact business. Companies are developing software that will run on their servers and go out to the Ethereum Blockchain to query information. What’s transformational about Ethereum is that these applications can go beyond simply recording events that occurred in the past and actually transact business in real time as dictated by the terms of smart contracts.
“Blockchain has the potential to do many things, but to achieve these things you need programmability. Programmability is what makes Ethereum truly transformational.”
Programmability is Critical for Enterprise Blockchain
Programmable Blockchains have three key capabilities that are valuable to Enterprise businesses: the ability to manipulate money, the ability to implement trust, and the ability to import real world information onto the Blockchain with high confidence of accuracy. Understanding the distinction between programmable and non-programmable Blockchains is crucial to understanding their value and business potential. To get the most valuable benefits you need a programmable Blockchain, meaning that a programmer can actually write a program in a high level language that expresses the terms of a smart contract that is being carried out on the Blockchain. Programming is a necessary component to realizing the full potential of Blockchain.
Blockchain is a history of transactions, stored sequentially, that people can see and contribute to. Although everyone can contribute to the Blockchain, nobody can go backwards and change what’s already on the Blockchain. It’s immutable. One of the reasons for using math in Blockchain is to ensure – with absolute certainty – that the Blockchain can not be modified once it’s been established. Once something’s been confirmed on the Blockchain it can not be erased. This is why Blockchain is suitable for financial transactions. One example is money transfers. Once the transaction has been made, everyone agrees that the transaction occurred on this date, with this block number, and that the account balances have been adjusted. Once this is confirmed on Blockchain it can never be changed or modified by anyone.
“Smart contracts will let us reengineer and streamline business practices that have been around for centuries. Many types of transactions will become much more efficient, and in some cases, will go from being impossible to easy.”
For non-programmable Blockchain, there are only a few types of transactions that can be written to the Blockchain, but with full programmability, there are many many types of transactions that can be written to the Blockchain. In fact – it’s completely up to the user. Users can make their own types of transactions that correspond to programs. These programs are called smart contracts. Smart contacts are the software programs that run on a programmable Blockchain. These programs enable complex deals, ensuring that person A paid the money, person B did her part, person C did her part and everyone agrees. It’s this level of flexibility that gives programmable Blockchain its power, and that enables us to realize the biggest benefits.
“Out of the 2,000+ cryptocurrencies out there, Ethereum has demonstrated how a blockchain technology can achieve real-world adoption with both individuals and enterprise businesses.“
Jeremy Wall, Coin Telegraph, July 27, 2019
Blockchain has the potential to do many things, but to achieve these things you need programmability. Ethereum is fully programmable and has its own programming language called Solidity. A programmable Blockchain is essentially a global computer where the results of every computation can be seen by anyone. With programmable blockchain, we can create smart contracts that enable peer to peer business transactions. Many businesses in the future will be conducted directly peer-to-peer via smart contracts.
Ability to Manipulate Money
Blockchain enables a new form of money. It’s a type of money with fundamental advantages over traditional money. These advantages are so huge that this new form of money may eventually supplant all legacy money systems in the world. Blockchain will open up opportunities for more buyers and sellers, and enable transactions and economic activity that want to exist, but can’t under the current money system. This new economic activity may come to dwarf the size of the current economy, yielding tremendous opportunity.
Blockchain is the foundation for the next generation of money, and money is extremely important for civilization. We couldn’t have accomplished everything we have throughout history without money. Without money, transactions would have been much more difficult, especially in multi party transactions (think “barter system”). Although traditional money allows people to transact business with each other, it also creates opportunity for disputes.
Programmable Blockchain has some form of money built in. In the case of Ethereum the currency is Ether. Smart contracts have the ability to manipulate money. With the appropriate authorization, a smart contact can transfer money from one party to another. A smart contract can actually effect the transaction itself and implement the transfer of money between people or between entities. This means that you can write a program which can actually carry out business transactions involving the transfer of money (or other tokens representing value). The ability to manipulate money is already in place and is fairly mature. This is the capability that most people are familiar with when it comes to Blockchain.
“Enterprise adoption of the blockchain has quietly reached a tipping point across multiple use cases. IDC forecasts enterprise blockchain to grow at a robust pace leading to a $15.9 billion market in 2023.“
IDC Worldwide Blockchain Spending Guide, August 8, 2019
Ability to Implement Trust
Blockchain has the capability to implement trust. Since Blockchains are programmable in a high level language, they allow for varying degrees of trust to be built in at the transaction and communication level of the infrastructure itself. As trust becomes part of the infrastructure it will seem to disappear from the perspective of the end user. Because the Blockchain is programmable, we can use existing solutions now, and in the future we can implement new solutions (some that we haven’t even imagined yet) to solve trust problems. And we can solve them in multiple ways in parallel. In the real world, if something is very important, we validate it in multiple ways so that we can have confidence that things check out. These approaches are going to be carried over into the world of Blockchain, but on the Blockchain they’re going to be automated and programmatic.
Verification and Validation of Identity
One very important category in this area is verification and validation of identity. The reason this is so important is that it’s codified into US law that in certain types of business transactions, you must know who the other party is on the other end of the deal, otherwise you’re not allowed to do the transaction. This is true in banking in particular. KYC and AML are part of US law and almost all countries in the world have signed on to enforcing these rules. Some people have been thinking of Blockchain as a means to evade these rules, but in fact blockchain is a powerful tool for ensuring compliance with these and other regulations, because compliance can be built into the protocols of the smart contracts.
“Corporate and government spending on Blockchain is expected to hit $2.9 billion in 2019 which is an 89% increase over 2018, and reach $12.4 billion by 2022.“
Forbes, April 16, 2019
In April, Michael del Castillo at Forbes wrote an article entitled Blockchain 50: Billion Dollar Babies identifying 50 Enterprise companies with minimum revenues or valuations of $1 billion that are actively exploring blockchain and leading the way in adapting decentralized ledgers.
The Transformative Potential of Blockchain
Blockchain has evolved from a payment system using Bitcoin to a decentralized computer using Ethereum. Ethereum smart contracts allow for the creation of any number of automatically governed structures that can be used to transact business. Some interesting areas are financial transactions, business contracts, medical records, wills and trusts, trading, and insurance. Soon proof of concept implementations will give way to actual profitable business applications and Enterprise companies will start migrating business activities to the Ethereum Blockchain. Blockchain could become a basic element in every business application where immutability, integrity and security is needed. Women and men who are involved in Ethereum Enterprise Blockchain now are defining the way businesses of the future will operate.