Blockchain for Business in 2021 – Towards Public Chains and Decentralization. Baseline Could Be The Direction to Take.
By Pete Harris, Executive Director, Austin Blockchain Collective
Hyperledger, the Linux Foundation’s blockchain initiative, just celebrated its fifth birthday. Initially known as the Hyperledger Project, it originally focused on a single enterprise blockchain development – a private/permissioned platform dubbed Fabric. Its early members were a couple of dozen major corporates, with IBM as a key champion, influencer and code contributor.
Five years on, Hyperledger has grown substantially. It now has more than 200 members big and small and comprises 16 core projects, including competing ledgers, development tools, identity frameworks, etc. Until recently, however, its focus remained on the private blockchain space. That changed in 2019 with the announcement of Hyperledger Besu, an Ethereum client built by ConsenSys, which supports both private and public chains.
According to Hyperledger’s annual report for that year, “Besu represents the growing interest of enterprises to build both permissioned and public network use cases for their applications.” Another report in 2019 – commissioned by consultants EY and analyst firm Forrester Research – found that some 75% of enterprises were interested in exploring public blockchains.
As those enterprises embark on their public blockchain research, they will find more than a few variants to choose from. Ethereum is by far the most established, and with its ETH 2.0 scalability upgrade now begun, it will surely remain the leader for some time to come. But many other public chains are now launched and being developed, including the Web3 Foundation’s Polkadot, Cosmos, Cardano, DigiByte, Decred, EOS, NEAR, Solana, NEM’s Symbol, VeChain, etc.
With so much innovation focused on (and investment in) the public blockchain space, and relatively little on private variants, bets against enterprise adoption of public chains would attract very long odds indeed.
Scalability aside, perhaps the most common criticism of public chains is that they are not relevant for – indeed not usable by – enterprises that need to keep their vast data assets private for competitive or regulatory reasons. It’s a valid POV, but this year the Baseline Protocol has emerged to counter it. Baseline is going to be very useful for businesses. And it’s going to be huge.
Baseline is not a blockchain platform. Rather, it describes a technique that leverages blockchain, peer-to-peer messaging and zero-knowledge cryptographic proofs to keep enterprise data stores – so-called systems of record – in synchronization with one another and so support business processes that extend across entire ecosystems.
When one considers the numerous business requirements to synchronize confidential data stores both within companies and between them and their partners on a global scale, the opportunity to achieve this alignment efficiently becomes clear. Common examples of the need for such synchronization include:
To address this opportunity, the open-source Baseline Protocol leverages blockchain as a time-ordered log of hashed proofs of existence to create a common framework for enterprises to run business processes.
Crucially, this approach does not require the data that is stored within enterprises to be moved on to a common blockchain. The data stays in its existing repositories, whether they be ERP systems from the likes of SAP and Microsoft, CRM applications like Salesforce, traditional databases or even private enterprise blockchains. To re-iterate: data remains in its original place, governed by whatever security and privacy controls and mechanisms the enterprises deem necessary.
Business interest in Baseline is in its early days, but the momentum behind it is clear. As well as ConsenSys and EY, Accenture also recently became a project sponsor. Significantly, Accenture and EY were ranked as 2nd and 3rd, respectively, in an annual ranking of global enterprise blockchain service providers by HFS Research.
Baseline does not actually mandate the use of any specific blockchain platform, but it does specify what the platform needs to provide. It needs to be open to all, globally available and always running, which are attributes typically associated with public blockchains. The first reference implementation of Baseline has been built on Ethereum, which is not surprising given the project’s ConsenSys and EY leadership.
John Wolpert, a ConsenSys executive who played a key role in the formation of Hyperledger when he worked at IBM, describes blockchain’s use within Baseline as “boring” and he should know. Along with Paul Brody of EY, Wolpert is the brains behind Baseline, and is its current steering committee chair. Within Baseline, he positions the blockchain component as middleware that connects data stores without becoming one itself.
While Wolpert uses the term “decentralization” economically, he acknowledges that the technology architecture with which it is associated aligns well with the requirements of a blockchain for Baseline. As such, as Baseline becomes increasingly adopted, it may become a de-facto poster child – maybe even a trojan horse – for the decentralization movement as it applies to businesses.
Even with the rapid evolution of the Decentralized Finance (DeFi) space championed by a growing number of startups, business alignment with decentralization is in its experimental phase. Not least, that’s because of the challenges of embracing it while also reaping the commercial rewards for doing so. Most enterprises are built to benefit from centralized business models and find that even modestly decentralized business initiatives, such as consortia, are time consuming to form and difficult to manage.
While [David] Johnston’s Law, which states “Everything that can be decentralized will be decentralized” remains a popular vision, it is clear that it is also aspirational. That said, for businesses wanting to make a start on realizing that vision, implementing Baseline – or Baselining a business process as it is termed – could be a useful first step. And one with a tangible business benefit.
About the CURATOR
Pete Harris is the Co-Founder and Executive Director of the DecentraTech Collective. He is also Principal of Lighthouse Partners, which provides business strategy services to developers of transformational technologies. He has 40+ years of business and technology experience, focusing in recent years on business applications of blockchain and Web 3.0 technologies.
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