Ethereum wants to be the OpenStack of enterprise blockchain
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Ethereum wants to be the OpenStack of enterprise blockchain

Blockchain is still in its early days, yet in some ways, it is starting to mirror the beginnings of cloud computing. Not because of the technology itself, but because of the way it is being received. At the moment it still causes a lot of confusion, there is interest from all sides – although the initial swing is towards business – and many companies are getting in on the act. Yet security still creates concern and, of course, there is a lot of debate around the merits of the public, private and hybrid varieties.

This week however, may have seen blockchain inch a step closer towards the mainstream. On Tuesday, at a launch event in NYC, tech giants, big banks and blockchain startups – including J.P. Morgan Chase, Microsoft, Banco Santander and Intel – gathered together for the launch of the Enterprise Ethereum Alliance. This aims to build, promote and support Ethereum-based technology for the enterprise.

“The Enterprise Ethereum Alliance is a not-for-profit alliance which builds and promotes the use of distributed ledgers, such as blockchain, between companies using the open source technology called Ethereum. The platform is decentralised and enables contracts to be made between peers, and aims to create value through its range of members,” explains Omar Mohamed, operations and financial marker analyst at Imperial FX. 

“The launch of the Enterprise Ethereum Alliance is yet another sign that blockchain is finally hitting the mainstream,” Joe Pindar, director of product strategy and CTO at Gemalto, tells IDG Connect.  “As larger companies turn their attention to blockchain, it will inevitably gain credibility in the eyes of smaller enterprises, helping increase the speed of the technology being adopted. The more businesses that embrace blockchain, the sooner the industry move towards standardising best practices to help meet growing demand.”

This sort of high profile open source alliance could become for blockchain what OpenStack is for cloud computing. And while it may not seem especially important at the moment it could become a lot more relevant as blockchain gradually takes hold.

 

How big an opportunity is blockchain likely to be?

A lot of time and money is pouring into blockchain and the big names are getting firmly stuck in. Over the last six months Microsoft has continued to invest in its Blockchain-as-a-Service platform while IBM has consciously set out to become the enterprise leader in the space. This recent chart from Statista, based on research from MarketsandMarkets, estimates the worldwide market will grow nearly seven fold to be worth $2,312.5M in four years’ time.

This bar graph depicts the size of the blockchain technology market worldwide from 2016 to 2021 (in million U.S. dollars).

 

Where does Ethereum sit within this cloudy blockchain picture?

Despite the hype around blockchain, the weight and importance of different blockchain players within the marketplace is still confusingly biased. This is partly because of the difference between public and private blockchains, partly because of the natural association between blockchain and cryptocurrencies, and partly because of the way press coverage is slanted towards Bitcoin.

At present, cryptocurrency Bitcoin – which has its own public blockchain – is by far and away the biggest household name. While Ethereum – associated with cryptocurrency Ether – is the second most well-known blockchain but lags some way behind Bitcoin. Coindesk, which produces a quarterly report on the state of blockchain revealed in its latest study just how much more US media airtime was given to Bitcoin than either blockchain as a whole or the Ethereum platform.

https://image.slidesharecdn.com/coindeskq3v6cterree-161116225818/95/state-of-blockchain-q3-2016-25-1024.jpg?cb=1479403589

Yet Ethereum has received a lot of interest in the enterprise space, has a bigger physical network than Bitcoin and is infamous amongst aficionados for a $60M hack last June which saw the community decide to edit its blockchain history in order to return the stolen funds and thus create a new blockchain. (This angered some so much that a small minority decided to restart the original blockchain resulting in two distinct markets on its public blockchain).

A 243-person study, conducted by Coindesk, which included the responses of technical leaders from both startups and enterprises, showed one in three were negatively impacted by all this. Yet 67% still planned to use the Ethereum blockchain in future.

 

Why do enterprises favour private blockchains?

Public blockchains get all the attention because they are free for anyone to join and are indelibly linked with the shady notoriety of cryptocurrencies. However, the focus of the Enterprise Ethereum Alliance – like most corporate bodies – is on the private variety. These are not free for anyone to join, and act as a kind of walled intranet.

Not surprisingly perhaps, a recent report by Infosys Finacle showed that, out of a small sample, 69% of banks interested in blockchain were looking specifically at private blockchains, 21% hybrid models and only 10% public blockchains.

“Private blockchain is the area that has seen the most significant growth to date, so it makes sense that the Enterprise Ethereum Alliance would make this its focus,” Gemalto’s Pindar tells us. “When the alliance talks about retaining compatibility with public Ethereum, it is reassuring blockchain developers that any applications created will be compatible on both the private and public Ethereum platforms, despite its focus on private blockchain. This compatibility is designed to help adoption for enterprises, and alleviate any concerns that executives may have when exploring the best blockchain applications.”                                                                                                                                                            

Some critics have seen this move as a direct attempt to deflect IBM’s growing dominance in this area, however Pindar disagrees. “The Enterprise Ethereum Alliance will have relatively limited impact on other large blockchain foundations and groups.

“Thanks to blockchain’s huge number of use cases, there is plenty of space for multiple groups to operate across different industries. For example, founding members of Hyperledger Project [of which IBM along with J.P. Morgan Chase and Intel are a part] have focussed on back office processes, where Ethereum has recently expanded into renewable energy. As the blockchain market expands and matures, we will see customer organisations begin to choose between different blockchain offerings based on their specialist needs.”

Mohamed adds: “The Enterprise Ethereum Alliance has been established to introduce standardised practices to blockchain technology, whereas the Hyperledger Foundation was established to implement standards.”  

So could this be to blockchain what OpenStack has rapidly become for cloud computing? Mohamed believes it could be. “If members of the alliance can work to establish industry standards and aid businesses entry into blockchain, then it has the potential to improve the industry for the greater good. The alliance could possibly provide the breakthrough that blockchain needs to become the preferred distributed ledger among enterprises.

“If a framework can be developed and implemented successfully, then the alliance will be able to push mass adoption and aid scalability, which would simply not work if corporate firms were working on their own.”

 

Also read:
Hype vs. reality: We investigate the potential in blockchain
What can Blockchain bring to security?
What’s a blockchain? And is it heading for prime time?

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Kathryn Cave

Editor at IDG Connect

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