In 2018, Maersk, the world’s largest shipping company, partnered with IBM to develop a platform that uses blockchain to track and verify cargo shipments. This is an enterprise-level blockchain platform, ‘TradeLens.’
Before TradeLens, the logistics industry relied on a complex web of intermediaries. Hence, it was difficult to track shipments and check if they got to their destination on time and in good condition.
However, with TradeLens, all parties can access a real-time view of the shipment’s status, enabling more efficient and reliable logistics operations.
Moreover, the success of TradeLens has inspired other companies to explore the potential of enterprise blockchain, from finance to healthcare to energy.
So let’s dive into what enterprise blockchain is, its features, different types, and use cases.
What is Enterprise Blockchain?
For starters, blockchain is a distributed database that stores information in a way that makes it highly secure and difficult to alter. Instead of existing on a central server, the data exists across a network of computers called ‘nodes.’
Every time a new piece of information, or ‘block,’ is added to the network, it is verified by the nodes using complex algorithms called ‘consensus mechanisms.’
It ensures that the transaction is valid and matches previous blocks on the network. Once a node verifies it, the block joins the existing chain, creating an unalterable record of network transactions.
When blockchain was first introduced, it was public or decentralized in nature. It means they are open to anyone and do not require permission to join.
But, as technology evolves, private or enterprise blockchains come into existence.
Enterprise blockchain refers to using blockchain technology within a business or organizational context. It improves efficiency, security, and transparency in business operations.
These networks are typically private or permissioned. It means they are only accessible to authorized users and often handle sensitive information. Their design must meet the specific needs of businesses.
They often have features such as identity management, access controls, and governance mechanisms that allow participants to manage the network in a more centralized way.
Enterprise blockchain applications find applications in various industries, such as supply chain management, financial services, healthcare, and more.
By leveraging blockchain technology, businesses can create secure, immutable records of transactions, automate processes, and reduce the risk of fraud or errors.
Features of Enterprise Blockchain
Blockchain technology offers several features that enterprises can utilize to improve their operations.
1. Permissioned Access
Enterprise blockchains are restricted to authorized users only. This allows businesses to maintain greater control over the network and ensure that sensitive information remains secure.
2. Consensus Mechanisms
Like public blockchains, enterprise blockchains use consensus mechanisms to validate transactions and ensure the network remains secure and immutable. But they often use more centralized consensus mechanisms, such as Proof of Authority.
3. Scalability
Enterprise blockchains are scalable. They can handle a high volume of transactions and users without sacrificing performance or security. This is achieved through techniques such as sharding, sidechains, and off-chain transactions.
4. Smart Contracts
Enterprise blockchains often support smart contracts. These are computer codes that automatically execute the terms of an agreement when certain conditions are met. Smart contracts can automate business processes, reduce transaction costs, and improve efficiency.
5. Interoperability
Enterprise blockchains can be designed to be interoperable with other blockchain networks or traditional IT systems. It allows businesses to integrate blockchain into their existing infrastructure seamlessly.
6. Identity Management
Enterprise blockchains often include identity management features. It enables participants to verify their identities on the network securely.
7. Governance
Enterprise blockchains often have robust governance mechanisms in place. It allows network participants to manage and decide its development and direction.
Types of Blockchain for Enterprises
Public blockchains are rarely used for enterprise-level use cases, as businesses don’t want everyone to access their data.
Thus, private blockchains are more suitable for organizations. For example, a private blockchain is the Hyperledger Fabric network.
There are other types of blockchains used by enterprises — Consortium and Hybrid blockchains.
1. Consortium Blockchains
Consortium blockchains are controlled by a group of organizations that have agreed to work together. Moreover, these blockchains are often used for joint ventures or collaborations, where multiple parties need to share data and work together on a project.
For example, a consortium blockchain is the ‘Global Shipping Business Network (GSBN).’ GSBN is a joint venture between several of the world’s largest shipping companies, including A.P. Moller-Maersk, MSC, CMA, and CGM.
2. Hybrid Blockchains
Hybrid blockchains combine elements of both public and private blockchains, offering the benefits of both. These blockchains are often used for applications where some data needs to be kept private while other data can be shared publicly.
An example of a hybrid blockchain is the IBM Blockchain Platform. It allows businesses to choose between a public or private blockchain deployment depending on their needs.
Applications of Enterprise Blockchains
1. Supply Chain Management
Enterprise blockchains can be used to track and trace products along the supply chain, improving transparency and reducing the risk of fraud.
Example: Walmart uses a blockchain-based system to track the movement of food products from farm to store, ensuring food safety and reducing waste.
2. Healthcare
Enterprise blockchains can securely store and share patient data between healthcare providers, improving patient outcomes and reducing costs.
Example: Mayo Clinic uses enterprise blockchain to securely store patient data and share it with other healthcare providers.
3. Finance
Enterprise blockchains can streamline financial transactions, reduce costs, and improve transparency.
Example: JPMorgan has developed a blockchain-based payment system called Quorum. It enables faster and more secure payments between banks.
4. Real Estate
Enterprise blockchains can be used to securely store and transfer property titles, reducing the risk of fraud and improving efficiency.
Example: The Swedish Land Registry uses blockchain to manage property titles, enabling faster and more secure transactions.
5. Energy
Enterprise blockchains can track and trade energy credits, enabling more efficient and transparent energy trading.
Example: Power Ledger is a platform that enables peer-to-peer trading of renewable energy.
Challenges of Enterprise Blockchain
While enterprise blockchains offer many benefits, there are also some challenges that organizations need to consider.
1. Integration with existing systems
Many organizations already have existing systems that may not be compatible with blockchain. This can make it challenging to integrate blockchain into their operations.
2. Security risks
As enterprise blockchains rely on a selected few participants, there are still security risks.
3. Regulatory challenges
The regulatory landscape around blockchain is still evolving. Thus, it can create uncertainty for organizations looking to adopt blockchain.
4. Governance challenges
Enterprise blockchains often require establishing a new governance model, which can be challenging to implement.
5. Cost
Implementing blockchain can be costly, and organizations need to weigh the potential benefits against the implementation costs.
As per a Deloitte survey, 39% of respondents cited regulatory issues as a challenge to blockchain implementation; 38% cited the lack of in-house skills and knowledge.
Conclusion
The adoption of enterprise blockchain is increasing rapidly, with many industry giants investing heavily in research and development to explore its potential applications.
As per industry reports, the Enterprise Blockchain Market had a value of $4.9 billion in 2021. Experts predict it will reach $246 billion by 2030, with a CAGR of 54.5%.
Enterprise blockchain technology has the potential to revolutionize the way businesses operate by enabling secure and transparent transactions, reducing costs, and improving efficiency.
While challenges remain, the potential benefits of blockchain for enterprises are too great to ignore. It is an exciting time for this technology, and we can expect its impact to grow in the years to come.
FAQs
1. What is the difference between public and private blockchains?
Public blockchains are open to anyone to participate, and they can access them without permission. Private blockchains are restricted to a specific group of participants, and access is usually permissioned.
Public blockchains are decentralized, whereas private blockchains are usually centralized.
Also, public blockchains are more transparent, while private ones offer greater control and privacy.
2. How can blockchain technology improve supply chain management?
Blockchain technology can improve supply chain management by providing a transparent, immutable, and secure ledger that can track products and transactions from manufacturer to consumer. This can increase accountability, reduce fraud, and provide real-time visibility into the supply chain.
Additionally, smart contracts can automate processes, such as payments and delivery, and ensure compliance with regulations and standards.
3. What are smart contracts, and how do they work in enterprise blockchain?
Smart contracts are self-executing computer programs that automate the execution of contracts and other agreements.
In enterprise blockchain, smart contracts exist on the blockchain and self-execute when the ecosystem meets certain conditions. You can use them to automate complex business processes. This can reduce costs, increase efficiency, and eliminate intermediaries.
