Blockchain evolution
Over the past 18 months, key changes and developments in blockchain technology have elevated its profile and applicability. Early enthusiasm for blockchain use in less-than-ideal circumstances sometimes resulted in disillusionment in the technology, which persisted until users became more realistic about blockchain’s potential and focused instead on best-use scenarios. Today’s market has matured, blockchain technology has evolved and corporate buyers’ questions have become more sophisticated. They no longer ask, “What is blockchain and what does it do?” Rather they’re asking, “Should I join a public blockchain or build a private one?”
Fearing the privacy, security and data sovereignty risks inherent in a public environment, larger enterprises have leaned more toward building and implementing private blockchains, which limit their number of participants and are centrally managed and hosted by a single operator, often in a locked-in, long-term digital relationship. Before long, those enterprise users began to register concerns, not about private blockchains’ promise and capability, but about their own difficulties in onboarding business partners to their system — a critical element for building networks and transacting together — and they started showing accelerated interest in and openness to public blockchains.
Global summit addresses private vs. public blockchains
Recently, a three-day online EY-hosted conference called
EY Global Blockchain Summit 2020 – Going Public, which focused not only on the public vs. private blockchain controversy, but also the recent big shifts in the blockchain ecosystem, the emergence of China as a superpower and the EY vision for the future of blockchain technology and implementation.
Led by EY Global Blockchain Leader
Paul Brody and supported by 50 guest speakers, the virtual sessions served to examine the effects of the changing business environment and how those changes spurred a hard push on EY blockchain advancements.
The ongoing efforts of EY blockchain in the public space, especially its work with Ethereum, a global, public programmable blockchain, are part of its Baseline Protocol, an open source initiative with ConsenSys and Microsoft to help enterprises network more broadly in a more cost-efficient manner and without disclosing proprietary data.
EY OpsChain, its blockchain-enabled flagship service currently used in multiple sectors, continues to gain new installations and users around the world.
“We believe the future of B2B transactions is public blockchains with open standards, no lock-ins, no risk of having proprietary data monetized, and no barriers for business partner onboarding,” Brody said.
Survey points to probable changes
To test the contention that private blockchains do not present a sustainable model for most enterprises due to their bases in siloed and parallel private networks, Forrester Research recently conducted an EY-commissioned survey of 233 enterprise executives with blockchain responsibilities who had either implemented or joined blockchains. Survey results showed that
97% of enterprises that responded had built or joined private or commissioned blockchains. The same executives were asked about their
likelihood of joining a public network, and a surprising 75% registered “likely” or “very likely” responses, which pointed to a maturity in the executives’ thinking based on anecdotal evidence or their own lessons learned.
Moving ahead with confidence
During our recent discussion for the
EY Better Finance Podcast, Brody listed the following next steps that may help finance leaders evaluate the use of blockchains across their organizations and within functions:
- Focus on public blockchains, as they offer the most scalable solution, and select a platform with the most users, not the one with the newest or flashiest technology
- Pick use cases with processes that have the most return on investment — those that deliver significant value and traceability
- Drive investments from business owners’ perspectives — CTOs and innovation teams may be effective in teeing up the vision, but if the business owner, CFO or functional leaders do not get onboard and sponsor the project, progress likely will suffer
Brody sums up: “We feel blockchains can do for networks of companies what enterprise resource planning did for single entities. They have inherent potential to reset the global economy.”
With the evolution in technology allowing for increased privacy when transacting on blockchain, going public is an important consideration and may have potential impacts for finance. For example, you can now implement almost every business process and financial payment option with vendors and customers without actually putting sensitive business data on the network. Instead, you put a proof that you did something off-chain and a link to that data off-chain.
Myles Corson is Americas FAAS Markets Leader at EY.
The views expressed by the authors are their own and not necessarily those of Ernst & Young LLP or other members of the global EY organization.