Enterprise blockchain matured throughout 2020 and will continue to do so moving forward, here’s how it may become mainstream.
The year 2020 has been monumental for the blockchain sector, especially in regards to financial markets. Yet, while the price of Bitcoin (BTC) reached new all-time highs this year, the enterprise blockchain space also welcomed in public networks, open-source code and a number of other elements not seen in previous years defined by private, closed networks.
Listed below are five enterprise blockchain trends seen in 2020 that can drive mainstream adoption of blockchain moving forward.
Tokenization will drive the internet of value
“The Internet of Value” is a term coined by Don Tapscott, author and founder of The Blockchain Research Institute. In 2016, Tapscott gave a TED Talk in which he predicted that organizations would begin moving digital assets, including money, music, artwork and more, across blockchain networks in the same way as cryptocurrencies are transferred. “Once it’s there, this is immutable. You can’t hack it. This creates the conditions for prosperity for potentially billions of people,” Tapscott explained.
Indeed, innovative enterprises today are moving items of value across blockchain networks. Known as “tokenization,” this process allows financial assets like invoices to be sent across multiple network participants, ensuring that all parties receive the same information at the same time. Everything is recorded on a blockchain ledger, which ensures trust and transparency between parties. For example, Coke One North America is leveraging the Baseline Protocol to send tokenized invoices across multiple supply chain participants.
Digitized invoices are just one example of tokenization, though. Earlier this year, Ernst & Young Canada shared a use case being conducted with the nonprofit organization Canadian Blood Services to tokenize blood donations. Numerous amounts of data is generated when blood donations are taken from donors and moved across the supply chain. In order to track data accordingly, EY Canada is leveraging the private Ethereum blockchain network supported by the EY OpsChain platform to track donation data coming from Canadian Blood Services across seven key points, creating an improved audit trail for blood products.
While these examples are still early use cases of tokenization, this trend will continue to be leveraged by enterprises. In order to ensure the widespread adoption of tokenization, the Interwork Alliance, or IWA, is developing standards for understanding token model concepts. The IWA is specifically focused on sustainability and trade finance use cases. Discovering a global standard for tokenizing carbon credits is also one of the alliance’s current priorities, as the blockchain sector can expect to see more tokenized green initiatives moving forward.
Supply chain transformation
Supply chain management is one of the most practical enterprise blockchain use cases to date. One of the earliest examples of this was demonstrated in 2016 by IBM, when the tech giant announced plans for its Food Trust Network. The network launched in 2018, illustrating how major retailers like Walmart could track and trace food products back to their source by leveraging a private blockchain network powered by Hyperledger Fabric.
Fast forward to 2020, and a number of industries have adopted blockchain for supply chain operations. A new report from PwC in collaboration with OpenNodes, IBM, Ernst & Young and others shows that asset tracking and traceability has become the most important use case for distributed ledger technology.
The COVID-19 pandemic has accelerated the adoption trend. In March this year, The World Health Organization launched a blockchain platform designed to detect COVID-19 carriers and hot spots by tracking and tracing users’ health data. Some of the world’s largest container carriers have also joined IBM and Maersk’s TradeLens blockchain platform to digitally transform their supply chains. These carriers will begin to utilize electronic bills of lading while digitally sharing permissioned shipment information between supply chain entities.
Moreover, Deloitte’s 2020 Blockchain Trends report notes that initiatives utilizing blockchain in clinical trials and pharmaceutical supply chains have been underway this year. While few have reached production, the firm envisions that there will be a wave of solutions that will go live once regulatory concerns gain clarity.
Over the years, enterprise blockchain developed a reputation as closed, private and expensive networks that could only be leveraged by billion-dollar companies like Walmart. However, 2020 has proven that public blockchains like Ethereum may offer a better choice for some enterprise users.
Ernst & Young was one of the first to demonstrate this, publishing a detailed blog post in Dec. 2019 explaining how public blockchains will make private blockchains obsolete moving forward. Although private blockchains are still very much being leveraged, more companies are using public blockchains to achieve benefits that cannot be provided by private networks.
For example, privacy and security solutions across public blockchain networks like Ethereum have become appealing to many enterprise users. As the space continues to mature, new privacy solutions utilizing zero-knowledge proofs are ensuring that data across public networks are secure, yet transparent when needed.
This has proven to be advantageous to some enterprises that have started leveraging the Ethereum blockchain for business use cases. For example, The Baseline Protocol, a set of techniques using advances in peer-to-peer messaging, zero-knowledge cryptography and blockchain to coordinate complex and confidential workflows, leverages blockchain as a middleware to demonstrate how the Ethereum mainnet can be used as an always-on, tamper-resistant state machine.
Through the Baseline Protocol, the Ethereum mainnet, or any other blockchain networks for that matter, are used as a common frame of reference for traditional systems of record. One of the use cases of the Baseline Protocol is being demonstrated by Coke One North America for supply chain optimization.
While impressive, the real challenge moving forward will be getting other enterprises to adopt public blockchains. After all, it’s not uncommon for an organization to think of cryptocurrencies like Bitcoin or Ether (ETH) when hearing the words “public blockchain.” In order for adoption to occur, enterprises must be open to utilizing a public network.
The rise of enterprise DeFi
Decentralized finance has grown to become one of the biggest crypto trends of 2020. The sector’s boom has laid the groundwork for “enterprise DeFi,” which is predicted to change financial services operations entirely.
For example, tokenized assets and fiat-backed stable coins will make moving financial items of value easier and less costly. This is already being demonstrated by companies like Coke One North America, which has begun tokenizing invoices. Yet in order for enterprise DeFi to become widely adopted, agreements regarding data sharing must be established to show that invoices and other financial transactions are valid and should be processed for payment.
DeFi protocols have also proven the potential to enable autonomous programmable digital securities in the future. However, regulations and standards must still be established in order for this to move forward.
Open-source blockchain adoption
Open-source code has always been an important part of the blockchain ecosystem, as it embodies the concept of open culture regulation. Interestingly enough, open source has become increasingly important for the development of enterprise blockchain networks.
While the Hyperledger open-source community was one of the first to demonstrate the importance of open-source code for enterprise use, a number of other projects are doing the same. For example, in March of this year, the Baseline Protocol was published to GitHub for public use, allowing developers to contribute to the project. In May 2019, EY made the code for its Nightfall solution open-source, releasing it on GitHub in hopes of speeding up the adoption of public blockchains. In June of this year, crypto exchange Bitfinex uploaded its “Dazaar” protocol to GitHub to allow users to share media across a decentralized network.
These examples show how enterprises have begun embracing open-source code to ensure the maturity of the blockchain space. Meanwhile, standards around open-source code are needed more than ever before. The nonprofit organization OASIS Open is one of those developing standards for open-source code used in blockchain projects, which will enable enterprise open-source protocols to advance .