Enterprise Ethereum: Creating A Standard For Private Blockchains

Jeremy Millar, Chief of Staff at ConsenSys LLC, recently introduced “the birth of Enterprise Ethereum” in a post written on the ConsenSys website. In his post, Jeremy explained that the development of blockchain technology for enterprise use has unfolded at “an almost unfathomable rate over the past 24 months.” Although he does mention continued development of the “public Ethereum blockchain,” the article is focused on introducing a new direction of development for Ethereum, as a prototype for private and consortium (permissioned) blockchains.

The update from Millar is a prelude to the official release, with further details to follow in February 2017:

this is actually a prelude of the official release. We will make an announcement later in February with all of the details.

— ConsenSys (@ConsenSys) January 9, 2017

Ethereum has already been forked and tweaked several times and used as a foundation to build entirely new private or consortium blockchain platforms such as Quorum, BlockApps STRATO, and Hydrachain. Ethereum was initially developed to be a public chain, and therefore requires a vast remodeling of it’s original design to support private and consortium blockchain use.

For public Ethereum to become Enterprise Ethereum, development will have to focus on favoring absolute performance over trustless transactions which would, in effect, lead to scrapping proof-of-work and replacing it with a more efficient, and faster method for propagating blocks which are more suited for a permissioned blockchain.

Additionally, Ethereum as a public blockchain has very limited capabilities for permissioning and securing private data. A new implementation of Ethereum for enterprise use will have to include out-of-the-box permissioning, data privacy, enhanced security, and a complete identity architecture.

Private Blockchains Will Make Their Mark

Private blockchains are unfavorably looked upon by many early adopters in the space, some libertarian-minded groups, and many others who see digital currency and distributed ledgers as a revolutionary invention to be used to liberate people from the constrictions and exploitations of large banking, financial, government, and corporate institutions.

Private blockchains implemented by well-established institutions could, very well, end up creating an even more restricted and controlled financial and social environment. An individual’s digital identity, his assets and money, and even his reputation, are literally at the mercy of a blockchain that is privately controlled by a corporation or government and can be modified or deleted by these entities at any time.

We have seen this scenario played out in several dystopian science-fiction stories and movies, and it is quite scary.

Blockchains being used in a private, permissioned, and centralized environment seem to contradict everything for which Bitcoin and blockchain technology were originally created. But it must be acknowledged that this type of blockchain, although not revolutionary, can be very useful for overhauling broken and inefficient legacy systems in finance and banking, business and supply chain, energy distribution, healthcare, and many other industries, and make them compatible with a digital economy.

In any case, it is apparent that private and consortium blockchains are not going to go away, and will have a significant presence in the near future.

Ethereum Bridges Public and Private Blockchains

It is unclear whether enterprise ethereum is being developed as a software product to be marketed, or if it will be considered as a protocol or set of rules like TCP/IP to establish a foundation for the creation of private and consortium blockchains, including communication between Enterprise Ethereum blockchains and the public Ethereum blockchain. So, once established, private Enterprise Ethereum chains and the public Ethereum blockchain should be compatible and able to communicate with each other, and confirm transactions between chains.

So whereas, bitcoin has always adhered to a macro-to-micro style of adoption, where the Bitcoin public blockchain aspires to serve the entire world in a decentralized manner, Ethereum seems to have veered off onto a micro-to-macro style of adoption. Ethereum aims to establish a protocol where individual companies and institutions can convert their systems from legacy to blockchain technology in a private, permissioned, and centralized environment.

Those businesses and institutions can then still maintain compliance with laws and regulations, and have complete control of their records, with the ability to modify balances, revert transactions, and change the rules of the blockchain as needed. As these private chains grow and become more popular in different industries, they will need a platform (the public Ethereum blockchain) where they can communicate with each other and complete transactions between chains.

So imagine a bank running a private blockchain to maintain it’s own records and the records of its customers. Then imagine a group of 20 banks running a consortium blockchain to be able to efficiently and quickly make transfers between these banks. Imagine also a company like Amazon running a private blockchain to maintain its own records and sell its products to customers.

Now imagine the Ethereum public blockchain as the means to communicate between Amazon’s private chain and your bank’s private chain, and an identity system which is compatible throughout all these private and public chains. So when you want to purchase a product, you simply select and confirm your purchase on a device that is already programmed with your digital identity, and that product is paid for with your bank account and delivered to your house almost instantly.

One thing is for sure, a means for establishing a digital identity which represents your real identity is central and absolutely critical to the private blockchain ecosystem and its compatibility with a public blockchain. Without a secure identity architecture, blockchain as a service has no future. This could mean that biometric security will become a very important feature in the future, such as surgically implanted microchips, or some other bodily invasive method to securely recognize an individual’s identity in a digital economy.

While private blockchain technology could streamline large industries and make them compatible with public blockchains in a digital economic and social infrastructure, it is important to ask who this actually benefits. It would certainly cut costs for large corporations, banks, and other institutions which might (or might not) result in lower fees for the public. It would definitely benefit Ethereum developers, ConsenSys, and all the companies involved in developing Enterprise Ethereum.

However, there is still a lot to wonder; how does this benefit the public, and what sacrifices of freedom and dignity will the public be forced to make in order to adapt to a world of private, corporate-owned blockchains? But maybe the name says it all; “Enterprise Ethereum.” More details will follow in February 2017 on the official release.

For more information on the difference between public, private, and consortium blockchains, check out this blog post by Vitalik Buterin.

For a discussion on Enterprise Ethereum, check out this Youtube video.