In brief
- A Cambridge report on enterprise blockchains found that 43% of projects in production are at financial service companies.
- 72% of respondents are building blockchain systems to reduce costs and overhead.
- It found that more than 80% of enterprise blockchains are highly centralized.
Corporate enterprise blockchains are centralized, most likely about finance, founder-led and slow to build, according to a study by Cambridge University on the matter.
The 2nd Global Enterprise Blockchain Benchmarking Study, published late last month, collected survey data from more than 200 established businesses, start-ups, central banks and other public-sector institutions across 59 countries between July 2018 and June 2019.
One section of the survey focused on enterprise blockchain projects. These are decentralized ledgers of information that are similar to blockchains like Ethereum but built to handle more sensitive data and support corporate-scale applications.
Analyzing 67 live enterprise blockchain networks, Cambridge found that financial projects, such as efficient order clearing and record reconciliation, comprised 43% of projects in production.
And they’re slow to build. The researchers found that it took an average of 25 months for projects to go from proof-of-concept to deployments, and that larger networks could take more than four years to build.
Centralized...
Enterprise blockchains are far more centralized than their public domain counterparts. This means that instead of thousands of anonymous nodes and miners securing the blockchain, one or just a few nodes agree on the contents of new blocks and the existing chain.
So-called permissioned blockchains, which provide more control over the blockchains and a level of secrecy, are important in industries where data headed for the blockchain are considered by some participants to be trade secrets, raising concerns that centralization will allow leading entities to gain an unfair advantage and potentially block data contributors from accessing the aggregated results.
Businesses building blockchain systems to coordinate supply chain shipments or import arrivals, for instance, may sell their logistics data to adjacent industries and macro-level economic analysts.
Cambridge’s researchers found that more than 80% of the enterprise blockchain projects used a single blockchain service—often a working group or subsidiary they manage themselves—to host the majority of their hardware, like nodes and miners.
But the platforms often rely on existing tried-and-tested tech to build their projects. 48% rely on IBM’s Hyperledger Fabric, a sort of customizable blockchain framework designed for enterprise use cases. A similar product from R3, Coda, powers about 15% of reported enterprise development.
And founder-led.
The Cambridge report found market leaders developed more than 70% of enterprise blockchain projects in the hopes that other companies in their industry join. Industry consortiums—groups of businesses in the same industry—started 22% of enterprise blockchain projects, and just over 5% were started by government institutions.
Being founder-led allows some enterprise blockchain projects to develop at a faster pace, but they can have difficulty attracting competitors to their platform, who may feel concerned about the long term consequences of letting their rivals hold the reins.