So you’re a decision-maker at your company and you’ve heard of enterprise blockchain projects — more and more companies are collaborating in business networks to streamline shared business process such as managing data, tracking transactions, and tracing real-world goods.

But maybe you’re asking, “Why not just use a shared database?”

The reason why not is the “who” problem — the problem of network governance. In a distributed database that’s shared across multiple organizations, governance boils down to four main questions:

Who actually owns the data?

Who enforces that the data hasn’t been tampered with?

Who in the business network has the authority to change or delete data?

Who creates and runs the application layer that allows all parties to validate the latest transactions?

A blockchain solves the “who” problem by establishing a shared network in which all participants agree on ownership and involvement. Members of a blockchain network host it jointly and equally in a decentralized fashion. The practical question is, what are the actual business benefits and revenue opportunities of enterprise blockchain solutions, and enterprise Ethereum specifically?

A Short Explanation: What Is Enterprise Ethereum?

Most people know that Ethereum is a public blockchain network that transacts billions of dollars in value. But many people don’t know that the Ethereum codebase is also used by enterprises worldwide to form business blockchain networks. Many of these private, permissioned Ethereum instances are separate from the public chain, though they have an option to bridge to data or value on the main public Ethereum network.

For the record, there is no single product called “Enterprise Ethereum.” We use the term here to refer holistically to blockchains built using modified Ethereum clients, such as Quorum and Pantheon, that address the specific needs of enterprise such as increased privacy, performance, and scalability, as well as permissions and governance controls.

The Enterprise Ethereum Alliance, the world’s largest blockchain initiative, distinguishes Enterprise Ethereum implementations as “extensions to public Ethereum providing enterprise-focused additions, including the capability to perform private transactions, enforce membership (permissioning), and provide transaction throughput scaling. Private transactions are transactions where the metadata or payload data are readable only by parties participating in those transactions.”

Another important fact that many people don’t know: Enterprise Ethereum networks don’t face the same scaling or privacy constraints as public Ethereum. They can transact much faster than the 15–20 TPS reported on public Ethereum because network size is smaller, and gas limits and block sizes can be adjusted to allow more transactions per block, scaling to as many transactions per second as other enterprise solutions and DLTs. Adhara has reported 400 TPS on an eight node banking network that includes the South African Reserve Bank, which we’ll discuss in depth later in this article. In addition, private enterprise Ethereum networks can maintain transaction confidentiality of participants, terms, and data at scale.

Enterprise Ethereum vs. DLTs

Hyperledger Fabric and R3’s Corda are the other two enterprise solutions that have earned recognition in this space. Enterprise Ethereum, Fabric, and Corda all share many of the same goals, including increased data coordination across shared ledgers. We greatly admire both Hyperledger and R3 and their contributions to enterprise needs, and we’re finding ways to collaborate on the mission of enterprise blockchain.

But what differentiates Enterprise Ethereum as the most powerful and versatile blockchain for business?

We focus on five reasons — from technical specs to real-world proof points — why Enterprise Ethereum specifically stands above the enterprise blockchain crowd.

1. Enterprise Ethereum has access to public Ethereum, the most secure and developed blockchain platform and ecosystem in the world.

Enterprise Ethereum benefits from the amount of innovation happening on public Ethereum, which is inevitably faster due to more participation — something that just cannot be said by other distributed ledger solutions.

Since 2015, millions of people have purchased billions of dollars of ETH on public Ethereum. But more importantly hundreds of thousands of developers — perhaps millions — have built over 2,000 decentralized applications on Ethereum, as well as the most advanced infrastructure and most robust enablement tools for blockchain solutions development, including testnets like Rinkeby and development environments like Truffle. This has made the public Ethereum network the most real-world-tested, resilient, and advanced blockchain development platform in the world.

So how does development on the public mainnet benefit Enterprise Ethereum?

For starters, by building with Ethereum, enterprise solutions can quickly adopt updates to Ethereum and benefit from the innovations of the entire ecosystem. They also gain access to so much more….

A bridge to the mainchain

Ethereum offers enterprise networks one main thing that the other enterprise solutions don’t have — optional access to this vast, active, high-value public blockchain and all the parts of its ecosystem. Why is this important?

In the future, Enterprise Ethereum networks’ access to the public chain may be seen as analogous to an intranet’s access to the internet today, where users behind security firewalls still have access to all or select parts of the internet. In the case of blockchain, enterprise networks have access to the Ethereum “mainnet” via a bridge, able to pick and choose what to interact with on the main chain. This interoperability with the Ethereum mainnet allows data storage across the blockchain and private cloud with customizable privacy and scalability.

Connecting to the mainchain also allows compatibility with and access to:

other open-source or business blockchain networks

wider markets and users

data or governance logic

thousands of dApps

dapps, according to the Ethereum Foundation, are “unstoppable applications” built to “run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference.” The unstoppability comes from the decentralization of the public network run by thousands of nodes securely storing the network, without a single point of failure. Examples of useful enterprise dapps are OpenLaw, a way to automate the execution of legal contracts, and Balanc3, an accounting and financial management platform for digital assets. And now, Hyperledger Besu from PegaSys is the first enterprise client that is public chain compatible.

All of this access enables future project adaptations and expansions — effectively future-proofing Ethereum based business solutions. Other enterprise DLT offerings currently only have closed networks, which limit business models, tools, and growth.

Dispute resolution, arbitration, and enforceability

Bridging to a mainchain is also a way to add accountability and enforce the rules of a private network. In a closed private network, rules, terms and contractual agreements can be set beforehand in a highly coordinated way. But, if there’s any bad behaviour or any type of fault or disagreement on the current state, how is a party penalized and the rules enforced? And how can public entities like government regulators or other parties automatically check records for compliance in a trustless manner?

Companies can run a private system but link to a public network which gives the full benefits of a privately controlled network but with public enforcement.

Enterprise network participants don’t need to indemnify their private chains against rewriting history or changing the rules of the network, because they can instead anchor to mainchain Ethereum to publicly commit to the rules of their private chain.

Root layer security

The mainchain can also be used to secure assets on a private network, letting the smaller network act as a side chain and the mainchain as a vault. Assets can be passed between the mainchain and a connected network using the Plasma sidechains or Plasma Cash, so that the sidechain doesn’t have to rely on itself for full trust and security, especially if consumers or customers need to interact with high-value assets in a permissioned way, such as for escrowing loans. This gives a sidechain or private network the full security of the multi-thousand node, real-world-tested, decentralized base layer of public Ethereum, and also allows the enterprise network potential for greater interaction with more parties and markets.

Technical architecture: one unified ledger view

Like public Ethereum, Enterprise Ethereum implementations display a single, unified view of their network’s stored ledger. This single ledger can support an infinite number of use cases, allowing the build-out of additional privacy and scalability solutions on top of the protocol without restrictions to ownership. Other enterprise solutions build these aspects into the protocol itself. Corda is not a single DLT — in fact, Corda doesn’t even call itself a blockchain — and most Fabric implementations are multi-channel, which is equivalent to split ledgers. This can lead to customization and scaling issues because it becomes complicated to maintain a large number of encrypted channels at the same time.

No other enterprise network has Ethereum’s public-first history, which emphasizes open source environments and multi-sided markets that allow customizable, permissioned interaction between multiple players: network participants, users, validators, and developers.

2. Enterprise Ethereum has the lowest cost business model and is rapidly deployable.

Ethereum’s open-source codebase and flexible platform enables Enterprise Ethereum to have a low-cost business model by eradicating vendor lock-in and dependence on a single large solutions provider whose business model is to upsell and feed on deep dependencies such as cloud and consulting services.

Private, permissioned Ethereum networks can be set up in a matter of weeks — a fraction of the time relative to other, difficult-to-maintain solutions. Moreover, Ethereum has proven itself across thousands of nodes on the public mainnet for over three years. And new business solutions are launching constantly, such as all-in-one blockchain solutions for business platforms like Kaleido’s Blockchain Business Cloud, a SaaS platform for building and running enterprise blockchain solutions. Modified Ethereum clients such as Quorum and Pantheon enable businesses to create, test, and deploy enterprise network solutions in a matter of minutes.

A great example comes from Kaleido. The Small & Medium Business Exchange (SMBX), which offers a blockchain-based exchange for issuing, buying, and selling small business bonds to community investors, uses Kaleido to underpin its own blockchain solution. “Since we are running this marketplace on behalf of the SMBX community, Kaleido has helped us get to market with our solution in a fraction of the time and at a fraction of the cost,” says Benjamin Lozano, SMBX CEO.

Another Kaleido example is Komgo, a cutting-edge commodity trade and finance network comprised of global institutions like Citi, ING, Koch Supply & Trading, MUFG Bank, Societe Generale, Credit Agricole Group, BNP Paribas, Shell, and others. “By building on an open blockchain system, Komgo can select from the best protocols in development across the ecosystem and use existing building blocks for an optimized solution,” said Souleïma Baddi, Chief Executive Officer of Komgo. “Now with the proof of concepts and pilots behind us, Kaleido will help us deliver production ready products for a large number of participants at a very fast pace.”

At the same time, some enterprises often want a full-service implementation partner and there are now also Enterprise Ethereum solutions and support providers in every market around the world including the big four consulting firms as well as ConsenSys Solutions. These companies offer services ranging from proof-of-concepts to production-ready blockchain networks to integration into legacy systems to ongoing support.

3. Enterprise Ethereum aligns participants and unlocks capital through asset digitization.

Enterprise Ethereum has the most advanced platform for digitizing, or “tokenizing,” of assets, on the market, stemming from the ERC-20 tokens used on public Ethereum. Tokenization is significantly beneficial for three reasons.

First of all, converting fiat or an asset into a digital asset gives businesses the capacity for secure, scalable, and fast asset transfer. Assets that have been registered in a digital format can be transferred and tracked much faster while achieving high levels of security, conserving time and money, and opening up new paths of revenue.

Look at the example of Project Khokha, built by Adhara as a bespoke implementation of Quorum. Khokha is a blockchain network for inter-bank transaction settlement that securely tokenizes fiat and transfers it to another party in a network privately and rapidly while complying with national banking regulations. The platform can measure performance to the millisecond.

There are eight banking entities in the Khokha blockchain network now transacting at a faster speed with the required security than ever before, saving hours of time and millions of dollars for both themselves and their customers. All of the banks are incentivized to keep the blockchain network running at peak performance, and can now look for further ways to mutualize operations in ways previously unthought of. Adhara has also engineered privacy into the transactions at a level not possible on public Ethereum.

Multiple companies come together on a blockchain to optimize a shared process. This can dramatically lower the costs around trust, while improving security and control around trust operations between entities, such as data sharing, digital transactions, and legal agreements.

The second reason asset digitization is a profound opportunity for enterprise is that it opens up new models of investment and equity. Ownership of real-world assets can be “fractionalized.” Tokenization makes equity available to all participants on a platform including companies, investors, developers, and users, increasing opportunity throughout the ecosystem.

Lastly, a tokenized micro-economy can align network participants, adding incentivization as well as accountable and transparent governance systems. For example, in a multi-company process, tokens can be used as crypto-economic incentive to punish nefarious activity or underperforming participants, while creating rewards for contribution, development, and participation (i.e. for verification and availability).

4. Enterprise Ethereum has the largest enterprise ecosystem.

We’ve already mentioned that Ethereum has the biggest and most active technical blockchain community in the world with over 300K+ developers and infrastructure experts globally and over 2,000 decentralized applications (dApps). The Enterprise Ethereum Alliance is also the world’s largest business blockchain consortium with over 450 members including Microsoft, JP Morgan, Accenture, ING, Intel, Cisco, and many more. Together, the consumer and enterprise arenas of Ethereum are developing standards to promote interoperability and guide regulation to ensure the future success of blockchain.

5. Enterprise Ethereum future-proofs companies.

Future-proofing is about protecting your company against obsolescence. Earlier this fall, we explored three case studies of companies that failed to innovate and meet the market and therefore were lost into the dustbin of history. With regard to enterprise blockchain solutions, future-proofing applies to three things:

Ethereum itself

Your company’s data

Your company itself

More and more businesses are realizing the power of the entire Ethereum ecosystem as evidenced in macro trends from the exploding growth of high-paying blockchain engineering jobs to venture capital investment. The pool of Ethereum developers is larger than any other blockchain community, based alone on the over 1 million downloads of Truffle’s Ethereum development frameworks. If you’re looking to hire a blockchain engineer, look to Ethereum. And in the words of TechRepublic, Ethereum is “first and foremost, a secure way to fuel an application ecosystem.” Because of its size and diversity, Ethereum has a network effect built-in. Moreover, it has become the most technologically sophisticated, production-ready blockchain with the largest developer ecosystem, most active community, most resources and third highest market cap. Ethereum is more future-proofed than any other protocol.

Secondly, future-proofing can refer to the actual function of a blockchain. A blockchain stores data immutably and is a more secure record than a centralized, third-party-owned database. A blockchain keeps data safe, future-proofed from corruptibility. On Ethereum, a company’s data is future-proofed.

Lastly and most importantly, future-proofing is what C-level decision-makers would call mitigating risk and ensuring prolonged success for their company. By choosing Ethereum over other solutions, enterprises are choosing the blockchain with the highest likelihood of being the most secure, best developed, longest-lasting blockchain platform in the world. Ethereum is not tied to the fate or bottom line of a single company or vendor. With Enterprise Ethereum, CEOs and CTOs are not only future-proofing their business networks, but their very businesses.

Conclusion: The Best Parts of Ethereum

Over the last 3+ years, public Ethereum and its developer community have created the most flexible, tested, and advanced blockchain platform to best enable the world to build and customize “unstoppable applications.” This has paved the way for the enterprise world to take the best parts of the public network and customize it for their network needs, including increased privacy and permissions as well as faster transaction speeds. But the Ethereum ecosystem’s real product is businesses better future-proofed to succeed.