Enterprise Blockchain in 2020: Simplify, Connect, Transact
By the standards of most technologies, blockchain ought to still be in its infancy. The modern computer, for example, has been around for over 80 years. Cloud computing is still gaining market share in many industries, despite having been around since 1996.
Yet the blockchain industry has matured at an unprecedented rate. After an explosion of interest and innovation in the first few years, business leaders are now becoming familiar with the technology’s strengths and are clarifying their ideas about where and how to implement it.
In response, the industry is consolidating as it becomes clear which models are meeting the enterprise need. 2020 is going to be an important year for enterprise blockchain to capitalise on this consolidation via real-world network deployments. We at R3 are organising ourselves around one mantra to help make this a reality: “simplify, connect, transact.”
Complexity is the enemy of adoption in enterprise technology. For blockchain to be practical and scalable across many different organisations with very different goals and pre-existing technologies, the underlying platforms need to strive for simplicity and flexibility.
Organisations want to simplify how they launch or join blockchain networks. Business sponsors do not want deployment and operations to delay their time to demonstrable value, and will want their blockchain nodes to ‘live’ where their current infrastructure lives.
This means that deploying a blockchain node needs to be as simple as booting up a laptop for the first time, and connecting to peers on a network should be pain-free, regardless if the node is deployed on-premises or across a single- or multi-cloud environment. The leading blockchain platforms in 2020 will need to be able to ‘deploy anywhere’ with the fewest clicks, allowing customers to focus on business value, not deployment headaches.
Enterprise blockchains will also gain a simplicity edge over public blockchains in 2020. The currently-leading public blockchains have injected ever-increasing complexity into their delivery roadmaps for 2020 and beyond, as they grapple with working backwards to achieve the privacy and scalability needed for enterprise buyers.
Organisations will move their attention away from the question of whether a chain is public or private and, instead, start asking ‘who are the validators of transactions?’ and ‘how future-proof is my platform choice?’
The second big trend in 2020 will be a re-focus on network effects. This will include bootstrapping net-new networks as well as the reemergence of interoperability as a priority to allow those networks to have increased reach.
Just as with deployment, customers will demand a simplified and low-friction experience for starting or joining consortium networks. This enhanced user experience will not be limited to technology considerations but also focus on streamlined governance and ‘consortium economics’ that will allow for enterprises to make better and more informed business decisions about which blockchain networks to join.
This may finally deliver the initial adoption by the to-date mythical ‘fast followers’ within the corporate world, and we are already seeing evidence of this within supply chain and trade networks, such as Marco Polo, which recently brought together over 70 institutions to trial a recievables financing solution on Corda.
Smart contract decoupling will create a lot of buzz, as senior executives do not want to be tied to any one underlying platform, but the market remains too immature and abstracted for this buzz to translate to reality.
Instead, the big steps forward in terms of interoperability will be blending the worlds of “on-chain” and “off-chain” as platforms and projects drive through integration with established business networks. For example, cross-payment rail interoperability, which can harness the best of incumbent rails and emerging blockchain settlement and asset networks.
As a result, participants in the blockchain ecosystem will start thinking about how their software can drive market-level (in addition to firm-level) connectivity and transformation. This is a cultural, as well as technological, change and so will take time to become a reality. However, this is one of the big promises of enterprise blockchain platforms, such as Corda, which enables controlled information sharing and workflow between different organisations without compromising on privacy.
Blockchain is unique in it’s ability to deliver market- and industry-wide networks centered on provably scarce digital assets and value being transacted directly and with finality. 2020 will reveal the demonstrable value of blockchain networks over traditional centralised databases as we move into the ‘transact’ phase.
Key to this will be the continued adoption by regulated institutional exchanges for high-quality digital assets. Such token initiatives were a significant part of the story of 2019 with a number of high-profile projects, such as SDX in Switzerland, making major steps forward.
Many of those projects have set robust goals for adoption and first transactions in 2020. For a new technology to have progressed from the fringes of the development community to underpin regulated exchanges, built by some of the biggest names in institutional finance, in just over a decade is astonishing.
Regulated asset network deployments will be coupled with an increased pace of innovation in digital value, especially for regulated or central bank backed digital currency. The current reactionary movement against private or crypto stablecoins will pick up pace, as the public sector will look to regain the march against cryptocurrency by fast-tracking experiments (and in some cases deployments) of digital currency.
2020 is going to be something of a coming of age year for blockchain. We’ve been part of an incredible wave of innovation and experimentation over the past few years, with firms putting forward many different models for how to best deploy and govern blockchain networks in the enterprise context.
Many of those debates, however, are becoming settled now as the industry consolidates around the most suitable models. Under the exciting pressure of deployments planned for 2020, the players that emerge as leaders will be those with a pinpoint focus on simplifying the blockchain journey, fostering connections and enabling live, seamless transactions.