Ethereum Once Again The Blockchain Of Choice For Private Giants
Another wave of good news arises for the Ethereum Blockchain, this time coming from leading DLT research labs of the likes of Microsoft, EY, and ConsenSys, which partner to develop a what appears to be on first glimpse a baselayer for secured private transactions and smart-contracts to be deployed on the popular public distributed ledger.
The move was initiated by ConsenSys, among other key blockchain developer companies, and it is an attempt to address some of the issues centralized blockchain networks carry, regardless of the benefits they acquire just by using a distributed ledger technology in opposition to traditional data management protocols.
So what’s the dilemma here? Basically, industrial titans who already utilize some sort of a blockchain platform, whether it is for internal document administration, supply chain management, or healthcare data distribution, are hesitating switching to a public blockchain solely for the reason they’d have to be ok with the fact that their data, customer-base, and smart-contracts will be exposed on a public and completely transparent level.
On the other hand, private blockchains are extremely expensive, at least for the medium user, and besides the fact that they are centralized – as in controlled by one single legal entity – they tend to be slow, due to the network of nodes supporting the ledger.
One could argue that IBM is a global hosting service provider, and therefore it shouldn’t be a problem for them to diversify their network across the world, yet, and regardless of its level of exposure, IBM could never compete with a public decentralized blockchain when it comes to networking.
So what’s the ideal solution here? According to joint and individual statements made by the pre-mentioned companies, as well as other significant blockchain players including Chainlink and MakerDAO, a Baseline Protocol is proposed to address specifically the issue described above.
The idea here is to use Ethereum’s public blockchain as a working layer instead of an end-layer where all the data are stored in a ‘free-for-all’ fashion. EY had previously proposed a privacy-oriented framework dubbed ‘Nightfall’, which essentially uses zero-knowledge technology, more specifically zk-snarks to deploy an extra layer of privacy masking typical Ethereum transactions.
The Baseline Protocol initiative tho has a slightly different approach, which is funded directly by the Ethereum Enterprise Alliance, as well as other company members who are proposing to use the Ethereum blockchain as a middleware instead of a final settlement layer aiming to utilize all the good stuff blockchain technology has to offer while leaving aside what’s considered ‘optimal’ by a for-profit organization.
“Over the last two years, we have been advancing the state of the art for private, secure transactions on public blockchains. This takes the groundwork we have built and starts filling in gaps such as enterprise directories and private business logic so enterprises will be able to run end-to-end processes like procurement with strong privacy”. – Paul Brody, EY’s Global Blockchain Leader says.
Obviously, this is very good news for the Ethereum Foundation, but for me it is also good news for the broader public blockchain scene, considering that once again, private companies, although late, realize the enormous power of decentralization.
Based on historical facts, we can assume governments and central banks will be following this strategy in the immediate future, as they have done in the past, putting faith in the private sector, since they don’t really get things on their own.