Enterprise Blockchain Implementation learnings and challenges

By Shamit Bhat, Director, Blockchain and Roaming, GSMA

Blockchain a form of Distributed Ledger Technology (DLT) has enabled an ever evolving fast paced space with new innovations continuing to come to the fore. Last couple of years have seen gradual move towards normalisation of cryptocurrencies, evolution of CBDCs (Central Bank Digital Currency), and maturing of Blockchain Wallets along with emergence of Non-Fungible Tokens, Stable Coins, Decentralised Exchanges, and more recently Metaverse which is predicated on DLTs Web3.0 infrastructure. As per Gartner Hype Cycle 2021 successful permissioned enterprise blockchain projects are scarce whilst decentralised blockchain applications are thriving. However, as an integration technology blockchain is quite promising for enterprises which explains the continued investments such projects tend to attract. In this article I cover key learnings and challenges faced in enterprise blockchain implementations with particular focus on interoperability debate as we move towards more successful implementations.

Key Implementation Learnings

  1. Blockchain is an ecosystem play

The technology works best when multiple stakeholders come together to solve a common problem in a collaborative environment. With an intent to create a shared economy model.

  1. Blockchain is a database with some added benefits

Its transparency, immutability, smart contracts, distributed, trust, and provenance features make it enticing for specific use cases but its not the be all and end all for all problems.

  1. Blockchain combined with some key technologies can be powerful

Drawing parallels with Machine Learning and AI; Blockchain saves information, Machine learning learns from this information, and AI acts on the learning. This with opportunities to enhance cryptographic algorithms through quantum technology, supporting some low latency high visibility use cases through edge computing and 5G infrastructure, and delivering efficiencies for supply chain use cases is a powerful union of emerging technologies.

  1. In blockchain 20% is technology and 80% is business

Proving the technology works is the least complex part. However, making it work as a business involves understanding regulatory landscape, enabling a workable governance model, defining strong legal frameworks, and having a strong commercial case for migrating an entire ecosystem to a new technology besides many other things.

  1. Reutilise industry bodies rather than reinventing the wheel

Typically, industry bodies are set as a consortium. Therefore, these are tailor made for supporting enterprise consortia blockchain solutions. Rather than reinventing the wheel such bodies can play a big role in reutilising existing governance frameworks to enable multi enterprise blockchain eco-systems.

Key Implementation challenges

  1. Getting the Governance framework right is half the battle won

Governance model should support the business rather being technology driven and most importantly pragmatism must win over idealistic structures which could put business into unrealistic compromises. Key decisions include going for an on-chain, off-chain, or hybrid governance model, ensuring a long-term strategic view, and finding a balance between desired flexibility at the cost of added complexity.

  1. Heterogeneity of enterprise blockchain implementations

The integration of heterogenous system architectures across eco-system touch points makes standardisation harder particularly for BAU processes looking for efficiency gains.

  1. Picking the right Blockchain protocol is extremely critical

Some use cases lend themselves better to a specific protocol however others may work well with more than one. To reduce complexity in some cases picking one protocol as standard might resolve lots of downstream technical and business challenges. However, picking a winner in an ever-evolving space is extremely challenging. A pragmatic approach is to keep the doors open for integrating other protocols. This can be achieved by adapting a protocol agnostic and modular multi-layer architecture design.

  1. Creating a multi-use case chain for a shared economy model

The common infrastructural elements in blockchain ensure possibility of a cross use case chain where a blockchain network node can host multiple applications thus being value for money. However, different use cases benefit from different attributes of the blockchain technology. For some transaction speed, latency and scalability are the key, for others transparency and security are more relevant and for others establishing new trust model and disintermediation is the key driver. Regardless of the use case, where feasible common infrastructure must be used to reduce cost and increase network usability.

  1. Blockchain Integration and Interoperability challenges

As an integration technology blockchain network using the same protocol and homogenous system architecture across enterprise application web clients could work easily. However, where multiple ledgers and networks come into picture a lot of work is still required to ensure the added overheads do not outweigh the efficiency gains achieved. Multiple solutions already exist through some fantastic work done by means of various relay chain or cross chain validator models. But in terms of reducing implementation costs and complexity more needs to be done.

Overall, more and more enterprise blockchain solutions are entering the market and these are paving the way for addressing common challenges. Through shared learnings future implementations are bound to become easier. Some pragmatic business choices to make are ensuring openness, homogeneity of architecture, rolling out use case specific architectures, where possible picking a protocol over others to reduce interoperability overheads and most importantly picking the right governance framework. Additionally, using simplified legal frameworks, having the right regulatory oversight, and defining standard operational practises by means of frame agreements, open technical specifications and standard rule books are key to success.

Disclaimer: views, thoughts, and opinions expressed in the article belong solely to the author, and not necessarily to the author’s employer, organization, committee, or other group or individual.

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