Today, the team behind the Baseline Protocol – an enterprise focused blockchain projects pioneered by by EY, Microsoft, ConsenSys, AMD and others that uses the public Ethereum blockchain announced support for integration with decentralized oracle provider Chainlink.
The announcement represents an important milestone for both the baseline protocol as well as Chainlink as they both attempt to make inroads into the enterprise adoption of public blockchain.
The Perception Problem With Public Blockchains
Corporates have not materially public blockchain networks in large numbers and that is becoming an issue for the credibility of the technology..
While enterprises — who are conservatively minded entities, after all — will naturally take some time before adopting a new technology, many observers believe that we still should have had more adoption at this point. Especially given that we are now five years into existence of Ethereum protocol, and influential organizations, such as Ernst & Young, Microsoft and Consensys have made significant investment to get the technology adopted.
Public networks may still get a pass given how paradigm breaking the technology could potentially be, but they are increasingly on thin-ice.
Where corporates have placed their toe in the water to experiment with the technology, it has predominantly been in the permissioned blockchain space on the understanding that these networks offer a more secure and reliable way of interacting between corporations than public chains.
To a certain extent, that is understandable — after all, public blockchain technology is fundamentally about providing full transparency of data to anyone, which is something of an anathema to a large corporate which can face material changes to their stock price and potential regulatory sanctions if privileged information was to leak.
Furthermore, public blockchains have also not done themselves many favors in establishing a level of confidence with enterprises that they are venues that align to the needs of a corporate for security, privacy and predicable operations.
From an outsider’s perspective, the public network space is littered with hacks, frauds and nefarious activity; whether it is the 51% attacks on public networks, smart contract vulnerabilities such as the DAO hack, the volatility of the price to conduct transactions on public networks, or the proliferation get-rich-quick schemes that so often end in tears.
That’s a lot for a would-be corporate to swallow, especially given how conservative large enterprises tend to be towards trusting third parties with the custody of their storage and computing resources. After all many businesses, especially in financial services, remain reticent to even adopt cloud technologies despite the fact that they can offer security and confidentiality then their own solutions in-house.
Corporates, it seems, prefer the solitude and safety solid and predictable if boring predictability of their private ERP systems, than the radical burning-man-esque free-for-all approach to data management that public chains appear to convey. And who would blame them.
But perceptions can be different from reality.
It’s All About The Baselining
Auditing giant Ernst and Young, enterprise software providers Microsoft and Consensus, and chip manufacturer have sought to challenge that narrative through the launch of the baseline protocol which melds the benefits of using a public network, while addressing many of the concerns of enterprises concerning privacy and security.
Ernst & Young announced the Baseline protocol at its annual blockchain event, accompanied with the usual fanfare surrounding announcements of this type.
For Baseline protocol co-creator Wolpert, part of getting adoption is about challenging some of the incorrect preconceived notions about what public blockchains are for. They are not – contrary to conventional wisdom – effective as shared corporate information databases
“Blockchains are terrible databases”, says Baseline protocol co-creator John Wolpert, Group Executive, Enterprise Mainnet Products and Technology at Consensys, who counts co-creating the permissioned distributed ledger hyperledger fabric as one of his many achievements in the space.
Wolpert goes on to explain that far from being a shared repository of corporate data, blockchains are far better suited to the role of enabling corporates to synchronize their own privately held corporate records with trusted participants but in a way where neither that corporate data leaves the safety of their corporate systems, nor can an outsider be able to ascertain that they have a relationship with these other parties.
There is certainly a great need for enabling multiple companies to securely unify their records. Anyone who has had experience of chasing down a medical claim in the U.S.’s fragmented healthcare system can attest to how the various parties involved seem to have fragments of a whole picture, leaving it up to the patient to stitch the remainder together through multiple rounds of calls, faxes and e-mails. That type of dysfunction happens on a daily basis across large corporates across the world.
Baseline is about ensuring that corporate data stores, whether they be ERP systems or other systems of records, can be used for what they are good at; keeping sensitive corporate data orderly and safe, while using a public blockchain network to augment what these systems are bad at; providing an assurance that every organization involved in a business transaction will be operating on the same set of information but without divulging anything about that data.
Through cryptographic techniques, this can be accomplished without ever necessarily publicly divulging corporate sensitive data.
That’s a vision echoed by Ernst & Young blockchain lead Paul Brody, who during our interview at the start of the year envisages a public blockchain based world where no corporate data is actually stored on a blockchain, only markers are present that enable those with the requisite knowledge to validate that their corporate data matches their counterparty’s.
Chainlink Integration Opens New Business Opportunities
Whereas Baseline’s role is one of ensuring that data in secure stores within organizations remain synchronized, Chainlink – a decentralized data oracle provider that today announced their integration with the protocol – enables data to be incorporated from outside sources in a way that is verifiable. That means that organizations, safe in the knowledge that through the Baseline protocol – their data is aligned with their partners’, can actually use trusted date from outside sources to power transactions.
That has the potential of unlocking some powerful business scenarios. Take for example, a situation parametric crop insurance where an insurer will pay out based on rain-fall. Chainlink can provide access to trusted verified weather data, while Baseline can ensure that both organizations have certainty that they are operating with the same facts concerning the insurance policy, bank accounts for payouts and so forth.
Echoing Wolpert’s theme of using technology for the job that it is best at, Sergey Nazarov, Co-Founder of Chainlink, explains how Chainlink provides Baseline users with a powerful tool for sourcing data – “while Baseline excels at using blockchains as a shared system of record across multiple enterprise databases, Chainlink excels at making sure that those shared records are properly connected to all of the additional systems, including data and payment methods they need to do something truly useful.”
Chainlink’s tie up with the Baseline protocol is one of a number of recent announcements which have sought to demonstrate that the protocol has a broader applicability than decentralized finance, which is the area that the protocol is based known for.
Earlier last month, Nazarov also reported that it had completed the acquisition of DECO, a company spun out of Cornell University which uses cryptography to make it easier for enterprises to publish their data securely to a blockchain through using their existing web technology infrastructure as opposed to needing to invest establishing as data sharing infrastructure specifically for the purposes of sharing data.
Will Enterprises Care?
There is no doubt that both protocols and their respective backers, who themselves can count large Fortune 500 corporates as their clients, are making strides in reversing the perception that public networks are unsuitable for enterprise users.
Yet, impressive as these leaps in capability may seem, for most corporates, one of the greatest overriding challenges is that the discussion in the space still remains highly technical in nature – business adopters, which ultimately hold the purse strings seek working corporate applications, as opposed to technology lectures on the underlying plumbing.
That change in emphasis may be coming. After all, the Internet’s early days was an incongruent mass of technical jargon before moving from the hands of technology experts to becoming a business and social tool. In other words, the focus on technology is replaced by actual use cases as the technology matures and the underlying piping becomes taken for granted
And that is where organizations such as Baseline backers Ernst & Young, Consensus and Microsoft have the opportunity to step in to take public networks form a word-soup of tehno-babble to real-world applications where the fact that they use blockchain is about as interesting as knowing what language Uber
Will Open API’s Get There First?
But the clock is ticking and public networks do not have the monopoly on harmonizing data that resides in corporate systems. Many of these systems are already opening themselves up through the use of API based integration.
API based banking, for example, something mandated by law in the European Union, has stated to break down these monolithic data siloed in enterprises, allowing organizations to share information with each other more freely.
For many corporates looking to dip their toe into the new age of corporate data sharing, using an API based integration approach, which in many cases is available in a handful of clicks through well known provides such as SAP
It’s now up to the teams backing Baseline and Chainlink to help these organizations see the light.