The era of private blockchain comes to a close as the value of public blockchains is realized.
Blockchains thrive as network systems. They allow companies to manage and track assets and complex interactions across large business ecosystems. This technology has been long overdue, because while companies have transformed radically over the last 30 years, the technology used to collaborate between enterprises hasn’t kept pace.
Today, most companies still rely upon point-to-point messaging like emailed spreadsheets to manage their shared operations. Blockchains promise to bring collaboration between companies, enabling the sharing of both factual data and business logic across an ecosystem in a standardized, structured and secure manner. So far, however, enterprises have limited themselves to a kind of stripped-down beginner model of this technology, and the limitations of this approach are starting to show.
The era of private blockchain comes to a close
Public blockchains, such as Bitcoin and Ethereum, sparked a technology revolution, but their early versions did not support transaction privacy. To rectify that, centrally controlled private blockchains were developed, facilitating privacy in transaction data by appointing a central authority to verify transactions. This allowed companies to dip their toes in the world of blockchain technology without the fear of exposing confidential data.
The limitations of this approach are obvious: if the main value proposition of blockchain technology is its decentralized nature, creating a centralized version of it might not prove to be of lasting value. Findings from Seize The Day: Public Blockchain Is On The Horizon (pdf), a commissioned study conducted by Forrester Consulting on behalf of EY in November 2019, suggests the era of private blockchain will be coming to a close.
The most pressing question in the world of blockchain innovation is, do you start your own blockchain or do you join one started by someone else? No prizes for guessing, but what has typically happened thus far is that for every organization willing to join a consortium or someone else’s network, two companies started their own. Not much hope for a network-effect here.