Point of View

Who’s Winning the Battle of Enterprise Blockchain Platforms?

March 1, 2018

Blockchain is emerging as a powerful architectural technology with the potential to impact enterprise and B2B ecosystems as much as the cloud has. The foundation for any blockchain solution is its underlying platform or framework, which sets the rules of the game.

 

Many enterprises are proactively running pilots to understand how they can get ahead of the curve with the potential of blockchain models. They want to know where decentralized blockchain models could impact business models compared to centralized models that drive a more closed and controlled ecosystem. The opportunities and challenges are potentially limitless.

 

As you can imagine, there is already plethora of such platforms emerging from the 1500+ different cryptocurrencies in the market as the business potential around blockchain unravels! However, given the nascence of the blockchain concept, the market standards have not yet emerged and interoperability issues persist. As a result, choosing the right platform is critical to the success of your experiments with blockchain.

 

From an enterprise or B2B adoption perspective, HfS analyzed the platform experiences of 15 service providers across more than fifty enterprise blockchain engagements in different stages of maturity. Learnings from both service provider and enterprise user engagements provide a helpful insight into the most promising blockchain platforms for enterprises (see Exhibit 1).

 

Exhibit 1: Leading Blockchain Platforms for Enterprise Adoption

 

Source: HfS Research, 2018. N service providers = 15, N engagements = 52 

 

This PoV focuses on the top five platforms: Ethereum, Hyperledger Fabric, R3 Corda, Ripple, and Quorum. The objective of this PoV is to help you understand blockchain platforms that show promise in solving complex business problems; it is not a financial guide with advice on which cryptocurrencies to buy and sell in order to get rich. Note that Bitcoin does not make it into our list of the top five platforms—in fact, it doesn’t even make it into the top 10 when we talk about enterprise applications of blockchain. It is important to distinguish between cryptocurrency initiatives and enterprise blockchain adoption.

 

It is also important to clarify that the focus of this PoV is the platform or framework layer of the blockchain ecosystem (see Exhibit 2) and not the blockchain tools and software providers that also often use the term “platform” to describe their solutions (e.g., IBM Blockchain Platform). The tools and software provider layer of the ecosystem plays an extremely important role in providing a development environment for solution providers to use the underlying frameworks and build blockchain solutions, but the definitional layer is always driven by the underlying framework—our focus here.

 

Exhibit 2: The Blockchain Ecosystem

Source: HfS Research, 2018

 

No. 1: Ethereum—Mature, Smart Contracting Cross-Industry Platform

 

“Ethereum is a platform that makes it possible for any developer to write and distribute next-generation decentralized applications.”

– Vitalik Buterin, Co-Founder, Ethereum

 

Founded by the 22-year-old Russian-Canadian Vitalik Buterin, Ethereum is one of the most mature blockchain platforms available today. Known for its robust smart contracting functionality and flexibility, it is used widely across multiple industry use cases. It has the largest number of use cases available in our sample set. Along with Hyperledger Fabric, Ethereum has developed a large online support community and has frequent product updates and enhancements.

 

The non-profit Ethereum Enterprise Alliance (EEA) is over 250 members strong and connects Fortune 500 enterprises, startups, academics, and technology vendors with Ethereum subject matter experts. Despite its widespread adoption in enterprise use cases, it’s important to realize that Ethereum is essentially a permissionless (or public) platform designed for mass consumption versus restricted access (typical requirement for privacy requirements in enterprise use cases). It is also PoW (proof of work) based, which is not the fastest (resulting in potential latency issues) and is an energy sucker, though it might change its consensus algorithm to the fast PoS (proof of stake) in future versions.


No. 2: Hyperledger Fabric—B2B-Focused Modular Blockchain Platform

 

Hyperledger, hosted by Linux Foundation and launched in 2016, is an open-source collaborative effort to advance cross-industry blockchain technologies. One of its key goals is to create enterprise-grade distributed-ledger frameworks and codebases. Hyperledger boasts more than 185 collaborating enterprises across finance, banking, Internet of Things, supply chain, manufacturing, and technology. Hyperledger Fabric is one of the eight ongoing Hyperledger projects initially contributed by IBM and Digital Asset. It is an attractive blockchain framework for enterprise solutions because of its modular architecture, which allows plug-and-play components around consensus and membership services. It recently announced the release of Hyperledger Fabric 1.0, which it claims is production-ready for enterprises. Read more in our interview with Brian Behlendorf, the Executive Director of Hyperledger.

 

“As new technology develops, there is a call for standards. Participants want to focus on time and effort and investment to build solutions versus worrying about the framework. This is the rationale for open standards…we are pulling together the most exciting portfolio with a multi-lateral developer and vendor community. It’s similar to the benefits that Linux brought to the world of operating systems.”

– Brian Behlendorf, Executive Director, Hyperledger

 

No. 3: R3 Corda—New Operating System for Financial Services

 

Corda has been developed to service the specific needs of financial services with generations of disparate legacy financial technology platforms that struggle to interoperate, causing inefficiencies, risk, and spiraling costs.”

– David E. Rutter, Founder and CEO, R3

 

In 2015, a consortium of some of the world’s biggest financial institutions launched R3 and created Corda, an open-source distributed ledger platform. Its partner network encompasses more than 60 companies. While Corda was designed with banking in mind, other use cases in supply chain, healthcare, trade finance, and government are emerging. There is no built in token or cryptocurrency for Corda. It is a permissioned blockchain that restricts access to data within an agreement to only those explicitly entitled to it, rather than the entire network. Its consensus system takes into account the reality of managing complex financial agreements. It is also known for its focus on interoperability ease of integration with legacy systems.

 

No. 4: Ripple—Enterprise Blockchain Solution for Global Payments

 

“Global payments are undeniably going through a sea change, led by financial institutions adopting blockchain to fix their customers’ broken payments experience. Now more than 100 financial institutions are looking to Ripple as the solution to the problem…”

– Brad Garlinghouse, CEO of Ripple

Ripple was founded in 2012 as Opencoin and took its current name in 2015. It connects banks, payment providers, digital asset exchanges, and corporations through RippleNet, with nearly-free global transactions and no chargebacks. It enables global payments through its digital asset XRP, which has become one of the most popular cryptocurrencies, just behind Bitcoin and Ether. XRP is touted to be faster and more scalable than most other blockchains (4 seconds per payment settlement versus an hour or more in Bitcoin, with the ability for 1,500 transactions per second compared to 3-6 for Bitcoin). 75+ clients are in various stages of commercial deployment across three primary use cases: managing cross-border payments (xCurrent), minimizing liquidity costs (xRapid), and sending payments across various networks (xVia).


No. 5: Quorum—Enterprise-Focused Version of Ethereum

 

“J.P. Morgan has long used open source software and we are excited to have this opportunity to give back to the community. Quorum is a collaborative effort and we look forward to partnering with technologists around the world to advance the state of the art for distributed ledger technology.”

– Lori Beer, CIO, J.P. Morgan Corporate and Investment Bank

 
Developed by J.P. Morgan and leveraging Ethereum since 2015, Quorum is designed to handle use cases requiring high-speed and high-throughput processing of private transactions, with a permissioned group of participants. It does not use the proof of work (PoW) consensus algorithm but uses a vote-based algorithms and others, enabling it to process hundreds of transactions per second, depending on how smart contracts and networks are configured. Quorum is designed to develop and evolve alongside Ethereum. It only minimally modifies Ethereum’s core, thus Quorum is able to incorporate the majority of Ethereum updates quickly and seamlessly. Just like Ethereum, Quorum is open sourced, is free to use in perpetuity, and encourages experimentation.

 

Keep in mind that each platform has its own unique quirks (see Exhibit 3), with variations in ledger type, consensus algorithm, ability to handle smart contracts, whether or not they have a cryptocurrency, and other characteristics. The right choice for each of these elements depends on the use case.

Exhibit 3: Summary of Features of Top Five Blockchain Platforms for Enterprises

 

  1. Based on responses from 15 leading blockchain service providers
  2. Based on a random sample of set of 50 enterprise blockchain engagements across multiple industries
  3. com as of Feb 20, 2018, 6:20 PM UTC

Source: HfS Research, 2018

 

Bottom Line: Blockchain Platforms Will Consolidate and Collaborate As Enterprise Adoption Increases

 

The blockchain world innovates at a frenetic pace with emerging new platforms, additional new features, and new releases; ambitious enterprises are eager to get ahead of the disruptive potential of this curve.

 

Meanwhile, enterprise adopters face challenges with a lack of standards and interoperability issues, especially as they try to upgrade from pilots and PoCs to production-grade environments. The whole development of the blockchain ecosystem is similar to the Internet for permissionless networks and cloud for permissioned ones, where blockchain is almost akin to TCP/IP as the architectural technology.

 

Enterprises do not need more than 1,500 different platforms; like with any hyped and exciting new technology development, we will quickly see a handful of real players dominate, investors focus, as the ecosystem matures. This PoV highlights the current top five platform players, but given the nascence of blockchain (almost all of these are merely a few years old), this will continue to evolve and we will start to see greater collaboration between leading platforms as a result of market forces. We are already seeing some evidence of this with Hyperledger, Sawtooth, and Hyperledger Burrow working together to run the Ethereum Virtual Machine (EVM). Also, the Blockchain Interoperability Alliance was created in November 2017 to collaborate on researching interchain transactions and communications. Like with every new concept, blockchain is also going through these growing pains. At this stage of the market development, it is important that enterprises show patience and not throw the baby out of the bathwater!

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