Enterprise Blockchain in 2020: Simplify, Connect, Transact

By the standards of most technologies,
blockchain ought to still be in its infancy. The modern computer, for example,
has been around for over 80 years. Cloud computing is still gaining market
share in many industries, despite having been around since 1996.

Yet the blockchain industry has matured
at an unprecedented rate. After an explosion of interest and innovation in the
first few years, business leaders are now becoming familiar with the
technology’s strengths and are clarifying their ideas about where and how to
implement it.

In response, the industry is
consolidating as it becomes clear which models are meeting the enterprise need.
2020 is going to be an important year for enterprise blockchain to capitalise
on this consolidation via real-world network deployments. We at R3 are organising
ourselves around one mantra to help make this a reality: “simplify, connect,
transact.”

Simplify

Complexity is the enemy of adoption in
enterprise technology. For blockchain to be practical and scalable across many
different organisations with very different goals and pre-existing
technologies, the underlying platforms need to strive for simplicity and
flexibility.

Organisations want to simplify how they
launch or join blockchain networks. Business sponsors do not want deployment
and operations to delay their time to demonstrable value, and will want their
blockchain nodes to ‘live’ where their current infrastructure lives.

This means that deploying a blockchain node
needs to be as simple as booting up a laptop for the first time, and connecting
to peers on a network should be pain-free, regardless if the node is deployed
on-premises or across a single- or multi-cloud environment. The leading
blockchain platforms in 2020 will need to be able to ‘deploy anywhere’ with the
fewest clicks, allowing customers to focus on business value, not deployment
headaches.

Enterprise blockchains will also gain a
simplicity edge over public blockchains in 2020. The currently-leading public
blockchains have injected ever-increasing complexity into their delivery
roadmaps for 2020 and beyond, as they grapple with working backwards to achieve
the privacy and scalability needed for enterprise buyers.

Organisations will move their attention
away from the question of whether a chain is public or private and, instead,
start asking ‘who are the validators of transactions?’ and ‘how future-proof is
my platform choice?’

Connect

The second big trend in 2020 will be a
re-focus on network effects. This will include bootstrapping net-new networks
as well as the reemergence of interoperability as a priority to allow those
networks to have increased reach.

Just as with deployment, customers will
demand a simplified and low-friction experience for starting or joining
consortium networks. This enhanced user experience will not be limited to
technology considerations but also focus on streamlined governance and
‘consortium economics’ that will allow for enterprises to make better and more
informed business decisions about which blockchain networks to join.

This may finally deliver the initial
adoption by the to-date mythical ‘fast followers’ within the corporate world,
and we are already seeing evidence of this within supply chain and trade
networks, such as Marco Polo, which recently brought together over 70
institutions to trial a recievables financing solution on Corda.

Smart contract decoupling will create a
lot of buzz, as senior executives do not want to be tied to any one underlying
platform, but the market remains too immature and abstracted for this buzz to
translate to reality.

Instead, the big steps forward in terms
of interoperability will be blending the worlds of “on-chain” and “off-chain”
as platforms and projects drive through integration with established business
networks. For example, cross-payment rail interoperability, which can harness
the best of incumbent rails and emerging blockchain settlement and asset
networks.

As a result, participants in the
blockchain ecosystem will start thinking about how their software can drive
market-level (in addition to firm-level) connectivity and transformation. This
is a cultural, as well as technological, change and so will take time to become
a reality. However, this is one of the big promises of enterprise blockchain
platforms, such as Corda, which enables controlled information sharing and
workflow between different organisations without compromising on privacy.

Transact

Blockchain is unique in it’s ability to
deliver market- and industry-wide networks centered on provably scarce digital
assets and value being transacted directly and with finality. 2020 will reveal
the demonstrable value of blockchain networks over traditional centralised databases
as we move into the ‘transact’ phase.

Key to this will be the continued
adoption by regulated institutional exchanges for high-quality digital assets. Such
token initiatives were a significant part of the story of 2019 with a number of
high-profile projects, such as SDX in Switzerland, making major steps forward.

Many of those projects have set robust goals
for adoption and first transactions in 2020. For a new technology to have
progressed from the fringes of the development community to underpin regulated
exchanges, built by some of the biggest names in institutional finance, in just
over a decade is astonishing.

Regulated asset network deployments will
be coupled with an increased pace of innovation in digital value, especially
for regulated or central bank backed digital currency. The current reactionary
movement against private or crypto stablecoins will pick up pace, as the public
sector will look to regain the march against cryptocurrency by fast-tracking
experiments (and in some cases deployments) of digital currency.

2020 is going to be something of a
coming of age year for blockchain. We’ve been part of an incredible wave of
innovation and experimentation over the past few years, with firms putting
forward many different models for how to best deploy and govern blockchain
networks in the enterprise context.

Many of those debates, however, are
becoming settled now as the industry consolidates around the most suitable
models. Under the exciting pressure of deployments planned for 2020, the players
that emerge as leaders will be those with a pinpoint focus on simplifying the
blockchain journey, fostering connections and enabling live, seamless
transactions.