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Enterprise Blockchain on the Rise Despite Criticisms

Enterprise blockchains to grow in popularity despite criticisms.

In the announcement for the launch of its blockchain security testing service, IBM X-Force Red highlighted the rise of enterprise blockchains and said that “organizations are seeing real efficiencies and cost savings from its use.”

IBM also highlighted the IDC’s 2018 Spending Guide, which forecasts worldwide blockchain spending to grow to $9.7 billion in 2021.

This arrived on the back of a Forbes article in February that explored the reasons “Why 2019 May Become The Year Of Enterprise Blockchain,” which also highlighted Deloitte’s 2018 global blockchain survey that found 95 percent of companies across different industries were investing in blockchain tech projects.

All of that indicates a rosy outlook for blockchain growth. But some critics contend there’s no need for enterprise blockchains and question whether such investments are warranted. It’s that pushback that has placed many companies in a difficult position — fearful of falling behind competitors, but wary of investing in a technology that may not require proprietary solutions.

The dilemma is reflected in the mix of comments in the enterprise vs. public chain debate.

Sky Guo, CEO of Cypherium, a startup offering enterprise-ready blockchain solutions, said to Forbes that enterprises no longer question whether blockchain is worth the attention but that, on the contrary, they are now proactively seeking new ways of incorporating this technology in their legacy systems.

This is something Leanne Kemp, CEO and founder of Everledger, a global digital registry for diamonds powered by the IBM enterprise blockchain platform, would agree with. Kemp, who won the 2018 Advance Award for technology, indicated that the introduction of enterprise blockchain solutions has the potential to completely revolutionize traditional supply chains, not just for the diamond trade:

“Where we’re at in terms of the world for 2030 and 2050 and beyond, we have to rethink supply chains. We have to think about how do we re-imagine product in market. We started with diamonds but our vision is much grander than diamonds.”

The difference between enterprise and public blockchains

Enterprise (also called private) blockchains and public blockchains share a number of characteristics. Both consist of a distributed peer-to-peer network, where the network is governed and maintained through a consensus protocol. Both types also provide some level of immutability of the network to prevent malicious attempts by individual participants to manipulate the data stored on the blockchain

That is as far as the commonalities go, and there are a number of key differences.

The biggest difference is who is allowed to participate on the network — meaning, who is allowed to join the network, to have visibility over the information on the blockchain, to write on it (e.g., launch DApps, execute transactions, etc.) and to participate in its consensus protocol.

Public blockchains are open for anyone to join and is also why they are often referred to as permissionless blockchains. As such, public blockchains are more decentralized and no one entity has absolute control over the governance of the network. Most cryptocurrency platforms run on a public blockchain, and well-known examples include Bitcoin (BTC) and Ethereum (ETH).

The disadvantages of public blockchains are the fact that they can take an enormous amount of computational power to reach consensus on the network, especially proof-of-work (POW) blockchains, and there is little or zero privacy for transactions.

Private blockchains require an application or invitation to join the network. Acceptance to the network would normally depend on a set of rules established by the originator of the network. As such, private blockchains are also referred to as permissioned blockchains.

This process of permission puts a restriction on who is allowed to join the network and in what capacity they are allowed to participate.

The permission process will also vary from network to network. A regulator within the network could issue licenses for participation, it could be in the form of a consortium that makes the decision, or the current network participants could come to an agreement on future participants.

Enterprise blockchains are less anonymous, which helps with compliance such as Know Your Customer (KYC) regulations, and transaction visibility is contained within the network, which provides a level of privacy and security. It is also cheaper, as the network wouldn’t require the vast amounts of processing power of public blockchains and nodes don’t necessarily have to be paid to verify transactions. Consensus tends to be faster, as there are far fewer nodes on a network that has to come to a majority consensus, which also provides for better scalability. These are important factors for large corporations.

Examples of enterprise blockchain networks include R3 Corda, Hashgraph, Everledger, Hyperledger and Quorum (from JPMorgan Chase). Other corporations that have tested and invested in private blockchain networks include Goldman Sachs, Santander and Royal Bank of Canada (RBC).

The number one drawback to private blockchains is that they tend to be more centralized, as there are often significantly fewer network participants than on public blockchains. This increases the risk of manipulation by a small group, or even a single malicious actor.

As a result, a number of criticisms have been levied against private blockchains.

Advantages and drawbacks of public and private blockchains:

Private (permissioned/enterprise) blockchains — e.g., R3, Hyperledger


Public (permissionless) blockchains — e.g., Bitcoin, Ethereum

+ Less anonymous; helps with regulation (KYC)

+ Open for anyone to join and participate

+ More private, transaction visibility is limited

+ More decentralized

+ Cheaper, faster and more scalable

+ No one single entity or small group of entities control the network

– More centralized

– High energy requirements and compensation to nodes make it more expensive

– Increased risk of data manipulation

– Little or even zero privacy

Not everyone is a fan of enterprise blockchains

An article published by international consulting firm McKinsey & Company in January 2019 took a very cynical view on blockchain’s influence, stating that the technology has yet to become the game-changer some expected, and the bottom line is that, despite billions of dollars of investment — and nearly as many headlines — evidence for a practical, scalable use for blockchain is thin on the ground.

Jimmy Song, a Bitcoin developer and venture partner Blockchain Capital, said in an interview that private, centralized systems, such as an enterprise blockchains, “makes zero sense,” while Bill Barhydt, CEO of cryptocurrency wallet and investing app Abra, called enterprise blockchains “nonsense” during an episode of Fortune’s “Balancing The Ledger”:

“Just like people realized extranet was a waste of time, it was all about the Internet.”

Research firm Gartner held their annual Symposium event in February, and the message from them was also overwhelming to stay away from blockchain for the time being.

Gartner research fellow David Furlonger said, “It’s still not appropriate for the vast majority of enterprises to consider blockchain technology at its current level of maturity,” despite “blockchain” being the top search term on since January 2017.

The firm stated that blockchain still has a number of challenges that have to be overcome before enterprises can confidently implement it at scale.

Adrian Leow, research director at Gartner, also said that the majority of blockchain proof-of-concepts were based on Ethereum — followed by HyperLedger and Corda — but that businesses could expect that, within just a couple of years, another platform would replace them. He likened it to Nokia and Blackberry, which were the initial leaders in the mobile phone market, before Apple and Samsung pushed them out.

“Probably the dominant blockchain platform of the future doesn’t exist yet,” Leow said.

Furlonger added that, for an outcome on the debate of public versus public blockchains, it all depends on who you listen to on a given day:

“I often feel I’m in the middle of this maelstrom of hyperbole and general commentary in the market. Virtually every day there’s someone saying something positive or negative about blockchain.”

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The Trick to Selling Blockchain Solutions? Don't Say 'Blockchain'

When Adrian Patten, co-founder of FX blockchain project Cobalt, pitches to banks these days, he chooses his words carefully.

In a move that may do much to validate Gartner’s finding this week that blockchain hype cycle is entering the so-called “trough of disillusionment,” Patten admitted he rarely brings up the technology, choosing instead to focus on the cost savings Cobalt can bring without the benefit of some of the most popular buzzwords of the last few years.

“We try not to mention blockchain or DLT too much in case it complicates matters,” he said.

In Patten’s view, many financial firms have taken a “me too” approach with blockchain, exemplified by things like the herd of banks joining the R3 consortium. In addition, most are probably invested in too many proofs-of-concept, he said.

“They tend to think, if everybody else is in it, they ought to be in it, just in case a board member asks them what they are doing in blockchain,” he continued.

The result is that people have rushed into DLT looking to use the technology rather than considering its process requirements, message requirements and whether it actually works, added Patten. But Cobalt, which created custom distributed ledger tech for its particular post-trade use case, is not alone.

There are other companies out there with live systems that are actually doing stuff, such as Baton Systems, also in the FX space with DLT, but who are using it less publicly, or at least not letting the technology dominate their messaging.

Seeing successful firms without blockchain front and center could be viewed as refreshing, or perhaps a source of misgiving. Forrester Research projects there will be a pruning, with 90 percent of blockchain projects with a flabby business focus ultimately shutting down in the coming years.

As such, Martha Bennett, principal analyst at Forrester, went so far as to say that those who persevere will likely come to understand that succeeding “isn’t really about technology, but about business.”

After the gold rush

Ready to embrace the disillusionment, some firms don’t mind even admitting they used the term “blockchain” when in fact they were using some of its key elements, without the hype mantle, for quite some time.

Back before the bitcoin white paper was released, Guardtime was developing its Keyless Signatures Infrastructure (KSI) which uses concepts like linked time-stamping (integral to bitcoin) to eliminate the need for trusted third parties or cryptographic keys to verify data.

As the blockchain gold rush gathered pace around him, Guardtime CEO Mike Gault said he got caught up with the perceived benefits of aligning his company with the blockchain movement.

“We called ourselves a blockchain company unashamedly. We were sitting in conferences listening to all this blockchain mania starting to happen and we looked at each other and said, ‘Wait a minute, isn’t this what we do?'”

Guardtime, which boasts a broad range of users from shipping giant Maersk to the U.K.’s NHS (National Health Service), is very different from ethereum, noted Gault, but the end result is the same: a single source of truth and immutability.

Gault also derided “crypto zealots who think everything has to be decentralized,” a view which he says is “totally irrelevant for enterprise.” “We will have no problem doing a quick marketing switch when ‘blockchain’ becomes a negative, in order to return focus to our own category of KSI technology,” Gault continued.

“There will be a turning point, especially in enterprise where there are zero production use cases. People are going to see the emperor has no clothes,” he said.

Cobalt’s Patten also thinks the space is being driven in a wrong-headed fashion by “evangelists and fundamentalists.”

“The idea that every message and every part of a life cycle is going to be encrypted and decrypted when it already exists in hundreds of databases in clear text format is somewhat naive,” he said.

Taking a hard-headed business approach, he called Cobalt a product rather than a project and said, “Unless we are cutting costs by 80 percent, people are not going to move away from incumbents. We have to be much cheaper and better.”

A bank’s perspective

So how does the idea of side-stepping the blockchain evangelists resonate with a bank’s blockchain department? Turns out, the sentiment appears to be trending.

“That is exactly what we would like to see,” said Ville Sointu, head of emerging technologies at Nordea Bank. “It should be business first. We have now moved to a phase where indeed we should see more companies coming up with a clear business case and having the fact that it’s a blockchain or a DLT network in the background.”

Sointu is perhaps not a typical blockchain evangelist, however.

After being brought in at Nordea midway through last year, he gathered the blockchain team under one roof and shut down almost all the prototyping. Nordea has narrowed its efforts down to We.Trade, plus a real estate pilot with the Finnish government, and a corporate identity blockchain, which has now passed the proof-of-concept stage.

“I don’t think we need another proof-of-concept for something like KYC,” said Sointu. “We don’t need another international payments PoC; we don’t need another FX PoC. These things have been proven.”

Asked if he has started to see a trend where fintech vendors mention the business case first and blockchain second, Sointu said, “Maybe this is a call to action. But right now we don’t see too many of those.”

“Ninety-nine percent of the companies that come to talk to us say, ‘We have the world’s most scalable blockchain network and here are 100 use cases that we can use the technology for,'” he said, concluding:

“Those are not helpful at all for us.”

Silent businessman image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Software Multinational SAP Announces Launch of Cloud Blockchain Platform

Multinational software company SAP has launched a blockchain-as-a-service platform, SAP Leonardo Blockchain, the company reported Wednesday, June 6. The platform is designed to let corporate customers build applications and networks using blockchain technology.

SAP’s official announcement notes that the new blockchain service will support Hyperledger Fabric and MultiChain, and will be built on top of SAP’s SAP HANA data management system.

Gil Perez, SAP’s senior vice president for product and innovation as well as head of digital customer service initiatives, explained that SAP will not commit to any one underlying distributed ledger technology in order to be more flexible as the blockchain market changes and grows.

Last fall, SAP accepted 27 new members from industries including retail, pharmaceuticals, logistics, public services and telecommunication to its blockchain program with the aim to integrate the technology into the Internet of Things, manufacturing, and supply chain solutions.

This spring, both Microsoft and Amazon announced new advances in their blockchain tech applications, with Microsoft Azure releasing its blockchain app creation service and Amazon launching blockchain frameworks for Ethereum (ETH) and Hyperledger Fabric.

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Hyperledger Tech Heats Up Ahead of Blockchain Software Debuts

Just six minutes.

That’s how long Hyperledger executive director Brian Behlendorf had to get former Chilean president Michelle Bachelet up to speed on blockchain. Spurred by a special request from the nation’s lawmakers, Behlendorf was one of multiple blockchain experts called to the country to talk about the merits of the technology and the ways in which it could modernize the copper-rich nation’s mining supply chain.

But even with such a short amount of time, Behlendorf believes he succeeded.

“She was interested, and she wanted to learn more,” he told CoinDesk.

Still, if that sounds like a tough sell, Behlendorf has become fast experienced in the art, having completed a whirlwind tour earlier this year. In addition to the meeting in Chile, he also visited Davos, Switzerland, for the World Economic Forum’s annual event and Beijing for MIT’s enterprise forum on blockchain.

And with that foundation laid, Behlendorf is now turning his attention to what will likely end up being the busiest year yet for the non-profit Linux Foundation-led consortium, which comprises 200 banks, large corporates and startups.

To start, the consortium is preparing to move three more open-source enterprise-grade blockchain platforms into version 1.0 status (currently there are only two platforms that far along), and launch its first-ever enterprise blockchain tool.

Collectively, these launches signify more than just milestones for the developers behind them, but could help lay the foundation for a wide range of applications finally able to conduct enterprise-grade transactions

Behlendorf said:

“The 1.0 is really a signal from the developers that they feel this code is now ready for production use with real digital assets, which is a pretty high bar, much higher than most organizations might put on their own 1.0.”

Enterprise ethereum

The first of the blockchain platforms expected to launch is Hyperledger Burrow, which will also be the first Hyperledger platform designed specifically for ethereum.

The codebase is currently in the final stages of development before moving to the Hyperledger Technical Steering Committee for approval, which is expected to be sometime this quarter. Built by blockchain startup Monax, the platform comes with a tailor-made ethereum virtual machine (EVM), deployable in internal enterprise operations, enterprise consortia and in more traditional public blockchains.

While the exact number of people using the platform is unclear, Monax CEO Casey Kuhlman said it will at least be included in the upcoming launch of an “agreements network” designed to create legal contracts.

As part of a larger trend towards blockchain interoperability, Monax was among the earliest Hyperledger projects to see its technology integrated with another solution – in this case, Hyperledger Sawtooth – to execute ethereum smart contracts on the Intel-contributed platform.

Going forward, Kuhlman hopes a similar integration that occurred with Sawtooth will proceed within a project currently underway using IBM-contributed Hyperledger Fabric.

“We are hopeful to continue working closely with the IBM engineers to ensure that Burrow’s EVM is suitable for their chaincode system,” he said.

Blockchain Facebook

With digital identity emerging as such a hot topic (think the Cambridge Analytica fiasco), many developers will no doubt also be interested in Hyperledger Indy, another platform expected to launch into version 1.0 this year.

Contributed last year by blockchain identity startup Evernym, the tool is designed to give people ownership of their own identity data.

So far, the non-profit Sovrin Foundation is building on the platform, plus distributed ledger consortium R3 is exploring integration with its Corda platform. On top of that, two European power companies are looking into using the technology, and 25 “stewards,” including T-Mobile’s T-Lab, have joined to operate validator nodes on the decentralized Trust Network.

“The Indy community is active, growing and working on graduating incubation from Hyperledger,” said Judd Bagley, the company’s senior communications director.

For a mobile device 

Distinct from the other solutions moving into version 1.0 this year, Hyperledger Iroha was built as a mobile-first blockchain.

Contributed by Tokyo-based fintech startup Soramitsu, with support from Hitachi, NTT Data and Colu, the Iroha consensus algorithm was designed specifically to enable blockchain-based solutions on mobile devices that have lower processing power. The platform also supports the creation of a number of crypto assets.

Last April, Iroha announced a partnership with the Central Bank of Cambodia to explore possible use of the technology.

Then, in December, the platform quietly entered the alpha 1.0 stage on Github and, according to Soramitsu co-founder Makoto Takemiya, is now in the final stages of preparing for a full, live launch.

“We are planning to release our version 1.0 final in May,” Takemiya said.

The key tool

These series of developments are a notable shift from last year when the lack of enterprise blockchain launches gave naysayers plenty of fuel for criticism.

But this year, starting with the launch of Intel-contributed Hyperledger Sawtooth 1.0 (which has already seen early-stage use by the likes of T-Mobile and Huawei) it seems the groundwork is finally being laid for real enterprise blockchain growth.

This includes IBM’s second contribution to Hyperledger, that is also moving into 1.0 status – a tool called Hyperledger Composer. The first tool to move into “live” status, it’s a actually combination of multiple developer tools designed to accelerate blockchain application development.

Since being contributed last year, Composer is already being used by a number of enterprises according to a Don Thibeau, offering manager of IBM Blockchain. Though few details about that work are being revealed, software giant SAP announced earlier this year that it was using the technology in conjunction with its internal cloud.

“Through the use of JavaScript and common developer tools, Hyperledger Composer has made blockchain development accessible to a wide ecosystem of existing developers and students,” Thibeau said.

And with more and more blockchain platforms and tools moving into 1.0 status, Behlendorf expects a corresponding increase in live applications.

“There’s traction behind each of them, there are multiple companies now participating in development, they are maturing at a rate where they’re ready for production use,” he said, adding:

“And in some cases are already in production use.”

Light speed image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Public Blockchain's Lure Will Become Irresistible for Enterprises in 2018

Paul Brody is a principal and global innovation leader for blockchain technology at EY.

The following article is an exclusive contribution to CoinDesk’s 2017 in Review.

Say what you will about Cryptokitties, but the app does something today that nearly all enterprise blockchains still cannot: exchange one item of value, a cryptokitty, for another item of value, ether.

That item of value may be silly (a digital kitten), but to those who care about them, it’s really enough.

More importantly, the entire contract and transaction, including the exchange of product, takes place on the ethereum blockchain. At EY, our hypothesis is that this kind of low-friction, closed-loop economic transaction is, in fact, the ultimate end game for most enterprise blockchain aspirations.

We’re still very far from that destination, however.

Right now, many enterprise blockchains are still operating like distributed databases and notary services, often with very specialized objectives, such as tracking product provenance. This is a useful start, but if we are not careful, it could be a dead end — a fancy, hacker-proof database, where the software company has replaced the central bank as the intermediary of choice.

To deliver on the full promise of blockchain technology, we believe that enterprises must embrace the full power of tokenization, and ultimately, the allure of the public network. And, 2018 is the year that this will come into view as the future of this technology.

Time for tokens

The foundation of this high-value future is the concept of tokenization: representing a company’s products and services as digital tokens on a blockchain, not merely as items of information, but as carriers of value.

Such digital tokens can stand for anything from pharmaceuticals to phones to music. Whatever they are, they should have assigned ownership and value. If you have a pallet of 1,000 mobile phones, each worth $1,000, that’s on a ship in transit, the blockchain should represent that with 1,000 small tokens with a collective value of $1 million.

When products are made, delivered or sold, value in the blockchain can change hands: 1,000 phone tokens for $1 million in U.S. dollar tokens. Not just bitcoin or ether, but U.S. dollar. Or euros or yen for that matter.

Set aside the debate about the value of traditional fiat vs. cryptocurrencies for the long run. The simple fact is that enterprise CFOs want to be paid the same currencies in which they have expenses and long-term liabilities.

That means tokenizing traditional fiat currency and doing so in the same blockchain as the products and services are tokenized.

Having both types of tokens in the same blockchain is critical — it is what enables the seamless, low-friction and low-risk exchange of items of value. Cross-chain connections are a nice idea, but they can’t beat the power and simplicity of direct exchange.

Central banks are already experimenting with the tokenization of their own currencies, but doing so in private, permissioned or proprietary blockchains that are managed by the central banks. It is a good start, but the next logical step is to create the legal and regulatory framework that enables the tokenization of fiat currency on any industrial or public blockchain.

Once a closed-loop tokenized industrial blockchain exists, many of the key foundations of specialized blockchains would become add-on features in the true economic blockchain. Trade finance is easy if you trust that the representation of 1,000 phones, each worth $1,000 is accurate — you can loan money against those tokens in the blockchain.

Similarly, customs declarations, tax calculations, and product history and provenance are all easily derived from looking at the history of the tokens in that blockchain. No separate blockchain is required for trade finance, payments or product traceability.

Next steps

This vision of the future will start arriving in 2018, and it will have two clear stages.

The first will be the development of what we are call full cycle economic blockchains, where products and services are tokenized and exchanged through digital smart contracts for digital currency tokens. This foundation will likely start with sales, procurement and logistics, and will then go on to see the addition of related services, such as trade finance.

The second phase of this will be the gradual emergence of public blockchains as the preferred ecosystems for these transactions.

We believe that decentralized public blockchains are the only way by which enterprises will truly and deeply commit to digitizing their products and services in a fully interoperable manner. No company will want a centralized intermediary to become the main point of exchange for trillions of dollars in products and services: that entity will have far too much power as a natural monopoly, protected by powerful network effects.

This second phase will depend on how quickly transaction privacy tools such as zero-knowledge proofs (and related zk-snarks and zk-starks) mature.

Right now, transaction scalability and data privacy are not yet ready for multiple competing enterprises to put their strategic transactions into a public blockchain and feel confident they are secure, but that those risks will start to fade in 2018.

Beyond privacy, there are still many challenges to making public blockchains usable for enterprises, including how to implement the rule of law and related know-your-customer and anti-money-laundering regulations.

We believe these are solvable problems and that they can be addressed without the need for centralization. We’re already testing our ideas of how to audit decentralized fiat currency tokens on public networks in ways that will company with AML and KYC rules, for example.

In the end, the lure of the public blockchain network is overwhelming. It’s the only place where companies can be sure they are being treated fairly on a transparent, inspectable and open playing field.

In 2018, the foundations for this future will emerge and the first pilots of these concepts will be visible on the world’s public blockchain networks.

Magnet image via Shutterstock

The leader in blockchain news, CoinDesk strives to offer an open platform for dialogue and discussion on all things blockchain by encouraging contributed articles. As such, the opinions expressed in this article are the author’s own and do not necessarily reflect the view of CoinDesk.

For more details on how you can submit an opinion or analysis article, view our Editorial Collaboration Guide or email

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Bitcoin or Blockchain? Bet That Both Will Thrive in 2018

Caitlin Long is the chairman and president of Symbiont, an enterprise blockchain platform. 

The following article, an exclusive contribution to CoinDesk’s 2017 in Review, outlines Long’s personal views and is not intended to provide investment advice.

Bitcoin and blockchain are often pitted against each other, but I come from both worlds and believe that both are game-changers in their own right.

I first learned about bitcoin in 2012 through liberty-oriented channels, which I’d discovered during a search for answers about the financial crisis in 2008. But I also took a deep dive into enterprise blockchain in 2014 while at Morgan Stanley, as a side interest to my day job of running its pension solutions business. In August 2016, I joined Symbiont full-time.

When I look ahead, I see 2018 as a year of maturity for both the bitcoin and enterprise blockchain parts of the space. Bitcoin will yet again prove its anti-fragility, more corporates will embrace it for payments, and the community will successfully resist its financialization. Enterprise blockchain will gain wider acceptance in production applications.

Bitcoin goes corporate

Bitcoin will increasingly be used for B2B foreign-exchange payments by multinational companies in 2018, as bid-offer spreads continue to tighten, daily liquidity consistently exceeds $5 billion and corporate new entrants gain comfort with liquidity providers (which enable corporates to use bitcoin for “cross-currency” transactions without touching the bitcoin itself–in other words, as an intermediary currency for foreign exchange in illiquid currencies).

Corporate bitcoin use will remain predominantly for payments in markets where banking systems are not well-developed. A tell-tale sign that corporate demand is sustainable would be this: when foreign exchange (FX) trading desks start making markets in bitcoin non-deliverable forwards (NDFs).

When that starts – possibly within the next 2 years – Jamie Dimon will admit his mistake and encourage corporate clients to route payments through JPMorgan’s foreign exchange desk, which will become one of the most active market-makers for cross-currency FX involving bitcoin.

Cryptocurrencies will continue to attract users as more folks learn about distortions in mainstream financial markets that just don’t make sense, such as this:  household net worth in the U.S. was $96.9 trillion, up $7.2 trillion in the year ending September 30, 2017 (according to the Fed’s latest Z.1 report).

This means the U.S. economy supposedly generated wealth at a rate equal to roughly 40% of its annual income (GDP), despite Americans consuming virtually all of their income and saving very little. Wow, that’s a miracle!

Remember this: all prices are fractions. Prices can go up either because numerators go up or because denominators go down (such as when central banks dilute fiat currencies). So…are financial markets climbing because we’re truly getting richer, or because of central bank-induced asset price inflation? Are quantity-constrained cryptocurrencies a safe-haven alternative? Time will tell, but I predict cryptocurrencies will broadly benefit as more folks come to understand what’s driving distortions in financial markets.

One of the “big 3” cross-currency central banks will announce in 2018 that it is preparing to issue its currency on a blockchain. The “big 3” are the “super-regional” central banks through which most “cross-currency” foreign exchange transactions settle, including the Fed, the Bank of England and the Bank of Japan. The Fed is behind the curve, but in 2018 either the BoE or the BoJ will step forward to allow tokenization of its currency to be executed by institutions in regulatory sandboxes. Corporate treasurers around the world will cheer at the prospect of same-day FX settlement through one (or two) of these “big-3” currencies because it will free up hundreds of billions of capital currently trapped on corporate balance sheets, due to payment system latency.

Yet for all bitcoin’s strengths, I believe advances in the enterprise blockchain will outpace those of bitcoin in 2018.

Let’s face it – enterprises are slower to move than the cryptoasset sector, which moves-fast-and-sometimes-breaks-things.

I believe 2018 will be the year in which a watershed event happens: an enterprise blockchain platform passes a CISO (chief information security officer) audit and is deployed inside the firewall of major financial institutions.

Enterprise goes live

Consensus 2018 will be “back to the suits.” Let’s face it: attire at industry’s biggest conference has been a pretty good barometer of what’s hot in the space. At the inaugural Consensus conference in 2015, bitcoin t-shirts dominated the audience. In 2016, business suits dominated as bankers discovered the space. In 2017, the dominant attire swung back to t-shirts, but this time for ethereum and ICOs. In 2018, I predict it will be “back to the suits” as enterprise blockchain accomplishments will again dominate the sector’s headlines, late-followers will scramble to catch up, and corporate treasurers will attend en masse.

The first institutional bond offering will be issued on a blockchain in the U.S. in 2018. Bond markets, not stock markets, will see the first U.S. institutional-level securities issued on a blockchain. Because the regulatory requirement to issue securities in “depository-eligible” (indirect) form does not apply to bond markets, the first institutional securities issued on a blockchain will be bonds – something I’ve predicted for years. In 2018, I believe it will finally happen. Yet, the coming clash between the federal securities laws that govern equities (which contemplate indirect ownership via the DTCC’s Cede & Co.) and state corporate laws (which contemplate that shares are owned directly by shareholders) will not happen yet in 2018.

No new blockchain consortiums will be formed in 2018. If 2017 were the year of forming new consortiums, 2018 will be the year of bilateral projects. Blockchains are networks and therefore suffer from the proverbial chicken and egg problem – consortium first and then project, or project first and then consortium? Consortiums now exist across a wide variety of industries, but – at least for now – more action is happening outside of consortiums than inside them.

Enterprise blockchain adoption will advance beyond incremental-type uses in production, such as sharing of data, to include transformational uses, such as custody of institutional financial assets that only ever exist on a blockchain. This will shine light on quality differences between platforms — and separate those that are decentralized and offer transformational benefits from those that don’t quite. A big gap will open in 2018 between the “haves” and “have-nots” in enterprise blockchain.

2018 will be a consolidation year as the sector matures. The sector came of age in 2017, as adoption broadened in both bitcoin and blockchain. In 2018, both will strengthen and deepen further. And property owners the world round will rejoice.

Disclosure: Caitlin owns cryptocurrency (bitcoin, almost exclusively) and has equity investments in Symbiont, and Payward, the parent company of Kraken.

Dogs image via Shutterstock

The leader in blockchain news, CoinDesk strives to offer an open platform for dialogue and discussion on all things blockchain by encouraging contributed articles. As such, the opinions expressed in this article are the author’s own and do not necessarily reflect the view of CoinDesk.

For more details on how you can submit an opinion or analysis article, view our Editorial Collaboration Guide or email

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

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Swiss Telecom Giant Launches New Blockchain Business

A major state-owned telecommunications provider in Switzerland has created a new business entity centered around blockchain

Swisscom, according to new reports, has established “Swisscom Blockchain AG” to focus on a range of services around the tech. These include enterprise-facing solutions as well as support for companies looking to launch initial coin offerings (ICOs).

The move comes months after the telecom joined the Hyperledger blockchain project. Swisscom is also a member of a Switzerland-based blockchain consortium that also includes exchange operator SIX and Zürcher Kantonalbank, the country’s fourth-largest bank. In January, that group unveiled an ethereum-based trading tool for over-the-counter exchanges.

It’s a notable development from an established firm that, from the outset of its formal entry into Hyperledger, has struck an optimistic tone on the tech.

“We want to provide support as a catalyst with expertise, experience and implementation skills,” Swisscom’s Johannes Höhener said in December.

The firm is being led by Daniel Haudenschild who, according to LinkedIn was previously a partner at advisory firm EY Switzerland. A report from local publication Inside Channels indicates that other staffers from EY have joined the venture, and that Swisscom Blockchain is eyeing a team as a big as 20 people by the end of 2017.

Image Credit: Arsenie Krasnevsky /

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