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Published by: 19:09, 29 June 2019

Corporate blockchain is going under the radar

Corporate blockchain goes unnoticed. Many large international corporations are already using blockchain in their business, but the implementation process is invisible to users.

Key points

  • Existing blockchain solutions are already being used by many of the world's largest companies.
  • Governments are exploring the use of blockchain at all levels.
  • Commercial realities, excessive hype, and competition in the nascent industry are not ignoring significant advances in the field.

If you want to see the current state of play in the large-scale enterprise blockchain segment, you need to look at where private networks meet public chains with so-called "hybrid" blockchains.

One reason is that the power players-your governments and Fortune 100 companies-have too many existing systems to just break everything down and start over.

A year ago, the team decided that the blockchain world would be a hybrid. The world is not going to change. It will almost always be hybrid. New technologies take too long to learn on their own, businesses want to integrate new systems with old ... If you can provide a bridge, you're a winner. If blockchain gets mass adoption, the market in 10 years will be mostly hybrid.

Another reason is that public blockchains are not secure storage for critical data, and their future is unpredictable. Serious blockchain implementation plans require such segregated layers so that you can optimize all the moving parts at each layer and not depend on these unpredictable common layers, unless you want to do something that specifically requires it.

People think that businesses record all their data on the public network, but they don't. For years, critical companies like governments have been afraid to put data on sites they can't control. What happens when quantum computers become dominant? Is it possible to hack into all public network data? Probably possible.

It is quite possible that Google, Huawei, the Chinese government, and the NSA could have production versions of quantum computers to crack any public code, including public blockchains. We see the world a little differently. Data will always be stored on the most secure devices.

Many customers understand the potential of public blockchains, but it will be many years before customers move critical infrastructure to public blockchains. If you're going to share data between an unchanging level of users, you need a hybrid blockchain.

Serious blockchains for serious people

The expert is Phil Zamani, CEO of Blocko and Aergo.

Blocko is a Samsung-backed blockchain developer with a long history of building private blockchains. Aergo is essentially the name of its own blockchain suite, which includes both private and public blockchain layers.

Today, Blocko's current and potential customers include Hyundai Kia motors, G7 governments, one of Europe's largest telecommunications companies, one of the world's largest insurance companies and several dozen other blockchain projects in various stages of completion.

Hyundai Kia blockchain

Hyundai Kia is a vast conglomerate with many heterogeneous systems. The authorized blockchain layer allows different identity systems to be linked together in a more cost-effective way than alternatives. It also digitizes documents in a private blockchain and puts them into a public blockchain to protect against unauthorized access and preserve time-stamped records.

Blocko has worked with the Hyundai Kia group on at least two blockchain applications.

Hyundai Kia - most people think of them as just a car company. But Hyundai Kia is a conglomerate. They build highways, hospitals, even nuclear power plants. Each division had its own credentials, mostly through Active Directory. But there was no unified login capability across the group. They either had to send Microsoft a lot of money to upgrade, or replace it with something else.

Phil Zamani

Hyundai Kia approached Blocko to find a way in which they could use the allowed blockchain, and create a single sign-on capability across the company.

Essentially, the plan was to use enterprise blockchain to combine all these individual identity stores in a way that would work with all the existing systems.

This is a unique application that covers a fairly complex part of the IT infrastructure, namely identity management. We have created an enterprise blockchain that includes several active implementations to create a new source of validated data. Each input will be validated before a record is provided - one active Uber directory using blockchain. It's actually leveraging some pretty sophisticated technology, namely Active Directory.

Phil Zamani

Essentially, Blocko created a lot of "links" that an organization could use between its many parts and connect to existing systems, in this case Active Directory. This particular test also showed that Blocko's blockchain could be effectively configured to work with various ERP or CRM systems to meet various government data management requirements, and that Blocko could work at the API level.

After proving that its corporate blockchain can connect with existing business systems, Blocko ticked the crucial box.

The company is also using enterprise blockchain to digitize documents.

Kia is printing documents, time-stamping, converting manual documents into digital formats, which are then hashed on the public network. We get two things: we don't need to duplicate the file storage, and once it's been verified and hashed on the private chain, there's no way to tamper with it.

Both uses served as good proof that blockchain can be deployed in fairly complex large distributed organizations like Kia and Hyundai. We did it because they were willing to pay a lot of money, and it was an interesting testing ground.

Phil Zamani


In Aergo's supposed ecosystem, internally resolved blockchains work as a convenient middleware between any existing systems the company has and the public blockchain. In some cases, its sole purpose may be to serve as a gateway between the public blockchain and anything the company wants to connect to the public blockchain.

If a business wants to take advantage of some of the additional benefits of blockchain at this level, that's also an option.

For example, in the case of sprawling, multi-faceted organizations like Hyundai Kia, a permitted semi-decentralized internal blockchain architecture can help smooth out intra-organizational trust issues by providing a single, easily accessible source of verified data once you start pulling data from the silo. Enterprises or consortia can join together in an enterprise blockchain to exchange data between organizations.

As a fully open system for both public and private blockchain implementations, Aergo aims to become something of an industry standard.

One of the five largest insurance companies in the world

One of the five largest insurance companies in the world is digitizing its vast data and analyzing it with machine learning, allowing it to compete with technology companies. It can accumulate valuable data and perform computations on it on a private blockchain, which can then be connected to a public blockchain. In this way, it can monetize and share certain data sets with third parties without revealing the data itself.

One of the world's top five insurers; they know it's only a matter of time before Apple, Amazon or Alibaba come to market with insurance policies. This insurer decided that they had to be prepared to respond to any changes in the marketplace, and the only one they could really do that was collecting more of their analytics.

It's common knowledge that insurers are conservative, but for 18 months this company collected data and learned from it with AI. They have digitized most of their know-how over the last 18 months. The insurer got the data and has an idea that they want to create an enterprise blockchain. They copy the information into a private blockchain that they control - they control everything in that blockchain.

They want to link that private blockchain to the public blockchain to allow it to communicate with third parties. We call it tethering. You bind transactions that are in the private chain to the public chain. You create a public layer as an interface to transmit your data to the outside world.

The information will not be posted to the public blockchain. Binding is a really useful tool for sharing data with third parties without disclosing the data itself.

Phil Zamani

One of the top three automobile tire manufacturers

Automotive tire manufacturing depends on a very wide range of variables that affect the final product. By digitizing all the variables that go into a batch of tires and comparing them to the final product using AI, you can get an extremely valuable data set and recipe for consistently better tires. One manufacturer sees enterprise blockchain as a way to selectively and securely share information with partners across the supply chain and from other industries.

Exactly the same blockchain scenario is being developed for one of the top three car tire manufacturers. People don't understand that car tires are an imprecise science. It's a chemical problem. They're having trouble with supply consistency. The chemicals come from different places in different plants with different shipping characteristics. The machines they use at each plant are not the same.

The normal procedure is to look at what makes the best tires and then try to redesign the steps that went into it based on all the production variables.

A lot of tire companies like this are solving the problem with human knowledge. They have the knowledge built up in their manufacturing process. Over the last two years, they've been copying the steps. So, take a car tire that is very reliable based on production in October 2018 - look at all the details. Whether the employee was working an 8-hour shift? Did the car tires come from this location or from somewhere else?

This manufacturer started slowly using AI to analyze their data. They realized that this data is very valuable not only to themselves, but to the entire supply chain. A lot of this data is helping to optimize the entire supply chain.

Phil Zamani

Large telecommunications company

A large telecommunications company wants to use enterprise blockchain to build a more automated bandwidth marketplace, because currently it's done mostly manually, which is a complete problem.

A major telecom provider - from one of the world's leading countries - not the top 7, but the G10 - uses blockchain to encode what they call roaming.".

Telecoms typically resell their roaming to third parties or other contractors. In the U.K., you have over 1,000 companies from which you can buy network connections. All of these contracts are based on what bandwidth you want to buy, and in what time frame, what quality, what level of service, and at what price.

This telecommunications company had a serious problem negotiating with literally 1,000 counterparties, everything was done manually. The company wanted to automate that process with smart contracts. They moved their last roaming agreements over 3 years and put them on a private network. It helps them review contracts because they have templates.

The reason you need an enterprise blockchain for this, rather than just creating some templates for internal use, is because you will later have to reconcile what bandwidth was actually used, account for any discrepancies that occurred, and then resolve them.

When you sell roaming service to a subsidiary, they have to reconcile what bandwidth was actually used. They actually use their clearinghouse to quickly process contracts without human intervention.

Basically, they're trying to capture all the parameters used for roaming and put them into smart contracts so they can automatically sign and automatically pay out without abusing it.

Phil Zamani

G7 and G10 governments

The same government as the cellular operator is exploring a hybrid IOT mesh network that can reliably and securely capture and monetize data flowing through the network in a tamper-proof way.

The same operator has enough evidence that it has had experience with blockchain to speak to its government.

It is the largest operator in this country, and this country is very manufacturing-oriented. There are a lot of factories in this state that are starting to use smart technology, they are also trying to become one of the leaders in autonomous vehicles.

So, what is this country?

The government has asked operators to build a mesh network to connect IOT devices. Data needs to be secured and monetized. They want to use Aergo as a private network and the public network as an interface to it.

We're building a variant of Aergo for IOT sectors. It's called Aergo Lite.

They're talking to us about potentially helping us build a power grid. Capture the data in a way that is anonymized and protected. Make sure the data can't be hacked and controlled by the owner. They all see the benefits of tying data to the public network. Why? The public network cannot be hacked. Even the government can't hack into the public network.

We're also in discussion with the G7 government, which is experimenting with where blockchain can help with a number of government projects. One is to secure public health records, allowing data to be shared across geographic regions, and to find private blockchain that can be used for security purposes.

Phil Zamani

Why such secrecy?

So, if you have all this serious blockchain work, why is it so secretive?

According to Zamani, part of it is the usual insecurity on the client side of publicly admitting that they are the first in the space. The industry is in an awkward phase where leaders are already betting on blockchain, and in more and more cases are actively using it, but they're still not ready to reveal all the details.

Meanwhile, most other customers are still looking for examples of how enterprise blockchain is being used, and are yet to see solutions because of all the secrecy. It's still a deeply competitive space filled with many maneuvers.

We've had situations where some people associated with blockchain have gone out of business, made statements about what they were using blockchain for, and been fired," Zamani said.

And then there's the simple element of marketing. Like any other for-profit company, Aergo tries to spread the word to as many people as possible.

Aergo is mainly based in South Korea, you can understand this from the list of Aergo partners such as Lotte Card, Hyundai Kia and Samsung. This puts some language barriers in advertising, and as Zamani said, it also means that there is relatively little inclination to self-promote Aergo and Blocko.

The other big part of the reason is simple industry competition, which in particular ties Aergo pretty closely as it enters the public and private blockchain space.

Blockchain firms themselves don't always want to reveal who their customers are or who they're talking to, because that's a good way to steal them. And for a small firm like Blocko, which faces names like Amazon, Microsoft and IBM in the private blockchain realm, it can be risky.

Zamani noted that spreading "FUD" about competing projects is still common even in the private blockchain sector, and inviting FUD when you're looking for large government and corporate clients can be costly both in terms of money and time. As Zamani said:

These clients are not easy to work with. It usually takes three months to build a relationship.

You also have this kind of competition on the public side of the blockchain. And in some ways it's even worse, given the additional "winner takes all" dynamic at play.

It's an IOT project - they came out a year and a half ahead of us - they recognize our successes, and they say we can probably work together. But eventually someone will have to concede. Whose blockchains will be the ones that the projects will be tied to?

There will be more private blockchains than people realize. The truth is there will be more private blockchains, but they will have to tie into certain public blockchains. The winners will be the ones that are really open, really interoperable and have scalability.

Competing for a piece of the blockchain

The Aergo public network is an interesting commercial solution. It's a delegated share proof (DPoS), but it's built with a focus on reliability, performance and usability that hasn't always been present in other DPoS-based projects.

Blocko and Aergo will use the DPoS algorithm for 23 block producers (BPs). Twenty-three out of 100 candidates have been selected. BP will eventually act as hosting providers or telecommunications companies. They understand GDPR, uptime, operational structures ... It is run by enterprise-level companies, not people who buy tokens in China. Our ultimate goal is for BP in Aergo to become decentralized telecom and hosting operators.

Telecom companies have the expertise and capabilities that Aergo is looking for in its public blockchain makers. And Aergo also has what they want, Zamani believes.

A lot of people laughed at Bezos when he launched the cloud. But when it did, all the big-cap operators started copying Amazon. All these carriers created this cloud infrastructure.

Phil Zamani

Success rates for these cloud solutions vary by country, but in the U.S. and many others their failure is legendary . Now blockchain presents a rare opportunity for hungry companies to make themselves a piece of the next-generation Internet.

It's not just about being a producer on Aergo's public network. It's also about hosting countless private blockchains that will travel the world in the near future.

According to Zamani, blockchain today is like Linux. That's when Oracle and many other big companies first announced support for Linux.

"They said we think Linux is viable. The moment they did, customers were suddenly interested. They said, "If Larry [Ellison] is talking about it, he must be mature.". Look back over the last year - everyone is talking about blockchain. If history doesn't repeat itself but rhymes, blockchain is only a matter of time.".

Now it's a race for companies that can take a leap of faith in their interests, and a race for companies like us.

Phil Zamani

This review is a translation of the article Enterprise blockchain adoption is happening. Here's why you don't see it

Read more about the Aergo project in this review - Aergo launches blockchain network for business or in a review of - Aergo. Hypotheses. Blockchain

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