Blockchain standards: are we there yet?

06.08.2020
7 min.
title

According to Deloitte’s 2020 Global Blockchain Survey, 55% of the respondents view blockchain as a top priority. Still, there are no unified standards for mass blockchain adoption.

Setting common standards is a prerequisite for the blockchain adoption in the enterprise space, which also depends on how fast the standards for the biggest stumbling blocks, scalability and interoperability, will appear. To speed this up, many key players have formed and joined industry groups to work on specifications. This task is not as glamorous as advertising ICO development, for example. It’s not as transparent and public either, as nations and corporations alike try to get to the finish line first. So it is quite a challenge to navigate the blockchain standards space at the moment, but we will sure try.

In this article, we look at the efforts of the Enterprise Ethereum Alliance, R3, and Hyperledger to produce blockchain tech standards, the specification documents currently in the works, and the steps you can take now to come out on top later.

EEA Blockchain Tech Standards

Founded in March 2017, the Enterprise Ethereum Alliance (EEA), is a non-profit corporation consisting of startups and Fortune 500 companies, developers and academics, as well as technology vendors aimed at developing open-source standards for enterprise deployment. It boasts big-name partners such as Accenture and BP, Credit Suisse, and Microsoft among its 500+ members. The alliance hopes to provide means of streamlining enterprise blockchain solutions without having to venture into custom engineering in order to create private enterprise-ready Ethereum-based apps.

The Ethereum community has big plans to standardize enterprise blockchain app development. Since its conception, the EEA has been working on research and white papers, sharing their ideas of sharding and zero-knowledge proofs, as well as views on homomorphic encryption and layer-2 solutions such as plasma and Raiden, with all this extensive data available to the Ethereum ecosystem community.

Enterprise Ethereum Alliance Client Specification v6 was released on July 23, 2020, and is available to the general public for downloading.

With a growing number of blockchain applications being developed on the Enterprise Ethereum blockchain, the demand for interoperability also increases. The EEA hopes that a standards-driven approach will help accelerate these developments. According to the EEU, common standards are of vital importance in the web 3.0 blockchain revolution for the following three reasons:

  • Standards that promote and support blockchain application development interoperability promote organic scalability of enterprise solutions.
  • Standards allow enterprises to avoid vendor lock-in, promote competition, and ensure interoperability through accredited testing and certification labs.
  • Interoperability allows enterprises to choose multiple vendors and freely switch vendors in cases where passing accredited EEA certification testing is required. Stiffer competition will help lower industry prices.
Ethereum Business Blocks

By the end of 2020, the EEA plans to launch its TestNet certification sandbox, which is intended for applications that follow the current EEA standards. This will make all applications interoperable with each other and enable seamless communication between both private blockchain deployments and the public Ethereum mainnet. This will be especially helpful for new industry players, who often tend to assume that blockchain interoperability is a given. By going through the EEA’s TestNet certification, companies will have a clear understanding of which apps are guaranteed to be interoperable.

Ethereum Architecture Stack

The EEA’s architecture stack is made up of five layers. The base layer is the peer-to-peer protocol, which allows nodes to communicate with each other. The core blockchain layer is on top, which consists of Storage and Ledger, Execution, and Consensus sublayers. In essence, this part of the architecture is provided to store and execute smart contracts and establish consensus between nodes. Next up is Enterprise 3 P’s, which stands for privacy, performance and permissioning. The fourth layer contains various APIs used to communicate with clients. The last layer of the stack often exists outside of a client and is used for higher-level services, including wallets and dApps.

The building blocks for creating next-gen Enterprise Ethereum applications are clearly defined, providing a transparent framework for blockchain application development and implementation.

R3

R3 is an enterprise software consortium with a network of more than 300 fintech institutions and regulators, trade associations, and professional services firms as well as technology companies. Their partnership network includes Accenture, Microsoft, and HPE, software firms Guardtime, Finastra, and Gemalto, and startups such as Tradewind Markets, GuildOne, and TradeIX, among others.

The firm is working on a blockchain platform named Corda, designed specifically for businesses. Corda is an open-source distributed ledger technology (DLT) created to streamline finance and commerce operations. Finastra and Tradewind Markets developed financial apps using the platform, which are already live.

According to Richard Brown of R3, Corda is the only DLT designed from the ground up to meet the needs of fintech services institutions, with the industry-proven technologies and standards built into the platform. He argues, it was designed to maximize interoperability with existing systems but also says it has the broadest applicability in the blockchain space. That’s why enterprises such as B3i Services choose the platform based on the critical factors of scalability, data privacy, interoperability, and developer productivity. What’s more, R3 has an investment committee ready to work with promising startups and even enterprises, given their solutions are utilizing Corda as their blockchain of choice.

Indeed, Corda’s permissioned network, Corda Network, makes it possible for applications in insurance and finance-related industries to seamlessly interoperate. Although Corda implies interoperability as its advantage, only apps built on its main network can cooperate. This is a limitation, as the ultimate goal is to achieve blockchain interoperability across different platforms.

Hyperledger

Launched by the Linux Foundation in 2015, Hyperledger also aims to develop blockchain technology standards for businesses.

When it comes to blockchain standards, Hyperledger is similar to the EEA architecture stack. The Hyperledger Fabric project’s goal is to create a permission-based blockchain infrastructure that can be deployed as modules by enterprises.

Hyperledger is different from Corda, however, since it develops solutions for particular purposes, such as Caliper. Caliper is a blockchain benchmark tool for measuring and reporting on the performance of a specified blockchain deployment with a set of predefined use cases.

Ethereum, corda and Hyperledger vision and design comparison table

What’s in development right now?

Blockchain standards are being developed as we speak by different interested parties, from fintech giants and business moguls to national governments of the United States, China, Russia, Singapore, and Switzerland, in an attempt to gain economic and geopolitical advantages from blockchain implementation.

GS1

GS1, a global business communications standards organization, has created standards for their enterprise blockchain applications for the supply chain and logistics niche in partnership with IBM and Microsoft. The GS1 standards for unique identification, such as GTIN, ensure that parties, locations, and products can be identified, which enables businesses to interoperate with each other at the basic level.

GS1 encourages the usage of EPCIS as the standardized data exchange format, which makes understanding of shared information unilateral. GS1’s identification and structured data standards help blockchain network users to scale the adoption of enterprise technology and maintain a shared version of supply chain and logistics events.

Currently, the organization improves the efficiency of supply chains in 25 sectors and enables 1.5 million user companies to perform over 6 billion transactions every day.

SVIP

In another case, the Department of Homeland Security (DHS) Science and Technology Directorate (S&T) is partnering with blockchain development companies to set standards for supply chain processes. The DHS units such as the U.S. Customs and Border Protection (CBP) and the U.S. Citizenship and Immigration Services (USCIS) are running blockchain programs to make the fight against counterfeit products and intellectual property theft more efficient.

S&T’s Silicon Valley Innovation Program (SVIP) launched a project that focuses on blockchain interoperability and uniform standards. By setting them, S&T enables both governmental and non-governmental organizations to skip the step of building new interfaces just for the sake of connecting proprietary vendor tools.

Historically, when new technologies or solutions are incorporated into legacy systems, there are obstacles that create slowdowns as workarounds are developed so that the systems mesh properly. However, through the use of globally acceptable and implemented specifications and standards, we are addressing and removing those interoperability hurdles before deployment.

Anil John

The DHS is supporting the development of globally available specifications in order to usher in interoperability as a forerunner to established standards. This will lead to the creation of a competitive marketplace offering cost-effective innovative solutions based on unified standards.

BiTA

The Blockchain in Transport Alliance (BiTA), a consortium of shipping and logistics companies, is developing a uniform framework for companies to build blockchain-based applications. The standards framework will cover smart contracts and freight payments, asset maintenance and ownership history, as well as the chain of freight custody. This, in turn, will help standardize safety specifications for vendor management, loss prevention, billing, and payments in logistics and fright niches.

The catch, however, is that BiTA creates standards relevant only to transportation, rather than making them suit a broad range of industries. Ben Kothari, Chair of the BiTA Tracking Document Working Group, argues that although we’ve already seen successful tailor-made implementations of blockchain-based systems like TradeLens, it doesn’t tackle the transparency issue and misaligns with the equal blockchain ownership principle. BiTA’s end-goal is to outrun such legacy systems and make blockchain-based solutions a global standard in the transportation industry.

Cross-border banking interoperability

In 2016, the Bank of Canada and the Monetary Authority of Singapore has started a pilot project to see how the use of blockchain can streamline cross-border payments.

Together with JP Morgan and Accenture, the two banks embarked on the Jasper-Ubin Project, which main idea was to use Hash-Time Locked Contracts (HLTC). HLTC is an unconventional smart contract system that triggers all actions making up the transaction at the same time or doesn’t trigger them at all. The collaboration between these banks have proved that transactions can be fast and secure without the need for a third party.

However, with a theoretical finesse of such a system, there are many unanswered questions left. Mainly, limitations start to appear when we apply the same approach at a bigger scale. Regulatory and legal aspects will inevitably become an issue, and protocol updates wouldn’t be as easy to implement. Moreover, there is no clear understanding of how such system will behave across a greater number of jurisdictions.

Although the two banks were using the Corda-Quorum interchain, which tackles the interoperability issue, it essentially only proves that two different networks can indeed operate with each other but this requires sufficient investment and implies limitations.

Accenture suggests to use an additional DLT to establish connections between networks or to use gateway nodes that act as services nodes for the network participants but, again, those are theories that need to be put into practice.

Lack of standards: what to do?

Besides monitoring the volatile situation around blockchain standards, here are a few more tips:

  • Choose your blockchain development platform carefully from the point of view of whether industry standards are already available for the said platform. With Ethereum, you can benefit from existing specifications, with clear plans on the way for 2020 and beyond. Ethereum’s vibrant developer community is also a bonus and a guarantee that there will be an ecosystem to support your solution for years.
  • Choose your platform depending on the importance of specific standards that your particular business situation requires. For example, as seen from the article, R3 is focused on blockchain standards most applicable in the financial and commerce spheres, while Hyperledger is centered on standards around developing use case-specific solutions.
  • Consult a third-party blockchain software development provider like Itransition to analyze your specific business case and map out a blockchain development strategy that will work best for you.

Until recently, the blockchain has mostly been seen as a new disruptive technology poised to replace legacy applications. While such assumptions may indeed become facts, in a more realistic scenario blockchain will enable existing applications to significantly increase security and efficiency levels in the context of tracking, auditing, and storing information.

Given the ultimate superiority of blockchain in terms of data management compared to conventional systems, this change will happen sooner or later. In the upcoming years, we will most likely see the big players tackling the interoperability issue for particular interrelated industries.

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