Enterprise Ethereum: Blockchain Use Cases and Applications by Industry

These major sectors are already deploying Ethereum blockchain solutions to solve industry problems.

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Nov 14

“The value of an idea lies in the using of it.”

–Thomas Edison

This is Part 2 of a 10-part series on Enterprise Ethereum. Part 1, “11 Ways Ethereum Can Benefit Enterprise,” discusses the specific capabilities of the Ethereum blockchain and outlines the future of the enterprise Ethereum ecosystem.

Blockchain technology has unleashed the wave of “what ifs” for both local communities and global enterprises. What if businesses could increase the speed and resiliency of payment systems while reducing the overall cost of those systems? What if governments could deliver high quality services to their citizens without a single piece of paper? What if manufacturers knew exactly where their precious minerals and metals were sourced? The task now is getting from what-if to how, from concept to solution.

A blockchain — as both a data structure and alignment protocol — is a powerful idea, but all too often fodder for popcorn presentations and public relations. This article is about actual enterprise solutions that are deployed on Ethereum.

If your organization is not considering a blockchain solution, understand why not. For some IT environments, a blockchain is overkill and a distributed database will suffice. But for large organizations that participate in networks and manage sensitive transactions between multiple parties, the right blockchain implementation could mean not just security and scalability, but survival.

Enterprise Ethereum: Benefits, Use Cases, and Applications

Ethereum holds four key promises for enterprise. Enterprise Ethereum can:

1. Reduce the cost of trust and coordination with external parties
2. Unlock new business models through multi-sided markets and digital assets
3. Improve business network accountability and operational efficiency
4. Future-proof businesses against antiquated process models

In “11 Ways Ethereum Can Benefit Enterprise,” we explored Enterprise Ethereum’s capabilities in depth. Considering these capabilities, the key questions are now 1) which industries stand to gain the most from Ethereum and 2) what does enterprise Ethereum look like in action?

Over the past few years, ConsenSys has become an incredibly active hub of blockchain development, currently supporting more than 50 blockchain startup projects up and down the Ethereum stack. ConsenSys Solutions, which began as a small enterprise consulting team in 2016, is now our global enterprise arm that has helped financial institutions, governments, nonprofits, and startups build, test, and deploy public and private blockchain solutions, from real-time gross settlement systems to digital land registries to identity management platforms. ConsenSys Solutions offers education, advisory, and development services, as well as opportunities for joint ventures and co-creation.

Here are what we believe to be the most pertinent blockchain use cases for enterprise, and examples of what we’ve helped forward-thinking organizations deliver.

Banking and Financial Services

Problem

For the banking industry, the cost of providing the utmost reliability, availability, and resilience against attacks or equipment failure is high. If a central bank’s servers go down, a country’s payment clearing system would collapse. Large institutional banks routinely spend upwards of $200 million dollars a year on cybersecurity. Reconciliation payments — the balancing between different sets of accounts — are also byzantine and inefficient. A single payment can involve four different transactions to move money from one account to another. Moreover, the burden of reporting on suspicious transactions falls on banks.

Opportunity

If every bank in a payment network transacted through the decentralized execution space of a blockchain, the network would have no single point of failure: a country could maintain its interbank payment network even if one or several servers go down. Banks could transact directly, reducing friction and decreasing the odds of double-spending and fraud. A blockchain’s distributed and immutable ledger also simplifies regulatory reporting. Regulators could pull data in real-time from a single source of truth.

Applications for banking and financial services

• Santander’s cash tokenization utility. ConsenSys has collaborated with Santander Bank to develop a cash tokenization utility and real-time payment system for domestic and international payments on Ethereum. Payments are cleared, settled, and disbursed in 10–15 seconds.
• Project Ubin. Last year, ConsenSys partnered with the Monetary Authority of Singapore to develop and open source software prototypes for decentralized interbank payment and settlements with liquidity savings mechanisms.
• Project i2i. ConsenSys partnered with Union Bank of the Philippines to build a closed-loop crypto-cash solution for rural banks in the Philippines on Kaleido, an all-in-one enterprise SaaS platform.
• Project Khoka. In a consortium with seven commercial banks, the South African Reserve Bank conducted a proof-of-concept trial with Quorum, an enterprise-grade implementation of Ethereum, to process the typical daily volume of payments with full confidentiality and finality in less than two hours. Adhara, a ConsenSys venture, is building a multi-currency liquidity management and international payments platform to optimize banks’ capital deployment, manage risk, and leverage liquidity effectively and globally.
• Project Endor. ConsenSys recently partnered with capital raising platform CapBridge on Project Endor with the aim of developing a fully compliant securities exchange on the public Ethereum blockchain.

Commodity Trade Finance

Problem

Rapid globalization has outpaced the trade finance industry’s ability to standardize and digitize its system of record-tracking. The exchange of commodities — all with very unique regulations, shipping specifications, and certification requirements — is currently managed across different borders and jurisdictions on a paper-based system that is prone to fraud and leaves stakeholders waiting for payment.

Opportunity

A blockchain would serve as as secure, streamlined, and paperless platform on which only authorized parties — banks, commodity traders, inspection companies, and governments — could exchange data and transaction records.

Application

After a series of proven use cases around soya beans and crude oil, fifteen of the world’s largest banking and commodity companies have officially announced the formation of komgo, a trade financing network supported by Komgo SA’s blockchain-based trade financing platform. By sharing user data via end-to-end encryption and digitizing letters of credit, komgo is restoring confidence to the KYC process and providing assurance to banks that temporarily own commodities as collateral on their loans.

Supply Chain

Problem

Global supply chains today — which support everything from fast-moving consumer goods (FMCG) to food and beverage (F&B) — are inefficient, poorly tracked, and oftentimes exploitative. In the container industry, paperwork can account for half the cost of transport. A nationwide study conducted in the US from 2010 to 2012 by the international ocean advocacy organization Oceana revealed that seafood is mislabeled up to 87% of the time. Mica, which is used in makeup, electronics, and automobile paint because of its shimmery, reflective properties, is often sourced from illegal mines by child laborers younger than 12 years old.

Opportunity

A blockchain’s public, permanent record of transactions would bring transparency and accountability to the movement of goods and commodities across the globe, from source point to end customer. A shared IT infrastructure would streamline workflows for suppliers, distributors, manufacturers, and retailers, and auditors would have greater visibility into participants’ activities along the chain.

Applications for supply chain management

• Viant. Viant, a supply chain track and trace platform built on Ethereum, teamed up with Microsoft earlier this year to help the World Wildlife Fund deploy a program which verifies that fish are harvested from sustainable sources. Viant is also working with pharma giant GlaxoSmithKline to track intellectual property licenses used by scientists and ensure that products are produced, transported, and stored in proper conditions.
• Luxarity. ConsenSys Social Impact recently partnered with Luxarity, the social venture arm of Hong Kong fashion retail brand Lane Crawford, to register resold luxury goods on the blockchain so donors can track charitable proceeds.
• Minerac. Minerac, a joint venture between ConsenSys and the metal concentrates trade platform Open Mineral, is an Ethereum-based consortium of mining companies and financial institutions which both eases and secures the exchange of critical trade documents such as bills of lading and letters of credit across different jurisdictions.
• GenuineWay. A consortium of over 500 authorized suppliers and distributors, GenuineWay applies QR codes to food and liquor items and deploys smart contracts to certify the manufacturer of artisanal food products for end consumers.

Government

Problem

In the wake of 2008’s global economic crisis, governments are being held to higher accounting and reporting standards to bolster investor and consumer confidence. The World Economic Forum’s Global Competitiveness Index ranks national economies along 12 pillars including infrastructure, market efficiency, and business sophistication. Citizens and businesses need a robust digital infrastructure to access basic services and to get their products to market in a secure and expedient fashion. Governments must also furnish proof that the spending of public revenue is efficient and effective.

Opportunity

The most immediate benefit of a blockchain solution would be the creation of a secure, paperless layer for all government documentation: government agencies could digitally process visa applications, bill payments, license renewals, and more through Ethereum’s encrypted ledger, reducing paper load, document processing time, and duplication errors. A blockchain-based identity management system would also give documentless citizens publicly registered and portable identification.

Applications

uPort is setting the standards for privacy-preserving identity solutions and helped the Swiss city of Zug develop ZugID, which enables citizens to access e-government services in a trusted and self-reliant manner. Last year, the uPort team also launched a pilot program with the Brazil Ministry of Planning that verifies government IDs and signed documents on-chain. While some governments have been slow to accept blockchain technology, several have taken initiative to prototype and deliver blockchain-based solutions around land registries (Dubai), electronic voting (Estonia), energy statistics (Chile), and internal messaging tools (Israel).

Last year, Dubai appointed ConsenSys as Blockchain City Advisor as part of their Smart Dubai Initiative to document all government records and transactions on the blockchain by 2020, and will soon issue emCash, a state-developed cryptocurrency. Earlier this year, the EU also launched a Blockchain Observatory and Forum and selected ConsenSys as its partner to help align and develop a blockchain-enabled and unified European market.

Energy Grid

Problem

Solar arrays and wind farms have proven to be such abundant sources of renewable energy that they’ve become a problem for the energy grid, which is currently not equipped to store or redistribute the load. To prevent overvoltage and damage to the wires, balancing authorities in some regions must respond by curtailing production and in some cases even paying solar generators to not produce energy. Solar and wind generation is also intermittent — affected by local cloud cover and weather conditions — causing rapid drop-offs or increases in produced energy which must be buffered by other energy producers to maintain grid stability.

Opportunity

The widespread adoption of low-cost distributed energy resources such as solar panels and wind turbines in recent years presents an opportunity to build a durable, sustainable, and transactive energy grid. A blockchain-enabled delivery system would not only create long-term incentives for consumers to build their own distributed energy storage capabilities and trade energy locally, but it would undercut costs of incumbent utilities, automate billing and settlement, and clear payments in real-time so utilities wouldn’t have to pool risk.

Application

This past summer, Grid+ obtained a certificate from the Public Utility Commission of Texas to operate a Retail Energy Provider and in coming weeks will begin accepting GRID tokens from customers to access wholesale energy prices. By moving the transaction logic for both energy and payments onto the Ethereum blockchain’s trusted architecture, Grid+ reduces the administrative burden of processing transactions over legacy rails (traditional payment processors typically charge fees of 1.5–2.5%). Moreover, by pushing market signals to customers, Grid+’s energy trading solution enables customers to make smarter decisions about their energy usage and react to the economics of the demand response market.

Oil and Gas

Problem

While the world continues to scale the infrastructure for renewable energy distribution, crude oil remains a resource for both energy needs and the vast array of everyday petroleum products. Petroleum is one of the most globally-traded commodities in today’s economy, but the industry — a behemoth of upstream, midstream, and downstream providers, refiners, tankers, jobbers, governments, and regulatory bodies — suffers from siloed infrastructures and countless issues of transparency, efficiency, and optimization.

Oil and gas companies today use proprietary systems to track, manage, and record data in order to perform trades. These centralized systems are difficult and expensive to maintain. Oil and gas commodity trading can often be a razor-thin profit economy, so optimization of any kind is critical for a company’s bottomline. Moreover, these centralized IT infrastructures are prone to hacking, manipulation, and corruption. Last year, Siemens conducted a survey of U.S. oil and gas cybersecurity risk managers and revealed that 68% of operations experienced at least one security compromise.

Opportunity

A blockchain solution in the oil and gas commodity marketplace would not only reduce the costs associated with maintaining, updating, and securing proprietary trading systems, but also the costs associated with labor, data management, data visibility, settlement delays, dispute resolution, and inter-system communication — all without compromising proprietary data, information sources, or trading methods that currently give companies competitive edge. Enterprise Ethereum’s permissioning and privacy functions would enable trading companies to create custom access restrictions and privacy layers, so that industry participants can transact across a single, secure platform without exposing confidential transaction data. Increased data transparency (to permissioned individuals) would also mean companies can provide access to regulators on a frequent and low-cost basis.

Application

Ondiflo is a joint venture between ConsenSys and Amalto, a B2B integration leader for the oil and gas industry, which aims to provide bespoke, enterprise-grade blockchain solutions to oil and gas companies in the upstream, downstream, and midstream segments. Since its launch in February 2018, Ondiflo has focused on two solutions: 1) consortium-building between oil and gas stakeholders and 2) a platform for all ticketing-based services to ease reconciliation around identity, certification, field capture errors, data sanitation, and financial settlement.

Law

Problem

Since the earliest written arrangements, our world has been structured through legal prose and contractual agreements. While agreements are no longer memorialized in clay, the legal industry — a $437 billion industry in the US — has failed to take advantage of advances in computing to streamline and simplify contract creation. Most lawyers use written templates derived from previous work and laboriously draft agreements in legalese, which can create ambiguity and further risk of litigation. Simple draftsmen’s errors around comma usage can spiral into legal back-and-forth (a la the Oakhurst Dairy drivers’ overtime dispute).

Agreement is another story. Once a legal contract is revised, reviewed, and finalized, signature pages are swapped between parties and generally signed using ink. For large agreements, getting these signatures usually requires the assistance of an overqualified associate, which slows down the closing of complex transactions. Storing legal agreements is also an unorganized and insecure process. Agreements often sit as attachments in emails, in vulnerable document management systems, or as hard copies in literal filing cabinets.

Opportunity

It’s not difficult to imagine how Ethereum-based smart contracts could completely renovate the legal industry. Legal documents could be embedded into smart contracts and templatized to ease the creation, execution, and arbitration of legal agreements. Public-key cryptography, a cornerstone function for authenticating and encrypting blockchain-based transactions, would replace the scramble of gathering pen and paper signatures with a swift and secure electronic signing system.

Application

OpenLaw, the first project to enable “smart” legal contracts, is reimagining the creation, execution, and storage of legal agreements from the ground up. OpenLaw’s legal markup language provides an easy way for anyone to reference and trigger an Ethereum-based smart contract to manage contractual promises. Using the OpenLaw protocol, legal agreements can be embedded in lines of code in an Ethereum smart contract and automatically triggered once the agreement is digitally signed by all parties. OpenLaw has partnered with McCarthy-Tétrault to automate key aspects of the lending process, as well as Rocket Lawyer to develop trusted and blockchain-enabled contract execution.

Real Estate

Problem

The current real estate market has three main problems: inaccessibility, transaction costs, and poor liquidity. Real estate ownership and investment has been historically reserved for the wealthy because of the capital reserves and credit rating required to put money down and take out a mortgage on a new home. For those who manage to swim upstream to ownership, purchasing a home involves up to eight middlemen (brokers, legal counsel, inspector, appraiser, etc.), who altogether siphon off up to 5% of a home’s value. For investors, REIT brokers usually take 9–10% in commissions and fees. Finally, getting in and out of real estate assets is slow and arduous. Renters face lock-in periods, sellers have limited options for selling a fraction of a property, and investors who can buy into a REIT are still subject to a portfolio manager’s personal investment strategy and fee structures.

Opportunity

Ethereum’s decentralized architecture and smart contract functionality would obviate the need for multiple intermediaries in a real estate transaction and enable automated payouts of rental income. Particularly exciting is the opportunity to “tokenize” properties. By issuing real estate-backed tokens on the Ethereum blockchain, asset owners can fractionalize previously monolithic properties into almost infinite slices and unlock additional capital and a diverse pool of investors.

Applications

ConsenSys partnered with Dubai Properties to build a blockchain platform for tracking the provenance of real estate from planning and construction to customer sale using cryptographically secure digital signatures. Meridio, a ConsenSys venture that spun out of the engagement with Dubai Properties, converts individual properties into digital shares on the Ethereum blockchain. Accredited investors can purchase tokens on the Meridio platform — which represent fractional shares of properties — and reap a proportionate amount of rental income. Meridio’s Ethereum-based real estate marketplace exposes asset owners to a diverse pool of investors so owners can access capital, streamline transaction processing, and analyze asset-specific data in real time. Investors benefit from low capital requirements, reduced transaction fees, and increased portfolio liquidity.

Standardizing Adoption: Alliances and Initiatives

Enterprise Ethereum is about much more than data management and IT cost-cutting. The true opportunity with enterprise blockchain adoption is the formation of wholly new products and business models: tokens that unfreeze and fractionalize previously immoveable assets; payment networks that help different nations move in and out of one another’s currencies in real time; multi-sided marketplaces — around finance, trade, energy, real estate — that give a much more diverse range of players access to the market.

These business models are dramatically more collaborative than what enterprises are used to. As Joe Lubin recently noted at Sibos, SWIFT’s International Banking Operations Seminar, “our society reflects the tech that we built it on. Until recently, we only had siloed databases, which created an Us vs. Them approach to business. Blockchain is a database breakthrough, a trust layer that puts collaboration front and center.”

Enterprise Ethereum offers a single execution space for diverse business entities to transact with one another, but also the permissioning and privacy layers to ensure that only authorized entities can access the network and that confidential business or customer data remains confidential. Ethereum’s capacity for both collaboration and customizability (what many refer to as Ethereum’s “programmability”) explains why many Enterprise Ethereum solutions emphasize network and consortium building. The only way an industry can truly streamline its document management, for example, is if it has a critical mass of stakeholders on board, but it also needs assurance that individual transactions and the network at large are encrypted and secure. Enterprise Ethereum offers that simultaneous collaboration and control.

Enterprise Ethereum Alliance

While most DLTs remain proprietary and other blockchain ecosystems small and balkanized, hundreds of leading enterprises have come together to standardize the adoption of Ethereum. The Enterprise Ethereum Alliance is the world’s largest business blockchain consortium with 500+ members and the first global standards organization to deliver an open, standards-based architecture and specification of Enterprise Ethereum. The EEA’s Enterprise Ethereum Client Specification 2.0 and forthcoming testing and certification programs will ensure interoperability, multiple vendors of choice, and lower costs for its members.

Accounting Blockchain Coalition

The Accounting Blockchain Coalition is an initiative started by ConsenSys’ Balanc3 team that includes accounting associations, standards-setting bodies, regulators, law firms, investors, and blockchain innovators. The Coalition is driving innovation in the accounting industry and also educating businesses and organizations on accounting for blockchain-based digital assets.

Strategic Partnerships

Beyond alliances, coalitions, and regional initiatives such as Smart Dubai and the EU Blockchain Observatory & Forum, ConsenSys is working closely with world-class financial institutions and software companies to create an easy onramp for enterprises to adopt blockchain technology.

• ConsenSys + Microsoft. ConsenSys helped deploy the first permissioned implementation of Ethereum on Microsoft’s Azure cloud and embedded Ethereum’s Solidity codebase into the Microsoft Visual Studio.
• ConsenSys + J.P. Morgan. ConsenSys has contributed to J.P. Morgan’s Quorum, an enterprise-focused version of Ethereum, which is optimized for high speed and high throughput processing of private transactions within a permissioned group of participants.
• ConsenSys + Amazon. Kaleido, a ConsenSys venture, has radically simplified blockchain adoption for enterprises with their Blockchain Business Cloud, the first full-stack platform for the entire Enterprise Ethereum journey. This past spring, Kaleido partnered with Amazon Web Services (AWS) so enterprises can run the Kaleido platform on AWS and seamlessly connect to Amazon’s other analytics, rich query, monitoring, and storage services.

Going to Market

A recent McKinsey article on the strategic business value of blockchain argued that the benefits of enterprise blockchain will take another three to five years to realize — not because of the state of the tech, but because of the challenge of developing common architectural standards and onboarding enterprises to more cooperative business models. The Enterprise Ethereum ecosystem, however, is proving McKinsey’s estimate wrong. Not only have hundreds of organizations participated in the development of a V2 architectural specification, but the array of industry applications above is proof that Enterprise Ethereum is on the ground, and working.

Some organizations will miss out on Web3, for a variety of reasons. They might be too entrenched in legacy technologies and therefore fail to respond in time to evolving consumer expectations as open marketplaces take hold. Or, because of lack of managerial vision, agility, and alignment, they will miss out on strategic partnerships that could facilitate adoption. But for those organizations who are ready to propel and participate in economies of scale, a battle-tested platform and world-class community await them.