EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
How EY can Help
Enterprise transactions have been slow to take off because of the lack of privacy tools, which are essential. Findings from Seize The Day: Public Blockchain Is On The Horizon (pdf), a commissioned study conducted by Forrester Consulting on behalf of EY, reveal that enterprises are rightly most concerned with privacy and security, and challenges around authentication, permissioning and access management are critical to security.
Fortunately, privacy and security solutions on public blockchains are now maturing to a level where enterprises can make use of them with confidence. The newest generation of enterprise blockchain technology, like the industrial privacy solutions EY has built and continues to build, support transactions, complex business logic, payments and transfers that run on public Ethereum, all under privacy.
EY's privacy technologies and implementations have been designed from the ground up to focus on the needs of enterprise users and regulatory compliance. Users and network node operators of Nightfall must possess enterprise-grade digital identity certificates. This means transactional details are private, but not anonymous and regulators only enterprises with verified identities will be able to transact at all.
Despite progress, enterprise blockchain efforts face hurdles
Despite this enormous progress with management of data privacy, enterprise blockchain efforts face several hurdles. First, constraints will remain – namely that privacy systems “leak” data. Transferring assets into and out of a privacy layer, for example, leaves a trail, making it possible to make educated guesses about which parties are doing what on-chain.
Then there is the matter of scale and compute capacity. Early models show that Nightfall can handle up to 400 million transactions a day on the Polygon Proof of Stake Network and about 40 million a day on the main Ethereum network. This is "good enough" for immediate supply chain applications, but EY has a current roadmap to roughly 4 billion transactions per day at a cost of under $0.01 each over the next few years. We anticipate very large volumes as industrial applications take hold.
Given the volumes involved for larger enterprises, transaction costs must come down another order of magnitude at least. As whole industries embrace blockchains for supply chain operations, the volumes and scaling will start looking like consumer payments volumes on credit card networks – very big.
The path forward
Every single one of these problems is solvable in the next two to three years – and there are already solutions on paper or in test for each one. As the world of blockchain gets more direct experience and comfort operating with privacy-based solutions, the pace at which solutions are developed will start to accelerate.
As with all big industry transformations, there is a kind of relativity theory of time involved. For those who are not following the space, they will be stunned by how quickly solutions mature and emerge. For those who are knee-deep in the design work, it will feel like several lifetimes.
Enterprises who are ready to embrace the future of public blockchain need to consider the following to be on the front foot:
- Who are your external business partners and stakeholders and what kind of business information do you share with them?
- What kind of standardized collaboration systems do you share with your partners, and how well do they perform?
- What are the main products / services you buy from suppliers and sell to customers – could they be digitally tokenized and managed on a public blockchain?