Startups, by definition, seek disruption – but that age-old trend is being bucked by developments in the blockchain technology sector.
As evidenced by the much-anticipated launch of the Enterprise Ethereum Alliance yesterday, the new blockchain group is defined – and seeks to create value through – its diversity of members.
Over the course of two panels at a New York event, executives from JP Morgan, Microsoft, CME Group, ING and BNY Mellon made one trend abundantly clear – if the ethereum blockchain is ever going to host a substantial number of assets, competitors of all types are going to have to learn how to play nicely.
But its not just billion-dollar enterprises that stand to gain by additional resources being invested on the private, permissioned versions of ethereum popular among regulated companies.
The Enterprise Ethereum Alliance is also a consortium of startups.
From Nuco and ConsenSys (which are both founding members of the board of directors) to AMIS, Brainbot Technologies, Chronicled and Tendermint (which are founding members), startups too have much to gain and lose from the new approach.
Speaking during a panel designed to show a diverse sampling of the membership, the CEO of blockchain services startup Nuco said that the mix of companies helped give larger organizations a sense of credibility.
Matt Spoke said:
“You’ve seen a lot of corporate people going into the startup world, and you’ve seen a lot of people in the startup world going corporate. We realize we need each other.”
Spoke co-founded Nuco last year after leaving “Big Four” accounting firm Deloitte to build blockchain networks for a wide variety of industries. Also on stage with him were representatives from business consultancy Accenture, ethereum startup ConsenSys, futures platform CME Group and software provider Microsoft.
In this way, the event served to showcase the alliance at the center of the newly minted Enterprise Ethereum Alliance, and by extent, shine a light on the novel approach it is taking to ecosystem development.
All hands on deck
In an attempt to meet the diverse demands of such a group, the management structure is being crafted to minimize the top-down structure typical of more traditional groups.
Building on the principles of collaboration called for by ethereum inventor Vitalik Buterin, CME Group’s blockchain lead Sandra Ro acknowledged skeptics of the consortia model, saying that a rotating board was specifically designed to minimize a single member’s influence, while a tech-focused sub committee would help drive innovation.
“When the groups have a purpose and specific goals they want to reach, I think we need more not less,” said Ro.
According to ethereum co-founder and CEO of ConsenSys, Joe Lubin, the group is “taking decentralization seriously” in its management structure.
Still, while the board is also designed to give members a sense of accountability, more experimental governance models are also being considered.
“Everything starts as an idea, with one person,” said Lubin. “That happened. But ethereum is moving towards decentralization.”
Accenture’s David Treat called blockchain development “a team sport” and Microsoft’s Marley Gray said blockchain is about more than just distributing technology and increasing transparency, but distributing the cost and risk of development and implementation.
As that happens, he said:
“We’ll start to see consortia crossing industries.”
Parsing the widget
But there’s no doubt where the momentum currently lies, as the shear number of competing consortia in the space makes clear. At the event, one entire panel was dedicated to ethereum for finance.
If the hybrid governance model of a rotating board with smart contract-coded decision-making is successfully implemented, the hope is that these companies can satisfy regulatory requirements while better capitalizing on ethereum’s technical capabilities.
“We have to play a different game,” said ING blockchain developer Toon Leijtens. “We have to be part of a new culture.”
Whereas in the past, software improvements were done by “parsing the widget” as BNY Mellon’s Vivek Kohil described it, the Enterprise Ethereum Alliance has the potential to do more than just create new features.
“The old game was a widget crisis,” said Kohil. “The new game is not going to be a widget crisis, it’s going to be what is your data worth?”
Santander’s head of R&D and innovation, Julio Faura, argued that ethereum was not created to replace enterprise architectures and it will likely “take some work” to make that happen.
The winners of that fight will be the early adopters according to Patrick Schmid, vice president of research at The Institutes, who said:
“The incumbents in this space that join quicker will be the victors.”
Talent and numbers
Perhaps most crucial to these enterprises is what Wipro’s Ramesh Babu called “the vibrant development community”.
Babu expanded on Schmid’s statement, saying that ethereum itself had an “early mover advantage.”
In the end, moderator Elizabeth Aquino of JP Morgan argued that simply finding ways to save money wouldn’t lead to large-scale benefits, even with a vast community of open-source developers.
She concluded:
“Whoever can be creative enough and smart enough around identifying the revenue play, new value propositions, are going to be the big winner.”
Image via Michael del Castillo for CoinDesk