Enterprise Blockchain: Everything You Need to Know

Global companies across various sectors favor enterprise blockchain, an innovative solution that simplifies operational processes. According to Next Move Strategy Consulting, enterprise blockchain is anticipated to reach the tier of $145.9 bln by 2030 with a CAGR of 47.4% (from 2024 to 2030). 

Based on the distributed ledger technology (DLT), private, permissioned, or hybrid enterprise blockchain promotes trust and immutability across borders, speeds transactions, reduces costs, and enhances privacy. The article discusses the essence of enterprise blockchain, types, benefits, risks, and future trends that businesses should consider now to make strategic decisions for the future. 

What Is Enterprise Blockchain?

Blockchain for the enterprise is a type of blockchain that uses business-specific variations of the technology to address enterprise challenges, better suit privacy needs, and comply with different industry regulations within a semi-controlled network environment. 

This type of blockchain enables corporations, departments, or multiple stakeholders to share data, automate business processes using smart contracts, and ensure a single source of truth that cannot be altered.

Distributed Ledger Technology (DLT)

The main purpose of DLT is to act as a secure, decentralized database. It stores, shares, and synchronizes transaction records across a network of participants (nodes). This configuration removes the need for matching records between separate databases. 

Difference from Public Blockchain

Enterprise and public blockchain types differ in applicability based on identity and governance emphasis that limit accessibility, yet can speed up or slow down the performance.

Private and Permissioned Networks

A private blockchain is usually managed by one organization, like a corporation, and is applied to handle operations like auditing, data management, tax reporting, and accounting. 

In the case of a consortium or permissioned blockchain, a few parties share control over the network. For instance, banks, manufacturers, and retailers are within the supply chain ecosystem. This model offers shared trust and controlled access and is beneficial in preventing counterfeiting. 

Business-Focused Features and Scalability

Enterprise blockchain development focuses on elements that help companies or consortia meet regulations, ensure safe operability, and optimize workflows. 

• Settlement Finality: once the transaction is recorded, it’s irreversible, which accelerates the confirmation time, as compared to public chains. 

• Regulatory Built-In Compliance: the architecture is designed to align with regulatory needs, promoting auditable trails and mechanisms for authorized regulatory nodes to inspect data while keeping operational privacy for the rest of the consortium. 

• Upgradable Smart Contracts: enterprise blockchains can be developed to be patched and updated to align with business logic, correct bugs, and adapt to new regulations without leaving the existing network, which is a central difference from the immutable public chain smart contract code. 

• Smooth Integration: equipped with APIs and system connectors that enable smooth integration with legacy CRM systems and cloud environments, ensuring that the blockchain layer does not alter existing architecture but complements it.

• Known Identity & Governance: The network is governed by the defined consortium or centralized identity to ensure clear accountability and structured decision-making with predictable rules towards dispute resolution. All permissioned participants are legal entities. 

Types of Enterprise Blockchains

Enterprise blockchains can be classified into private, consortium, and hybrid models to meet varying business needs for control, public verifiability, and shared governance. 

Private Enterprise Blockchains

A private blockchain is a network controlled by a single, centralized identity. Only the chosen members can take part in validation and view the ledger, preventing data manipulation and misuse. 

The central entity dictates the rules and maintains the entire node system. The use cases include: Internal audit trails, compliance, document, record management, workflow automation, financial operations, and treasury.

Consortium / Federated Blockchains

A consortium or federated blockchain is a decentralized network where a pre-selected group of multiple organizations controls the consensus process. The participants are known, vetted identities, like banks or suppliers. 

The model operates via industry-specific platforms for cooperating entities like retailers, manufacturers, logistics, and supply-chain management companies. Use cases include healthcare data exchange, insurance claims management, and trade and customs clearance. 

Hybrid Blockchains

A hybrid blockchain is a network that combines aspects of public and private networks. It keeps a permissioned and private environment when it comes to confidential transactions and can operate via a public chain, such as Ethereum, to publish transaction hashes. 

Hybrid blockchains can be used for notarization and regulatory compliance when a company needs to prove data without exposing sensitive transaction details. Here is the list of use cases: tokenized assets with private compliance layers, identity management & access control, IoT networks with public verification.

How Does Blockchain Work for Enterprises?

Custom blockchain software development provides businesses with an operational architecture that enables different partners to collaborate and share data and send transactions without depending on a central intermediary. The process relies on several key components:

Distributed Ledger Technology (DLT)

DLT is a foundational level of enterprise blockchain as it’s a single source of truth shared across all authorized participants (nodes). 

• When a transaction occurs, it’s sent to the network, validated, and added to the blockchain. Every participant operates via an instant and cryptographically synchronized copy of the ledger. 

• DLT is about the tamper-proof records, where each block is hashed and linked to the previous one. This ensures the transaction history's auditability and permanence, critical to compliance and fraud prevention. 

Smart Contracts

As the automated engine of an enterprise blockchain, smart contract development is about self-executing programs that contain agreement terms encoded directly within them. 

Automated business logic, as smart contracts automate complex, multiparty business rules. For instance, a contract can be programmed as “When the IoT sensor confirms items arrive at the destination, then payment is automatically released to the supplier”.

Smart contracts bring trustless execution to the table, which implies that the code runs on a shared ledger, ensuring reliability, minimizing the need for human intervention or intermediaries, like lawyers or banks, to enforce an agreement. 

Consensus Mechanisms (PBFT, PoA)

Consensus mechanisms ensure that all authorized parties agree on the validity of the transaction before it’s recorded, supporting the ledger’s integrity. Enterprise blockchains apply high-speed models adjusted for permissioned environments, refraining from slow and energy-consuming mechanisms designed for public networks.  

Practical Byzantine Fault Tolerance (PBFT) is a consensus model designed for an enterprise where validators are identifiable. The network continues operating correctly even if some of the validators act maliciously. 

Proof-of-Authority (PoA) achieves consensus with minimal computational effort, as the validators are pre-approved and verified, such as consortium members. This results in high transaction speed and low operational costs. 

Integration With Legacy Systems 

Blockchain needs to ensure seamless interoperability with the corporate legacy infrastructure, including CRMs, ERPs, or cloud platforms, to deliver real value. 

The API/Middleware Layer ensures secure linkage by functioning to translate data between a company’s legacy off-chain systems and the enterprise blockchain. 

Key Applications of Enterprise Blockchain

Enterprise blockchain is a strategic solution to corporate issues associated with a lack of trust, data fragmentation, and high operational costs when it comes to manual processes. This blockchain type is used across different sectors and industries to produce shared, verifiable records that automate transactions. 

Supply Chain and Logistics

The overall supply chain is an extremely vulnerable industry to counterfeiting, for which enterprise blockchain presents a solution due to the DLT’s transparency and immutability. Enterprise blockchain ensures traceability and provenance by creating a permanent and auditable record of the product’s overall journey (from raw material to final delivery), which prevents the identified problem of counterfeiting. 

Additionally, enterprise blockchain simplifies documentation and customs by digitizing the shared shipping documents and customs declarations across the involved parties: manufacturers, shippers, and customs, leading to a reduction in processing time while presenting the same data to all stakeholders.

Finally, enterprise blockchain speeds up payment cycles by using smart contracts, which can trigger payments when specific conditions are met, like the receipt of parcels at the port. This significantly reduces costs and time associated with traditional financial services. 

Finance and Banking 

DLT promotes fast, cost-efficient, and transparent transaction processing while reducing counterparty risks when it comes to the industry built on centralized intermediaries. Enterprise blockchain can contribute to cross-border payments within the banking sector by minimizing multiple layers of correspondent banks involved in international transfers. This promotes near-real-time, low-cost settlement for large corporate transactions. 

Enterprise blockchain for banking digitizes letters of credit and trade documentation, enabling ownership verification and executing financial transaction agreements through smart contracts.

DLT promotes asset tokenization, presenting traditional items (real estate, stocks) as digital tokens on a permissioned ledger, simplifying trading and settlement.  

Explore the essence of blockchain technology in the banking sector.

Healthcare

Data privacy, fragmentation, and safety of pharmaceutical supply transportation are core challenges in the healthcare industry; enterprise blockchain can help prevent them. DLT enables different providers, hospitals, and insurance agents to share patients’ Electronic Health Records, while keeping patient consent and remaining compliant with GDPR/HIPAA requirements. 

The second aspect relates to fighting drug counterfeiting. Blockchain enables tracking pharmaceuticals from manufacturing to the pharmacy shelf by ensuring the package has a verified origin, which helps prevent drug falsification and the supply of expired medications. 

Accounting and Auditing

Enterprise blockchain in accounting shifts from periodic reconciliation to continuous assurance through an immutable record of financial activities. Blockchain provides authorized auditors with real-time access to tamper-proof transaction records, preventing lengthy manual inspection of the ledger. 

The involved parties, like internal departments, suppliers, and partners, share the same cryptographically secure ledger, which minimizes the need for reconciling different versions of financial data, thereby reducing time and errors. 

Media and IP Protection

Marketing and creative industries recognize the potential of the enterprise blockchain to address issues related to intellectual property theft, content licensing, and royalty payments. DLT ensures content provenance by providing an immutable timestamp and recording when the intellectual property piece, like music or art, was first registered. This serves as proof of ownership by simplifying legal disputes over copyright infringement. 

Smart contracts can be programmed automatically to distribute micropayments to all rights holders immediately upon content consumption. This removes dependency on slow, costly intermediaries. 

Blockchain can be applied as a source for digital fingerprinting that can be applied to register a unique cryptographic signature on digital media. In the case of unauthorized copies appearing elsewhere, the legitimate owner can prove authenticity and initiate tracking of the leakage source. 

Benefits of Enterprise Blockchain

Enterprise blockchain provides essential benefits by establishing a secure, real-time single source of truth that significantly minimizes costs, reduces errors, and ensures full traceability across corporate operations. 

Error Reduction

Blockchain operates via the DLT principle, ensuring every authorized participant operates from a single and synchronized source of truth. The enterprise blockchain network eliminates the need for manual data entry and reconciliation across siloed databases, which serves as the principal source of human errors or data mismatches. 

Enterprises can automate complex, multistep business logic via smart contracts, which can minimize delays and contractual non-compliance.

Enhanced Security 

Enterprise blockchain ensures extensive security advantages beyond traditional encryption methods. They include tamper-proof records. When a transaction is validated and recorded on the ledger, it is linked to the previous block, so any alterations are impossible. This immutability minimizes vulnerability to fraud by increasing the network’s resilience.

Another security element is cryptography. Hashing and digital signatures ensure authenticity and non-repudiation, which makes it difficult for fraudsters to deny sending or receiving transactions.

Transparency and Traceability 

When speaking about a permissioned blockchain network for enterprises, the authorized parties experience controlled and absolute transparency, which is critical for clear audit trails. From the product’s origin to shipping, information about the order is logged sequentially, creating an end-to-end history (provenance). This is a central element for regular reporting, warranty claims, and high-value goods tracking. 

Additionally, the involved parties, like manufacturers, shippers, retailers, and regulators, see the same version of the ledger, minimizing disputes over validity. 

Cost Optimization and Efficiency 

The technological design of the blockchain structure significantly minimizes dependency on third parties for operational validation and streamlines workflow. To be specific, smart contracts automate tasks, usually performed by banks and lawyers, resulting in a significant reduction of third-party fees. 

Another benefit is the minimization of reconciliation, which reduces staff time and administrative overhead associated with processing paperwork, legal compliance, and auditing. 

Real-Time Transaction Processing

Enterprise blockchains are designed to promote speed and enable instant settlement or data updates. This blockchain type operates via fast consensus algorithms that achieve transaction finality near-instantly, as compared to public chains. 

When it comes to time-sensitive operations like financial trading, this fast finality and real-time data availability enable organizations to make faster and strategic business decisions. 

Risks and Challenges of Adoption

Despite the range of benefits, enterprise blockchain adoption comes with a set of technical and operational challenges businesses should consider before implementation. 

Scalability Limitations 

Enterprise blockchain is more efficient at handling volumes of data and transactions, as compared to the public chain; however, there are still challenges with throughput bottlenecks that worsen the network’s functionality. Establishing an enterprise blockchain can lead to the replacement of the traditional centralized system. The private or permissioned network’s throughput will lead to a bottleneck by slowing the processing of requests per second. 

Another challenge is data volume storage. The validation process can be slowed down when storing a large amount of transactional data, as immutability leads to increasing storage requirements. 

Integration with Existing Systems 

Connecting the blockchain layer to the decades-old internal IT infrastructure can provoke a set of obstacles, one of which is compatibility with legacy systems. Integrating ERP and CRM with the distributed ledger interface may pose a significant development challenge, requiring in-depth IT proficiency to craft seamless connectors and APIs.

Data synchronization is an additional challenge that lies in the integrity of a single source of truth, as failing to perfectly sync the official blockchain data with off-chain centralized records compromises the core ledger’s purpose.

Compliance and Regulation

Global enterprises encounter specific challenges associated with the evolving regulatory landscape for DLT. Multinational companies have to abide by different data residency requirements and laws across the countries of their operability. This is problematic because what’s legal in one country may be restricted in another. 

Additionally, when it comes to the European Union, there is a GDPR statement called the right to be forgotten, a requirement that conflicts with the immutable nature of blockchain, as once the block of data is created, it cannot be removed. Companies have to craft systems to store sensitive data off-chain while applying the ledger only to non-identifiable and hashed proof of existence. 

Check out the requirements to start a fintech project in the USA.

Lack of Understanding and Resistance 

Organizational and cultural friction presents a significant challenge to blockchain adoption that comes along with the technical complexity of implementation. Companies face extreme and costly dependency on third-party IT experts due to the lack of an in-house team for smart contract and blockchain platform development. 

Organizational resistance is an additional challenge to blockchain adoption, as departments or consortia and competing companies have to alter their business approaches to maintain data transparency. This can provoke alterations in organizational workflows, leading to internal resistance. 

Enterprise Blockchain Platforms

Enterprise blockchain platforms are purpose-crafted frameworks that address the operational, security, and compliance needs of individual businesses and consortia. They offer infrastructure, consensus models, and APIs required to tailor customized, permissioned, and distributed ledger systems. 

Hyperledger

Hyperledger is a Linux Foundation ecosystem of blockchain projects, with Fabric as one of the most popular and widely recognized for enterprise utilization. It’s highly modular and adaptable for diverse B2B use cases. The platform suits cross-industry use for supply chain operations, government functions, or a multi-party system where precise control over data privacy is essential.

Hyperledger’s Key Features:

• Permissioned: all participants are verifiable, known identities, which is ensured due to strict identity and access management services. 

• Channels: privacy assurance by enabling several independent consortia to operate concurrently on the same network while keeping their transactions isolated from each other. 

• Pluggable Consensus: Hyperledger supports pluggable consensus mechanisms that provide flexibility in choosing the optimal algorithms that align with the network’s required performance and secure trust structure. 

R3 Corda

Developed by the R3 consortium of major financial institutions, Corda fundamentally differs from a typical shared ledger by functioning as an operating system specifically designed to automate and record legal agreements, focusing strictly on individual transactions rather than a global chain. It’s best suited for financial, banking, trade, and insurance sectors that prioritize transaction privacy and legal compliance. 

R3 Corda Key Features:

• Privacy by Default: transactions are private by default, shared exclusively between counterparties, and a Notary service is used only to check for double-spending, promoting maximum privacy. 

• Identity-Centricity: extensive focus on known/verified identities and legally binding smart contracts. 

• Not a Chain: instead of a globally shared ledger, the system maintains individual, auditable streams of transaction history visible only between the involved parties. 

Quorum

Quorum is an enterprise adaptation of the public Ethereum blockchain, initially developed by J.P. Morgan, designed to apply reliable EVM code for smart contracts while promoting speed and privacy for businesses. Quorum fits best financial institutions and enterprises interested in high-performance, private solutions that require Ethereum compatibility. 

Quorum Key Features:

• EVM Compatibility: compatible with the Ethereum Virtual Machine, developers can apply the familiar and widely adopted Solidity language for smart contract development.

• Transaction Privacy: the platform features a layer for Private Transactions, ensuring sensitive data can be viewed only by explicitly authorized network members. 

Future Trends and Predictions

The future of blockchain marks its transition from experimental programs to transforming into an indispensable part of a global digital infrastructure, focusing on integrating with evolving technological opportunities. 

AI and Blockchain Synergy

AI systems implement machine learning to analyze the vast, tamper-proof data sets recorded on the blockchain (through supply chain data or transaction history), allowing for AI-driven smart contracts to autonomously execute complex financial decisions for further automatic adjustment of supply chain processes based on real-time data analysis. 

Being excellent at pattern recognition and anomaly detection, AI can be integrated to serve as an additional security measure, immediately flagging or preventing suspicious transactions in real time. 

Interoperability between Platforms

Many enterprise blockchains, especially built on platforms like Hyperledger Fabric or R3 Corda, limit their overall network effect, as they exist as isolated data silos. From this point, the future of enterprise blockchain is anticipated to experience the bridging of isolated networks. Cross-chain communication protocols are anticipated to enable different, disparate blockchain platforms to exchange data and assets. 

Interoperability is about ecosystem collaboration, which is anticipated to ensure seamless connectivity within large consortia that use different blockchain technologies. This trend enables a package to be tracked through the supplier’s network and linked to a bank network for trade finance settlement. 

Energy-Efficient Consensus Models

Enterprises keep adapting their systems to the global climate and sustainability goals, requiring them to shift from energy-intensive consensus methods. The presented approach pushes corporations to substitute Proof-of-Work with low-power models, like Proof-of-Stake (PoS) or Proof-of-Authority (PoA). 

Environmental compliance is anticipated to influence protocol development. New protocols will have to be developed with sustainability as a core design approach to guarantee that the enterprise network produces an operational footprint that aligns with corporate environmental, social, and governance (ESG) reporting standards. 

CBDCs and Tokenized Assets

The financial system is anticipated to keep reshaping under the influence of sovereign and private digital currencies. For instance, Central Bank Digital Currencies represent the digital version of the country’s fiat currency issued by the central bank. They are anticipated to become a settlement layer for enterprise transactions. Applying CBDC on private blockchains is anticipated to simplify cross-border payments, minimizing commercial bank exposure. 

Enterprise blockchain platforms are projected to securely handle the entire lifecycle of real-world asset tokenization (from real estate to tokenizing trillions of dollars), from issuance to post-trade operations to enhance liquidity and increase regulatory compliance. 

Summary

As a private/permissioned blockchain network, an enterprise blockchain ensures regulatory compliance, fast performance, and secure transaction data/processing through DLT, smart contracts, and verified identities. The organizational work is optimized through energy-preserving consensus mechanisms, like PoA and PBFT, that streamline verification and increase speed compared to public networks. 

Finally, whether isolated businesses or consortia, all known identities receive the same near-instant updated record on the status of operational performance, which minimizes data manipulation. 

Interested in crafting an enterprise blockchain for your business needs? We’re ready to help!