Enterprise Blockchain Redux

It’s been almost 6 years since J.P. Morgan released the enterprise Ethereum client Quorum (now ConsenSys Quorum), however during the past few years, the focus has shifted somewhat to public blockchain networks.

Last month, the enterprise blockchain narrative was given a new lease of life by VMware’s announcement they were adding support for Ethereum to their enterprise blockchain platform.

Back in 2016 when Quorum was launched, followed by the Enterprise Ethereum Alliance a few months later, they brought together many of the world’s leading enterprises including Microsoft, UBS, Santander, Accenture and CME Group. With this momentum, it appeared to be only a matter of time before these enterprise blockchain networks began to start changing the face of business, moving many of their inefficient non-value driving activities on-chain.

Many firms had been touting the benefits of blockchain in an enterprise setting since 2015 and earlier, hence such industry adoption appeared to be inevitable. However, whilst a number of initiatives were announced, in the years since, there has been a lot more focus on the public blockchain networks, with enterprise networks falling out of favour with many of the proponents of Web3.

In some instances, this was justified, where companies used blockchain simply as PR machines where they would promote their company’s activities via a press release, then shelve the initiative. In other instances, it was the challenges associated with network governance between other large, slow-moving, risk-averse participants, or simply the wrong problem to be focussed on in this first instance.

Regardless of the specific reasons, enterprise blockchain technology simply could not compete with crypto, DeFi and NFTs when it comes to the speed of innovation and mainstream appeal of the innovation taking place on public networks.

This isn’t to say activity has fallen by the wayside. The sector is alive and well, with companies and consortia continuing to move forward with their initiatives. For instance, the interest in wholesale financial markets spanning central bank digital currencies and FX settlement is still very real, with firms such as Fnality which have been gathering momentum since 2015, back when it was called the Utility Settlement Coin. Such industry inevitability is mirrored in the supply chain, telcos, pharma, healthcare and government — but what is less clear is when and how these Web3 networks for enterprise will come to fruition.

VMware’s announcement is important, as it is the most significant enterprise focussed Ethereum announcement since J.P. Morgan announced Quorum and the genesis of the Enterprise Ethereum Alliance. Quorum was significant in that you had the world’s largest financial firm putting its weight behind Ethereum technology. Now you have one of the world’s largest enterprise technology companies (VMWare’s market cap is larger than HP but smaller than IBM) adding Ethereum support to their blockchain platform. VMWare isn’t new to Web3, they have been working alongside Digital Asset since 2019 on the ASX’s DLT-based securities settlement replacement platform. They also invested in Digital Asset’s series C round in 2020.

Since then we had the DeFi summer of 2020, and the NFT mania of 2021, onboarding many new participants to Web3. The fact that all of this innovation took place on Ethereum caught the attention of many, who started to appreciate just what was possible on the platform.

Enterprises looked with envy upon much of this activity and started to look beyond the private-permissioned networks of old and consider how they may be able to leverage from this public network infrastructure which didn’t come with all of the governance overheads of the private permission networks.

One of the major hurdles to using public blockchain networks is the lack of transaction privacy, limited throughput, and…