Microsoft, EY and ConsenSys Tout New Way for Big Biz to Use Public Ethereum

It’s time for big business to embrace the public chain – as a coordination tool, rather than as a place to carry out large-scale financial transactions.

That’s the view of a trio of heavy hitters in the enterprise blockchain space: EY, ConsenSys and Microsoft. The group has come up with a new way of using the public ethereum mainnet to connect firms’ internal systems for resource planning.

They are calling it the Baseline Protocol.

Using ethereum as a kind of message-orientated middleware, rather than a source-of-truth data repository, is a novel approach. Some people might even think it boring, said John Wolpert, head of Web3Studio at ConsenSys.

“It’s about changing the mental model from system of record to middleware,” Wolpert said. “That’s a pretty boring way to use the blockchain. I think we could use a little boring.”

A useful analogy, says Wolpert, is thinking of ethereum like an old-school message bus, a type of messaging infrastructure connecting distributed systems and interfaces. Ethereum offers a highly expressive version of this, which Wolpert likes to call the “Magic Bus.”

This concept ought to be attractive to the chief security officers of large enterprises since their critical data all remains within their firewalls, he added. Then there’s the hundreds of millions of dollars spent integrating large scale enterprise resource planning (ERP) and customer relationship management (CRM) systems. 

Rather than build a general set of tools, team Baseline has chosen to pick off one specific use case in the area of procurement: comparing and verifying purchase orders and the like. These records, and some of the business logic attached to them, are then tokenized. 

The Baseline Protocol code will be released later this month and a technical steering committee is also being formed. The committee will include the likes of EY, Microsoft, ConsenSys, Splunk, MakerDAO, Duke University, ChainLink, Unibright, Envision Blockchain, Neocova, Core Convergence, Provide and W3BCloud.

“We can use the mainnet as a common frame of reference,” said Wolpert. “I can say my purchase order is the same as the record you have of that same purchase order. The business rules that we employ to transform that record or use it to make new records is going to be executed by both of us in the same way.”

But all this talk of tokens and public blockchains tends to make the enterprise world nervous. Creating shared immutable systems of record and eliminating costly reconciliation has typically been the hunting ground of private blockchain projects. 

Paul Brody, head of blockchain at EY believes the private DLT model is fundamentally flawed.

“We have long believed that private blockchains don’t scale very well because it’s hard for companies to want to join somebody else’s private network. Indeed there’s a lot of evidence to suggest that’s the biggest problem,” said Brody.

Zero-knowledge proofs make it possible

Surely the biggest elephant in the room here is privacy: blockchains reveal data. But as Wolpert points out, this problem is common to both public and private chains. “Blockchains are the digital nudist colonies of IT, and a private blockchain is just a nudist colony on a private beach,” he said.

The tokenizing part of the Baseline system is done using zero-knowledge proofs (ZKPs), a way of mathematically proving you are privy to a secret without having to share any its attributes. 

Brody explained a good deal of progress has been made with ZKPs, referencing EY’s Nightfall project and work done within ConsenSys by Aztec, a London-based startup focused on the technology.

Baseline will manage tokens under zero-knowledge using shield contracts with the key metadata related to the tokens stored off-chain. 

But blockchains and zero-knowledge proofs don’s scale well. ZKPs require a lot of computation and when they run on public ethereum there is the cost of gas to consider, the price levied on ethereum transactions.

EY has been exploring ways of batching ZKPs together to make them scale better and to reduce the cost of running them on blockchains like ethereum.

“There’s a lot of FUD deployed around blockchain scalability. The truth is if I have to wait four minutes for my transactions to clear most enterprises won’t even notice,” Brody said.