Blockchain has quietly become a prominent part of the business realm. And it’s no surprise: distributed ledger technology (DLT) establishes trust, streamlines processes, and ensures data immutability — these are undoubtedly qualities that every business owner dreams of.
But the question is, how do you seamlessly integrate blockchain into your company’s digital environment? Especially if your company is a big enterprise that interacts with myriad applications, including legacy systems with sensitive data. Well, you can find everything you should know about successful blockchain integration for an enterprise in this article.
Blockchain in enterprise: Use cases
No one will argue against the premise that today, blockchain is more than just fancy tech for crypto enthusiasts. It’s now widely used for document sharing, supply chain automation, product distribution, record keeping, quality assurance, copyright protection, contract transfers, Know Your Customer (KYC) procedures, and beyond.
If you think that blockchain is for startups and small businesses, it’s not the only case. Heavyweights aren’t sitting on the sidelines anymore. Case in point, Walmart Canada uses a smart contract- driven solution to manage invoices from and send payments to freight carriers once they meet shipment conditions. As a result, less than 1% of invoices have reconciliation discrepancies, as opposed to 70% before the solution was rolled out. Anheuser-Busch InBev is another example. The beer behemoth is currently to improve its marketing campaigns using blockchain. They’re also planning to use smart contracts to outsource marketing materials.
And these are just two examples. JP Morgan, Samsung, Cisco, IBM, and Microsoft invest heavily in DLT. At the same time, it isn’t a panacea — it won’t help everyone. So, before jumping on this trend, do your research.
How to connect blockchain to your system
Blockchain integration doesn’t happen in a couple of clicks. You set the ball rolling by analyzing your business case to see whether DLT is necessary and if there are alternatives.
Once you see that the game is worth it, the next thing you should do is to define your use case precisely. Why do you need a blockchain? Is it for document sharing? Is it to streamline your supply chain processes? Or do you need a secure data backup? The answers will make it easier to identify a suitable tech stack and get started with implementation.
After you refine your use case, here are your next steps.
Step 1: Select the consensus mechanism
The consensus mechanism is a key concept of blockchain. It’s an algorithm that helps peers reach an agreement on the validity of each new block (record entry) added to the distributed ledger.
There is no one-size-fits-all consensus algorithm. You might choose a different option depending on the level of decentralization, security, and transparency you need for your particular case. The most common consensus protocols include Proof of Work (PoW), Proof of Stake (PoS), Delegated Proof of Stake (DPoS), and Proof of Authority (PoA).
Step 2: Select your blockchain platform
You’ll base your choice of platform on the preferred consensus mechanism — different platforms support different algorithms. But given the number of blockchain options available out there, this task might turn out a bit more challenging than you expect.
Fortunately, you can significantly narrow down the choices if you know exactly what type of blockchain you need. Basically, you’ll choose between public or private blockchains or will try to get the best of both worlds. Here are your four options:
Now let’s take a closer look at each of them.
Anyone with internet access can join a public blockchain anonymously and validate blocks or carry out transactions. Since all nodes can see all transactions and there’s no central authority to control and edit the records, a public blockchain offers true immutability and promotes trust among its participants.
On the other side of the coin, public blockchains are the slow type because of the large number of participants needed to validate each transaction. Bitcoin, Ethereum, and Litecoin are the most popular public blockchains.
A private blockchain typically belongs to one organization or a group of organizations (a consortium blockchain), and only authorized peers are allowed to view data in the ledger, participate in transactions, and validate blocks. Meanwhile, the owner(s) acts as a central authority of the ledger. The owners overlook all the events in the blockchain and, in certain cases, can even edit the record. Since a private blockchain has fewer nodes than a public one, it’s much faster.
Because of its data privacy and scalability, most enterprises implement private blockchains. Hyperledger Fabric is probably the most well-known private blockchain. For example, Walmart’s freight-invoicing solution runs on this platform.
This one addresses the shortcomings of the public and private blockchains, helping you to get the best of both worlds. For example, you can secure confidential data behind a permission scheme while making other records (like cryptocurrency transactions) public. In a hybrid blockchain, the owner can’t modify data added to the ledger without the approval of all nodes. Plus, all nodes participate in consensus, making this type of blockchain more secure than its private counterpart.
LTO Network, Ripple, and IBM Food Trust are examples of hybrid blockchains.
Step 3: Implement integration
Once you’ve selected your blockchain platform, it’s time to decide how you’ll plug its functionalities into your environment.
Our experience implementing similar projects suggests that the best way to do so is to introduce a blockchain proxy layer. It’s a kind of middleware that will stitch your systems and the blockchain technology together. This layer allows you to:
- Communicate blockchain functionalities to your enterprise systems, including legacy systems
- Combine multiple blockchains within one environment and evoke them through a single protocol
- See every event in your blockchain ecosystem in real-time
- Have events trigger processes across both on- and off-chain apps and services
- Optimize security and stability; despite the interoperability achieved with the help of middleware, your enterprise applications exist independently from the blockchain stack.
Here’s what the architecture of your blockchain will look like after introducing the abstraction layer:
Service and process automation components and event handlers are the key components of this architecture. Simply put, event handlers listen to the changes within enterprise applications or blockchains using communication protocols. When a change is detected by an event handler, service and process automation components trigger appropriate logic in response.
Now that you know your use case, preferred consensus algorithm, suitable blockchain platform (or platforms), integration method, future ecosystem architecture, and a detailed project roadmap, it’s time to get down to the implementation. And this process implies certain roadblocks.
Enterprise blockchain integration challenges and how to address them
Blockchain is complex technology itself, and like it or not, connecting it to your digital ecosystem won’t be smooth sailing. Meanwhile, the wrong implementation will create chaos in your processes. To avert an undesirable outcome, we strongly recommend you consider the following challenges and find ways to overcome them.
If you opt for a public blockchain, be prepared for it to be pretty slow to process transactions. For example, Ethereum can handle as few as 12-15 transactions per second. That’s why if transaction speed is vital for your processes, you should eliminate this bottleneck.
You can solve this problem on a software level, as Tomochain did. They built a highly scalable public blockchain on a performance layer. You can also choose to use a private blockchain, which, due to a limited number of nodes, is much faster than a public blockchain.
Though security is one of the main reasons why blockchain adoption continues to grow, DLT isn’t entirely immune to cyberattacks. For example, hackers have exploited vulnerabilities in the Ethereum network and managed to steal $60 million. Yes, it was several years ago, and those vulnerabilities were fixed, but don’t underestimate the ingenuity of hackers.
Private blockchains can also be targeted by bad actors. One of the main threats private blockchains face is a 51% attack. This is when more than 50% of the blockchain’s nodes are deployed by a hacker, allowing the attacker to acquire full control over the ledger. As you might guess, public blockchains are less prone to this type of cyberattacks because they require immense computational resources.
In addition, when you connect a blockchain to your system, you put your data at risk. How can you best protect your data? Consider only those blockchain providers that take security seriously, think about how you can mitigate the risk of cyberattacks on your end, and of course, make security part of your blockchain ecosystem design.
Smart contracts are simultaneously a blessing and a curse of blockchains. These pieces of code outline transaction terms. Along with nodes, they can substitute for an authority to permit or reject a transaction. And like a distributed ledger, smart contracts are immutable, preventing anyone from modifying transaction rules in their favor.
This means the developers can’t modify your smart contracts once you deploy them on the blockchain. Meanwhile, a flawed smart contract can create bottlenecks in your workflow and make your system more vulnerable to cyber threats, preventing you from making the most of blockchain. So, since there’s no second try, make sure your software engineers have a strong grasp of smart contract development.
Since replacing a legacy system can cost you a small fortune (let alone incorporate the risk of data migration errors and putting all your processes on hold), many organizations continue using them. If your company has a legacy system, you should account for it when planning your blockchain integration strategy. Why?
Most legacy systems have monolith architecture, lack documentation, and are coded using obsolete programming languages. This makes them extremely resistant to modifications, and integration is no exception.
Consider this when planning your blockchain integration strategy. A proxy layer, as mentioned above, will probably address the issue. But still, be prepared to modernize your system before implementing a blockchain.
Certainly, the challenges we already listed can complicate your enterprise blockchain integration. Luckily, experts will help you address any issue and build a robust solution. But what if you don’t have the needed expertise in-house? That’s where the next challenge arises. Where can you find the right talent? How do you evaluate their expertise if you’re new to blockchain?
You can outsource blockchain integration to Ukrainian companies, namely Unicsoft. With a strong grasp of Ethereum, Hyperledger, and other blockchains, we can cover all your blockchain adoption needs, and integration is no exception. We’ll help you identify your use case, choose an appropriate blockchain stack, and seamlessly integrate DLT into your digital environment.
Integrating blockchain into enterprise processes is a complex, labor-intensive process. Lots of factors must be taken into consideration. You should know exactly how you want to use blockchain technology and whether or not there are any better alternatives. You should identify an ideal consensus algorithm and choose a platform that perfectly balances price, transparency, and performance. Finally, your integration method should ensure the stability and security of your environment.
Luckily, nothing is impossible. All you need is a team of blockchain professionals ready to stick to a robust strategy or change strategies if one doesn’t work for you. The Unicsoft blockchain development team provides all this and more — just drop us a line.