Is This the Blockchain Firm That Will Get Enterprise to Finally Embrace Open Networks?
Concordium, an ambitious project whose founders have close links to companies including Volvo, IKEA, Saxo Bank and Nasdaq, is looking to shake up the seemingly glacial world of enterprise blockchain.
The most striking thing about Concordium, which launches its third testnet next month, is the way it pushes what was once anathema to big corporates: public and permissionless blockchains.
Businesses, wary of tipping their hands and giving away any competitive advantage, have traditionally preferred the idea of private and permissioned blockchains. But many advocates of blockchain tech believe only open systems hold true transformational promise. The oft-cited analogy centers on the relevance of internet versus intranet.
Toeing the line between the privacy requirements of regulated businesses and full-broadcast blockchains like those of Bitcoin and Ethereum has led some very smart people to opt for an attenuated architecture when it comes to distributed ledgers.
However, Concordium is confident it has found a third way, keeping sensitive data private using a clever identity and zero-knowledge-proof (ZKP) system, providing firms with a safe, flexible option to deploy open blockchains.
The momentum around projects like Baseline Protocol, which now has some 600 big firms using it, is a solid indicator ZKP tech is ready for prime time.
‘Something totally new’
According to Concordium CEO Lone Fønss Schrøder, sometimes you need a permission-based ledger; but in order to realize new business models, it has to come in combination with baked-in permissionless possibilities.
“I think that’s really what large corporations are looking for,” said Fønss Schrøder. “If you look at Hyperledger, for example, or R3, I don’t think it is blockchain in the sense of really providing something new. It’s not decentralized. Companies are seeing it as just another way to do their mainframe applications. But when you talk about permissionless blockchain, it’s something totally new.”
Blockchain today simply doesn’t meet the needs of corporations, says Fønss Schrøder, and a lack of permissionless flexibility has led to no uptick in business adoption.
Concordium’s chief marketing manager, Beni Issembert, went further: Businesses underwhelmed by today’s enterprise blockchain offerings are squarely in Concordium sights.
“Businesses that are open-minded feel a lot of frustration and desolation when it comes to using Hyperledger and R3 Corda. And we are talking to those disappointed businesses,” Issembert said.
It would be easy to write Concordium off as some kind of naive newcomer – both R3 and Hyperledger declined to comment on the Concordium white paper.
But the project, which has its roots in Denmark, features an impressive cast of players from business and academia. On the science side, Concordium’s research center at Denmark’s Aarhus University is run by widely cited cryptographer Ivan Damgard. Last September, Torben Pryds Pedersen, creator of the Pedersen Commitment cryptographic primitive, was appointed as Concordium’s CTO.
In terms of corporate clout, Fønss Schrøder is a boardroom director at IKEA, vice chairman of Volvo and spent 22 years at A.P. Moller Maersk. Concordium’s founder, Lars Seier Christensen, founded Saxo Bank in 1992, while the blockchain’s advisers include former Danish Prime Minister Anders Fogh Rasmussen, and heavy hitters from Nasdaq, Mastercard and Skype.
It’s one thing to announce a paradigm shift in the way businesses intend to use blockchain technology, but another to show hard evidence of this new permissionless demand.
“We are already in contact with those people [Volvo and IKEA] and looking at ways to fulfill what they would like to do. But we are not only targeting 20 or 40 businesses,” said Issembert. “We are focused on the next generation of commerce, the new unicorns; firms that you don’t have to convince the best approach is an open system.”
If large corporations have been mostly happy with proofs-of-concept using closed enterprise blockchains, what are the new use cases that open systems like Concordium can offer?
Fønss Schrøder said a major opportunity exists in rethinking the way procurement and supply chains work, for example. (In terms of new entrants to the enterprise blockchain space, there have also been some interesting moves from the EOS ecosystem, particularly in Latin America.)
“It could be smart contracts, which actually will function as marketplaces for you and your whole procurement sector,” said Fønss Schrøder. “I think about what Maersk has been doing, but the disadvantage for Maersk is that this should never have been built on a permission-based blockchain; it should have been permissionless. But that’s the kind of logistical use case I’m sure we will be able to support.”
Volvo board member Fønss Schrøder also sees plenty of uses for open blockchains in the car industry, across secondary markets, for instance, and the service agreements that come with that.
“Nearly every car sold by Volvo has some kind of lease arrangement or car-care, and blockchain is well suited to support this on the insurance side and on the service side,” said Fønss Schrøder.
Public, but private
As far as the ZKP secret sauce, Issembert called this the “backbone of the network,” but could not disclose details.
“For the ZKP design approach, we are going to come to the market with our own solution. It’s not something that has been seen yet,” he said.
Next month sees Concordium’s third testnet come into being, with a view to going live in January 2021.
“We will have the smart contract layer ready and then we will see which corporations will build on it,” said Fønss Schrøder. “It will be very interesting. I don’t think we will disappoint you.”
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