Microsoft, Intel, banks form Enterprise Ethereum blockchain alliance

Microsoft is expanding on its Azure Blockchain-as-a-Service work by joining the new Enterprise Ethereum Alliance, along with Intel and a number of leading banks.

Microsoft, Intel, Accenture and more than two dozen banks and other companies have formed an alliance to use the Ethereum blockchain code.

Blockchain is the technology that underpins the cryptocurrency Bitcoin. But it has uses beyond that. A blockchain is a shared, distributed ledger that can store the complete transaction history of not just cryptocurrency but other kinds of records. As such, it's of interest to many enterprises, especially those in banking and finance.The member companies are unveiling the new Enterprise Ethereum Alliance (EEA) today, February 28.

Microsoft initially launched Azure Blockchain as a Service in November 2015. Last year, Microsoft took the wraps off version 1 of its Project Bletchley blockchain template. Bletchley is accessible via the Azure resource manager and is aimed at helping customers and partners create private consortium Ethereum networks.

Ethereum is an open-source, blockchain-based distributed computing platform that provides a decentralized virtual machine.

Other members of EEA include Credit Suisse, UBS, JP Morgan Chase, Bank of New York Mellon and Thomson Reuters. More information on EEA is available on its web site. Its mission statement:

"The Enterprise Ethereum Alliance connects Fortune 500 enterprises, startups, academics, and technology vendors with Ethereum subject matter experts. Together, we will learn from and build upon the only smart contract supporting blockchain currently running in real-world production - Ethereum - to define enterprise-grade software capable of handling the most complex, highly demanding applications at the speed of business."

There are other industry blockchain alliances including the Linux Foundation's Hyperledger Project, which includes among its members IBM and Hitachi.

Blockchain: Over-hyped bandwagon or truly revolutionary technology?

Silicon Valley is hot on blockchain -- the technology behind the Bitcoin cryptocurrency -- and its many potrential uses.Blockchain's economic impact could be as important as the Internet

Is blockchain technology the second coming of the Internet? That seems to be the enthusiastic message from many new startups that I meet with and also from top business consultants such as Don Tapscott, who authored with his son Alex Tapscott, the recently published book, "Blockchain Revolution: How the technology behind Bitcoin is changing money, business, and the world."

Blockchain is a globally distributed ledger -- a platform for reliably clearing transactions without the need of a bank or other third-party. I get the concept behind blockchain, that everyone owns the same ledger and thus it can't be easily altered unless you can gain control of the majority of all the computing resources.

But I don't yet get how this eliminates "middlemen" service fees after all, the startups in this sector are the new middlemen and have plans to make money on their services.

- how it can be scaled up to millions of transactions given the huge computational costs and the time taken to process a single transaction

- how can blockchain escape regulation by governments

- how can small blockchains provide the same levels of trust as the huge Bitcoin blockchain (which is larger than all of Google's server farms combined);

- and why will blockchain challenge giant corporations, as many have said, when giant corporations are the ones sponsoring the blockchain events and conferences, and seem to have the most to gain?

- where are the pain points? Surely, we have solved the problem of clearing transactions? Visa and Mastercard do it all day long and they manage to verify identity and guarantee security for a fairly low fee considering the 30% and more that Internet companies such as Apple and Google charge for handling payments for digital goods .

To find some answers, I turned to a recent event at the NASDAQ Innovation Center in downtown San Francisco that featured father and son Don and Alex Tapscott, followed by a panel discussion with John Wolpert, Global Blockchain Products Director at IBM; Haskell Garfinkel, Partner and FinTech co-lead at PricewaterhouseCoopers; and Ryan Smith, co-founder and CTO of Chain, a startup building blockchain infrastructure for financial institutions.

Above video, Alex Tapscott with his explanation of blockchain.

Below: The panel discussion:

Foremski's Take: I didn't get all my questions answered but I did see a slide that appeared for a few brief moments at the end of Don Tapscott's presentation, about all the things that could stop blockchain. Some of my questions were represented as showstoppers on that slide.

Blockchain is certainly fascinating to watch, who will use it and the many new use cases being proposed.

The question is can blockchain overcome the many technical and societal challenges it faces and emerge as a revolutionary technology that's nearly as important to the global economy as the Internet itself? Way too early to call but that hasn't muted the cheerleaders.