Lessons learned from the first generation of Enterprise Blockchain projects
In 2017, enterprise blockchain was hot. The Australian Stock Exchange was modernizing how stock trades settled with a blockchain-based replacement for their legacy CHESS system. Supply chains were being streamlined by Maersk and IBM’s TradeLens project. And the Blockchain Insurance Industry Initiative (or B3i), was creating a world-wide industry platform that promised to transform how insurance companies managed risks.
Despite their initial promise, five years later these projects had been shut down, leading to the natural question: what went wrong with the first generation approach to building enterprise blockchain projects?
While many factors contributed on the business side, a large part of the core problem was that these 1st generation blockchain pioneers approached these projects as large custom development build outs engaging dozens or hundreds of developers. This meant core components had to be built from scratch, and it could take years of manual effort to result in production grade, tested, certified and scalable solutions. They simply lacked the tools they needed to cost effectively get to market with their solutions.
One hard earned lesson: while blockchain gets all the attention, the blockchain itself accounts for only about 5-10% of any given blockchain-based solution. The other 90-95% is made up of everything that sits between the blockchain and the user interface itself: wallets, digital asset management, asset tokenization, messaging, user management, off-chain data flows, integration points with existing systems, and various other layers of essential plumbing.
While these components are complex, they aren’t unique. They don’t need bespoke code any more than buildings need hand-crafted wastewater pipes. Yet that’s what 1st generation enterprise blockchain projects had to do: create everything from scratch. This led to projects that stretched on for years and spent tens of millions of dollars on development, only to fall short of providing business value and a return on investment.
This created a clear path forward. If enterprises didn’t have to reinvent basic solutions, they could shift their development costs to the business logic for their use cases. That could mean millions more dollars focused on what matters most to companies.
Surely that would be better. But even if a SaaS company could create a plug-and-play scalable, highly compliant and performant solution, could it generate enough adoption to really push enterprise blockchain adoption forward?
Choosing to drive a next-gen approach with open source
Kaleido, an enterprise-grade web3 platform, thought so. Founded in 2017, it started with the mission of making blockchain and digital assets simple for organizations to adopt. Kaleido’s Blockchain Business Cloud was designed to reduce both the time and cost required to get a blockchain app into production.
“We’d see teams that had been working for years to get a blockchain app off the ground and it still wasn’t running,” explains Sophia Lopez, Founder and President of Kaleido. “We’d get them up and operating in a fraction of that time.”
That was great for Kaleido’s clients. But other organizations were still struggling.
“Enterprise blockchain might never be viable if we couldn’t solve this problem for everyone,” says Lopez. “So, we decided to make Kaleido’s solution open source.”
To some, taking technology they’d spent capital and time developing and making it free and accessible would sound like an unsound business idea. But not to Kaleido.
“Going open source, open governance enabled us to tap into the power of the community in a way that no other approach could touch,” says Steve Cerveny, Founder and CEO of Kaleido. “When we did the analysis, there were just too many benefits to going open source versus keeping the technology closed.”
