Steve Cerveny

Enterprise blockchain networks are moving beyond what Kaleido cofounder and CEO Steve Cerveny calls “blockchain tourism” and into real-world use cases.

The blockchain, adds cofounder and COO Sophia Lopez, is “an opportunity to reimagine these core business processes that haven’t been touched for 30 to 40 years. It’s an exciting time, and people with vision and ideas have a huge opportunity that can benefit whole industries.”

Sophia Lopez

Since Kaleido was unveiled as a software-as-a-service blockchain solution by ConsenSys in collaboration with Amazon Web Services in May, the platform has grown to host more than 1,000 enterprise blockchain networks, company officials say. Among the projects that have moved from proof-of-concept to real-world scenarios are komgo, a global commodity trade and finance network made up of a core group of 15 international banks, and Project i2i, a payment network for rural banks in the Philippines which has grown from six to 100 participating banks, with more than 300 additional partners anticipated in the coming months.  

Last week, Kaleido announced flexible pricing plans for its hosted blockchain solutions, an approach intended to help blockchain consortia scale by offering plans that fit the needs of companies at different levels of technology adoption.

Cerveny and Lopez spoke with ThirtyK about what’s needed beyond the blockchain to make enterprise solutions work, the challenges of building consortia and how the greatest obstacles to bringing solutions to scale are no longer technological but human. Lopez previously led IBM’s worldwide blockchain platform offerings, while Cerveny was a program director for blockchain with IBM.

ThirtyK: How has Kaleido evolved since it was first unveiled at the Consensus conference in May?

Cerveny: Our vision then was to help accelerate the enterprise adoption of blockchain, and that’s our view going forward. One key way that Kaleido has evolved is that we realized that only 5 percent to 10 percent of an enterprise blockchain project is the chain itself. If you look at the projects… the app is at the top of the stack and the chains are at the bottom, but what’s interesting is all the decentralized components that are blockchain-ish but not on a blockchain.

“Changing the trust equation where it’s really simple and easy to participate in the ecosystem is really a compelling proposition.”

To help address that need, Kaleido launched a marketplace offering a set of decentralized services. [One example] is distributed file storage. As you digitize assets and put them on the blockchain, you need a decent amount of storage for them, and one thing the blockchain isn’t great at is storing large files. So IPFS puts these files in distributed storage, and a hash links them on the chain. Oracles are a component we’ve talked about for some time in the blockchain arena to get outside data in… like the exact currency swap rate [to facilitate] cross-border transactions.

We have 15 listings in our marketplace. [These products] have had a heavy barrier to entry for an enterprise to adopt them. We’re making it quick and simple.

Moving Into Production

ThirtyK: What kind of adoption have you seen among your enterprise clients, and do you have a sense of how many of these projects have moved from proof-of-concept to production?

Cerveny: Of the thousand-plus networks running around the world, these networks have produced over 100 million blocks. There’s a lot of activity going on. In prior years, it was very heavy on the blockchain tourism. Now we’re seeing the business case, the governance and legal aspects of forming these networks are in place and people can move quickly. A lot of it now is that the technology isn’t the blocker, it’s the other elements of the business transformation they’re attempting.

Lopez: [The new tiered pricing model] is in response to clients pushing into production. Really being able to move this fast when we’ve seen the market struggle for years has been a gratifying part of what we’re doing.

ThirtyK: What are the challenges of scaling networks across consortia?

Lopez: Some of the traditional problems people were running into were about getting their arms around the technology. You look at 400 different entities on the business side. These sorts of initiatives are hard to get off the ground because of the support barrier. The second layer of challenge is around shared IT. With onboarding [new consortia members], you have a situation where everyone owns a piece of the network, but no one owns it. You’re only going to be as fast as your slowest member and as secure as your least secure member. You need to find a way to equalize and accelerate everyone and remove these challenges from the table.

Ceverny: Consortia blockchains are really diverse. Different participants want to be involved at different levels with the blockchain, and while the initial group doing the pilot is really small, part of being in production on the blockchain is about opening up to the larger business network and ecosystem. There’s been no way to efficiently onboard these [organizations], and our subscription plans are designed to work together, which is another first in the space. Changing the trust equation where it’s really simple and easy to participate in the ecosystem is really a compelling proposition.

Enterprise Challenges

ThirtyK: What are the challenges you’re seeing the enterprise face as it moves more blockchain systems into production?

Cerveny: I think the bigger frontier that’s providing a lot of friction now is the more human side of it, the idea that in order to get the benefit, we need to trust the blockchain system as the system of record. It’s not just another complementary component on the side, it needs to be the source of truth.

The second aspect is that this thing is a network, a collective system. How do we, as a group of organizations, collaborate to maintain it? We talk about governance and shared IT, but we’re just starting to scratch the surface of what that means for companies to do that at scale and replace the core systems that the blockchain can replace…. Enterprises just aren’t used to getting on the phone with partners and competitors and working together collaboratively. To trust the new system and do that at scale is the next frontier we’re going to be talking about over the next couple of years.

Mark Toner
Mark Toner is a Washington, D.C., writer and editor. He has covered business, technology, media, education, and healthcare for a wide range of trade and industry publications.