Ethereum investors have been eagerly awaiting more news about the Enterprise Ethereum Alliance, the enterprise platform that’s supposed to transform Ethereum into the Amazon Web Services (AWS) of the future. The announcement of the co-venture between several of the largest US tech companies coincided with the beginning of a massive runup in the value of Ethereum. Some have speculated that enabling the Ethereum network to process a million transactions a second could potentially boost the value of ether tokens past $2,000 a coin. They’re currently trading at $290.
In an announcement earlier this week, Microsoft, a key partner in the alliance, has released the Confidential Consortium (Coco) Framework, an Ethereum-based protocol that could revolutionize how companies use the Ethereum protocol for business applications.
The CoCo Framework improves scalability – or the network’s ability to process a high volume of transactions – while also improving privacy features that are also important to businesses. It accomplishes this by creating what’s called an “off-chain” structure for running distributed applications, according to CoinTelegraph.
These “off-chain” structures, also known as “sidechains,” are crucial to allowing the Ethereum network to someday process millions of transactions a second. Here’s Mark Russinovich, the CTO of Microsoft Azure, who explains in his press release how the CoCo Framework will help customers build effective Ethereum-based applications.
“As enterprises look to apply blockchain technology to meet their business needs, they’ve come to realize that many existing blockchain protocols fail to meet key enterprise requirements such as performance, confidentiality, governance, and required processing power. This is because existing systems were designed to function—and to achieve consensus—in public scenarios amongst anonymous, untrusted actors with maximum transparency. Because of this, transactions are posted “in the clear” for all to see, every node in the network executes every transaction, and computationally intensive consensus algorithms must be employed. These safeguards, while necessary to ensure the integrity of public blockchain networks, require tradeoffs in terms of key enterprise requirements such as scalability and confidentiality.
Efforts to adapt existing public blockchain protocols or to create new ones to meet these needs have generally traded one required enterprise attribute for another, such as improved confidentiality at the cost of greater complexity or lower performance.”
In summary, public digital-currency blockchains prioritize transparency over other features because they function in a “trustless” environment where two anonymous parties are exchanging cryptocurrency. In a business setting, this need for publicly broadcasting every transaction disappears.
As Microsoft explains, CoCo is compatible with all rival enterprise blockchain solutions like R3 and Hyperledger, and J.P. Morgan Chase & Co. is busy integrating it into R3, while Microsoft integrates it into Ethereum.