Odaily Frontline | What exactly does Ernst & Young want to use the blockchain for?
This article comes fromDecrypt, original author: Tim Copeland
Odaily Translator |
Odaily Translator |
In April, auditing giant Ernst & Young unveiled a technological development called Nightfall designed for conducting private Ethereum transactions. But at that time, no one knew why EY developed this technology, nor did they know how much EY expected from it.At Devcon 5, the Ethereum developer conference held in Osaka, Japan, Paul Brody, global blockchain leader of Ernst & Young, accepted an exclusive interview with Decrypt.Brody revealed that "Twilight" is only the first step in a larger journey, the goal of which is to allow enterprises to use the Ethereum public chain to create agreements, settle invoices, pay each other...but at the same time all transaction information Both will remain private, and most data will remain off-chain.
It's an ambitious plan, but Brody thinks it could drive "a massive transformation for businesses around the world".
To better understand this, Brody cites the introduction of enterprise resource planning (ERP) software, which brings together information from all parts of a business in one place. ERP was created 20 years ago, and its emergence has restructured the way enterprises operate. “We believe blockchain will do to networks and businesses what ERP did to individual businesses,” Brody claimed.
Brody's idea is not groundless. In June 2018, before the release of Twilight, EY had announced a partnership with Microsoft, which planned to use EY's solution prototype to settle and pay contracts. Brody said Microsoft’s previous method of settling invoices, which usually took 30 days, took only five minutes using the blockchain-based method. It was a huge success.
Brody revealed that Ernst & Young can handle more than 10,000 transactions for Microsoft every day. In addition, the prototype has seven major video game provider clients, and EY is also expanding the scope of the service.
privacy paradox
However, the success of the prototype simply means that EY is on the right track that there is now a gap in the market where blockchain-based services can be more cost effective. Only, this is still not enough.EY's solution prototype currently uses a private blockchain, not too different from a database with encryption added. It still requires trusted third parties to maintain the private chain, and these third parties can witness what happened.
This shows that they haven't solved the real problem.
The real problem, according to Brody, is the risk that arises when companies use third-party platforms (ie, portals) to enable improvement processes. A third party's ability to collect data on all the transactions it processes could expose a company's private data, which itself is a valuable commodity. As a result, many companies choose not to use such intermediaries, especially when it comes to trade secrets or other valuable information.
Brody: "All transactional data is visible to the portal operator. As a result, many corporate partners have been reluctant to use the portal, especially in direct procurement, as it would expose their most confidential commercial terms and conditions to potential competition opponent."
This is where blockchain can come into play. This technology allows any two parties to interact without the need for an additional third party. Ethereum has smart contracts that are automatically executed when conditions are met. Again, this does not involve third parties.If you make a transaction on the web, anyone from anywhere can see the two addresses involved in the transaction and the amount transferred. Therefore, if a business started using Ethereum today, it could expose its financial situation. this is a big problem.
the most important is,the most important is,Smart contracts are also publicly available.
So if you create a contract between two parties, when certain conditions are met, a certain amount of assets will be transferred, and anyone can monitor it. Again, this is a big problem.
The concept of "privacy smart contract"
Ernst & Young did not choose to sit still. Instead, he chose to take the initiative to go deep into the blockchain industry. EY has hired a number of engineers and developers (Brody would not say how many) to help develop privacy features for ethereum. Its first step was to create Twilight, a method of creating private transactions on the ethereum blockchain — using sophisticated cryptography to hide transaction data from public view.
Here comes a new problem, they take up a lot of network space and make transactions very expensive. Initially, (EY’s solution) would cost as much as $100 per transaction, far exceeding the current average transaction fee of $0.004 on the Ethereum chain. EY has since managed to get the cost down to $9. Brody claimed that from an overall cost perspective, such as using a private chain to pay for services, it is already cheaper than using a private chain. But he added that EY plans to bring the cost down to less than $1 by batching (that is, combining into one transaction) transactions, a technique commonly used in the blockchain industry.Specifically, EY is actually waiting for a new development — Ethereum Improvement Proposal 1962. If implemented, the proposal would make it possible for multiple entities to work together to process transactions in batches.
Brody's team is working hard to make this happen.
Brody: "If we succeed, by the end of the year, transaction costs will be down to very low levels, but only if you have multiple transactions to do at the same time."This is not the end, EY wants to do the same with smart contracts.Its planned second phase is the creation of the concept of "privacy smart contracts". In this concept, the details of the smart contract are not transmitted on-chain.
This obviously requires more technological innovation.
The third stage is more radical. In Brody's words: "Our goal is to create enterprise transactions. But we want to tell enterprise customers that any of their data will never appear on the blockchain, even in encrypted form."One of EY's concerns is that even if encrypted data is uploaded to the blockchain, it is still a security risk. Instead, it hopes to create some distance between the original data and the data on the blockchain. More specifically, what Ernst & Young hopes to put on the blockchain is the data link, not the data itself.
Therefore, even if the blockchain is compromised, the company will have the ability to cut off access.
Brody explained: "We can prove that all transactions have been performed according to the contract, but in order to get the details, you have to follow up to the data link off the chain. Encrypting the data is not enough, you need to be able to revoke access to the data if necessary. .”
Bringing Commerce to EthereumLooking at these three stages, if Ernst & Young succeeds,
Businesses will be able to first enter into a contract with another business — and then fulfill the terms of the contract — which in turn triggers a smart contract — which ultimately triggers an Ethereum transaction — without anyone but the two companies involved in the contract having access to any data.
Brody emphasized: "The ultimate goal of this plan is to provide enterprise users with all the functions of the Ethereum blockchain, but with absolute privacy."
This is a fairly radical overhaul. Essentially, it will make forming partnerships between companies as easy as sending an email to anyone in the world. While it might not be in the spirit of decentralized finance (DeFi) (i.e. the idea of creating financial applications on a blockchain platform), it's actually the same concept, applicable to real-world businesses.
Enterprise customers also seem to like the plan. In addition to the cooperation with Microsoft, Ernst & Young is also handling blockchain-related audit work for 130 companies, and has carried out 350 business cooperations with multiple blockchain companies. If EY can achieve its plan, it will be able to drive many companies to start using Ethereum, saving time and cost.
