Microsoft is deploying what could become one of the biggest enterprise blockchains

Into blockchain.
Into blockchain.
Image: Reuters/Dado Ruvic/Illustration
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Even as blockchain mania is in some cases being replaced by blockchain skepticism, projects using the distributed ledger technology are still being rolled out. One of the latest is a partnership between consulting firm EY and technology giant Microsoft.

The companies say the network, initially to be used for rights and royalties processing by Microsoft’s game publishers,  will eventually have a much wider purpose. It’s meant for any industry in which assets or intellectual property are licensed and royalties accrue based on contracts. Users could include developers, music publishers, authors, or production houses, which generate millions of transactions each month in paid royalties.

For Microsoft, the gaming-partner blockchain network is expected to handle millions of transactions each day, making it one of the largest such ecosystems for enterprise use.

A key question is whether blockchain systems are better than regular technology. It’s entirely reasonable to think a distributed-ledger network will be an upgrade from an old manual process. Yet is it cheaper and faster than regular technology that hasn’t been sprinkled with crypto pixie dust?

Paul Brody, EY’s global innovation leader for blockchain, told Quartz this system is better than some other off-the-shelf technology because of its decentralized nature—it provides tools to process transactions between multiple entities without relying on a centralized party:

There are two reasons why a blockchain is a much better solution for this particular challenge. The first comes from smart contracts themselves, which allow for a much more flexible approach to business logic. Smart contracts are much more flexible tool for handing lots of unique business agreements while ingesting lots of transactions and preserving the privacy between parties. Secondly, this isn’t just about Microsoft and their business partners–it is ultimately intended to be a general tool set for any company to do digital rights and royalty contracts with any other. That means no centralized control and each company being assured of its own operational privacy.

The Bank for International Settlements (pdf) recently pointed out that the widely distributed blockchain behind crypto assets like bitcoin uses far more energy and memory storage than existing electronic payments systems, and it can’t process nearly as many transactions. The Basel-based bank acknowledged, however, that the underlying technology could be useful in other fields.

The BIS also suggested that so-called permissioned distributed ledgers, which use a smaller network of nodes to validate transactions, could be more efficient than bitcoin’s ledger system—and potentially even more efficient than other types of technology. The project between EY and Microsoft uses Quorum’s permissioned distributed ledger and Microsoft’s Azure cloud infrastructure.