After talking about Hedera’s Consensus-as-a-Service model in the first part of CryptoNewspeople’s interview, Hedera CEO Mance Harmon mentioned one specific use case of enterprise blockchain to organize industry cooperation.
Like with public blockchains, enterprise-based solutions are a way of coordinating participants of an ecosystem who cannot rely on trusting each other.
When asked about specific examples of industries benefiting from blockchain, Harmon referred to one of their clients, the Coupon Bureau.
The Coupon Bureau is a non-profit organization that Harmon called “the heart of the coupon industry in the United States.” Through various other corporate associations and committees, it is backed by major U.S. retailers like Target and General Mills.
Harmon then explained that Coupon Bureau provides a central database for all entities participating in the system, be they retail stores or product manufacturers. He continued:
“Consumers, when they go to the store, they have a coupon, perhaps on their phone. […] They use it at the point of sale system. That transaction goes to the Hedera Consensus Service and it gets a consensus timestamp, and then flows from there back to the Coupon Bureau.”
The bureau then updates its registry with a consensus-backed entry to ensure that the coupon is never used again. This system has two main advantages, as Harmon explained.
The first one is for consumer analytics, where the digital coupon system allows producers to track which coupons — of the 250 billion issued annually in the U.S. — are actually being used.
But the second reason is given by the nature of the bureau, which unites many companies into a single entity, some of which may be competitors. The problem of trust becomes key, as Harmon said:
“The industry at large doesn’t want to have to trust the Coupon Bureau not to defraud them.”
Why public blockchains are not ideal for enterprise
Hedera Hashgraph’s consensus model is fairly centralized by cryptocurrency standards, as nodes in the network are managed by corporate entities. In that respect, it’s similar to existing governance mechanisms for industry consortiums.
In Harmon’s view, public companies will not embrace public blockchains where nobody can be made accountable. Enterprises are used to signing service-level agreements, which define specific quality standards. He added:
If you’re serious about your application, you need somebody to call in the event the infrastructure doesn’t work right. How do you do that with Ethereum? You can’t, not really.”
According to Harmon, Hedera’s model allows it to be “decentralized and trusted in a global public network,” while at the same time responding to the practical concerns of their clients.