What the hell are Business-to-Business transactions?

Assume you're a big company that produces Product X. Product X requires raw materials A, B and C. Now where does the big company get the raw materials from? From other companies that produce them.

So we have two companies that produce raw material A, three companies that produce raw material B and four companies that produce raw material C.

Now the big company obviously needs all three materials, but there's several companies that can supply them with different prices/quality of material/volume discounts, etc. So how does the big company strike a deal with the supplier companies?

The existing solutions are:

• Big company sends an email or calls the different supplier companies, upon which a deal is struck with whoever fits the needs the best and is cheapest. The details of the contract are then entered manually into existing ERP (Enterprise Resource Planning) software like SAP or Microsoft Dynamics. This is outdated and no "big" company does this anymore. Instead they automate, see next point.

• Big company and supplier companies are connected digitally through for example IBM's Business2Business products.

As for point two, IBM's B2B solution features the following, taken from their website:

B2B integration platforms come with a wide variety of capabilities:

Communications adapters. Never say no to an onboarding request. Supports security-rich Internet communications protocols, including AS2, SFTP, MQ, HTTP, Connect:Direct and others.

Application integration. Includes adapters to connect to back-end systems, including databases, SAP as well as cloud object storage with AWS S3 Client Adapter.

Now you may be scratching your head: Aren't these features the same things that the Baseline protocol seeks to implement? Kind of, but not exactly.

There's a key difference. If you scroll down on that IBM website, you will see that in order to reap the benefits of being able to connect to different ERP systems across companies, you need to buy their B2B integration software. Generally speaking, if different companies want to connect with each other to automate their ERP workflow, there's different solutions from different software creators, but not a one-size-fits-all Baseline.

Now what does the Baseline protocol do differently from these software solutions? First off, the baseline protocol isn't software. It's a protocol. What does this mean?

• It doesn't require any company to buy expensive B2B solutions
• It doesn't require any company to set up all their existing computers with new software
• It doesn't cost the companies anything to use the Baseline protocol, besides the integration of the Baseline protocol into their ERP system (SAP, Microsoft Dynamics) which is a one-time cost compared to the expensive subscriptions that need to be renewed with existing B2B software; and the minimal cost of gas fees from sending transactions over the Ethereum mainnet

So let me summarize this. The baseline protocol is software-agnostic: It can be integrated into any existing ERP-software. Companies don't have to pay for expensive subscriptions, and are able to ditch IBM's B2B solution; because now you can communicate with business partners directly through your ERP system of choice.

Security

The baseline protocol is also more secure: Existing B2B solutions send all this business data over the internet (encrypted, but still!). So if one were to hack these messages, you could find out that our big company is in dire need of Product A, has little stock of it, and needs it by a specific date. This could give competitors unfair advantages; if the needed product is scarce, a competitor could buy it before you in order to drain the supply, so you can't get any in time.

Zero-knowledge-proofs

The baseline protocol uses zero-knowledge proofs; and this happens off-chain and directly inside the ERP system, disconnected from the internet. Say you want to submit a proposal of buying X goods from a company. A zero-knowledge proof is generated, sent over the Ethereum blockchain, and then decrypted in the receiving company's ERP system. Nobody can sniff for any info about that on the blockchain; in fact, nobody will ever know that these two companies even interacted in the first place; the transaction will look like noise in the grand scheme of blockchain transactions. This makes it infinitely more secure than transacting over the internet.

Decentralization

I haven't even talked about decentralization yet. IBM's B2B solutions are centralized, so if IBM decides to not support company X or encryption standard X or whatever else, they can screw you over. You could argue that won't happen, but you can never know.

The baseline protocol is open-source, anyone can contribute, there's no central entity that can shut it down or make unilateral changes, and it's not for-profit (because it's a protocol, duh).

It leverages the ethereum public mainnet blockchain, which means nobody can tamper with the sent transactions.

Baseline in action

Using the baseline protocol, every company that uses it receives a public ethereum wallet address. That means you can easily plug your company into the "common frame of reference" which is the Baseline protocol. Any company plugged into it can see any other company plugged into it.

Remember my first example way above? Company produces product A, needs raw materials, but there's several suppliers for each raw material. What do?

With the baseline protocol, since all companies are now connected, you can send a proposal for what you need to every single company that could provide you with said material. Those companies then respond to you with their conditions: Material X costs $50 a piece, if you buy 100 it costs only $40 a piece, if you buy 500 it only costs 30$ a piece.

Then you can respond to the different conditions you received from the different companies, pick the one you like most, and tell them directly through your ERP system: I like this proposal, let's do it. This gets sent to the supplier, the supplier signs it, and the contract is made and automatically integrated into both company's ERP systems. You can see this process of: Request for Proposal, Proposal, Buy order, Sales order in this video: https://www.youtube.com/watch?v=LNym1HeuTxw&t=313s using the ERPs SAP and Microsoft Dynamics; into which the Baseline protocol has been integrated.

Advantages over existing Business2Business solutions

Baseline is a one-size-fits-all solution that is open-source, tamper-proof, decentralized, always-online, pay only as much as you need, subscription free, secure, cheap solution to automate business processes among companies. It lays out standards together with the Ethereum OASIS initiative. It's a common frame of reference to which companies can refer in order to sync their ERPs together.

It reduces friction and workflow errors while substantially speeding up Business2Business transactions, for a fraction of the cost of software solutions that require you to bind yourself to that software, hoping that others do the same. This isn't needed with Baseline.

This is the killer use case of enterprise blockchain; and it's built on Ethereum. It's the holy grail of enterprise adoption. It may not seem exciting, but it lays the groundwork for public blockchains to be recognized as useful. Big companies used to laugh at the idea of using public blockchains due to the fact that their business data would be exposed for everyone to see; but now, using zero-knowledge-proofs, this has changed for good.

This is every blockchain project's wet dream. And it's built on Ethereum.

EY's reputation among industry giants

This project is spearheaded by EY. EY is extremely reputable among the big companies out there. They're advising Fortune 500 companies about management, ERP, transactions, taxes, etc. They're always looking for ways on how to optimize business processes for their customers because that's literally how they make money.

If EY approaches their customers and tells them: You can get rid of all this bloated software and just do this one-time integration and connect to all other companies in a fast and secure way - those companies will absolutely try it. And if it works, and it does, the word will spread fast.

The protocol is supposed to be "finished" in the fall of this year, so we can expect to see the first companies doing a trial run of it in the next couple months.

I dare say the enterprise adoption race for blockchain has been decided. It's not out of the woods just yet, but Ethereum is so many miles ahead of any competition, I don't see anyone catching up now.

Whew. This post got a lot longer than I thought it would, but I'm not an experienced writer so forgive me. But I hope I was able to get the concept across without using a ton of buzzwords that nobody understands.