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Ernst & Young steps up commitment to blockchain

Big Four auditor and professional services group Ernst & Young, aka EY, is encouraging corporate clients to use the Ethereum blockchain and will offer free software to help them do so.

EY’s protocol is internally codenamed Nightfall and has been in development over the past year by the group’s team of over 200 blockchain developers. It is scheduled for publication next month and was created for such use cases as supply chains, food tracing, transactions between branches of a company and public finance.

According to the cryptocurrencies website coindesk.com, Nightfall uses a technology known as zero-knowledge proofs in keeping with other enterprise blockchain platforms, which allows private transactions on a shared ledger.

It differs in two major respects. Firstly, EY’s software is intended to run on top of the public Ethereum network, not a private variant. Secondly,

EY is adopting an unusual approach to intellectual property – it is ready not only to open-source the code – releasing it with a permissive copyright licence – but also to put it in the public domain with no licence at all.

Encouraging adoption

“We want to maximise adoption and community involvement, we want people to adopt it, and adapt it, and improve it. If we retain ownership, people may not invest that much time and energy in something they might not control,” explains EY’s global innovation leader for blockchain, Paul Brody.

“The cleanest way to make everybody use it is just to give it away with no strings attached,” although the decision was not taken lightly. “A year of coding work. This is a million dollars’ worth of stuff we’re giving away.”

Brody adds that EY’s solutions for Nightfall will run in the Microsoft Azure cloud environment and are integrated with enterprise software from SAP, to give clients “a comfort that this is not new and scary. This is a mature technology backed by the world’s leading technology companies.”

Testing and security

EY has also announced the launch of EY Smart Contract Analyzer, a smart contract testing and security service for the public Ethereum blockchain. The service, now entering a private beta test, will allow users to monitor smart contracts and tokens for known security risks. “As companies and investors increasingly turn to blockchain-based tokens and assets, it is becoming crucial to understand the risks involved,” the group commented.

“Investors in digital tokens face unique risks because both tokens and contracts are software designed to represent certain business and legal commitments. EY research has found that, in the past, digital tokens may not have accurately reflected claims made in prospectuses or white papers and may not be updated in ways that are agreed by investors.”

The EY Smart Contract Analyzer has been developed by the group’s blockchain security lab in Israel to test and monitor tokens and contracts both prior to their release and once available on public blockchains. EY has developed a list of more than 250 standard tests that cover aspects ranging from known malware and coding errors to standard tests that confirm for investors that tokens are behaving according to accepted industry standards. 

EY is developing and deploying these tests into the system in categories ranging from known security flaws to efficiency concerns. The EY service also allows for the development of customized token tests and continuous monitoring for changes.

“Our clients are increasingly entrusting key enterprise business processes and valuable investments to software code,” adds Brady. “We don’t run enterprise computing systems without anti-virus tools and it only makes sense to run blockchain-based investment systems with smart contract and token testing tools.”

In addition to monitoring tokens and contracts for expected performance, EY has developed patent-pending simulation software that allows organizations to test token behaviour against likely transaction scenarios using real data from the public Ethereum blockchain. 

“It’s not enough to test static code, we need to see how contracts and tokens perform under real transaction conditions,” comments Brody. “The simulator allows many different transaction scenarios to be tested using the full Ethereum blockchain, without changing its state. This includes all kinds of standard activities like code updates, lock-up rules and transfer restrictions.”

The EY Smart Contract testing service will be integrated into EY Blockchain Analyzer, the group’s blockchain analytics, tax and monitoring platform later this year for general availability.


This item appears in the following sections:
Risk Management
Financial Risk Management
Trade & FSC Management
Financial Supply Chain Platforms
Treasury Management Systems

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