There is no doubt that 2019 was the year of enterprise blockchain adoption. The buzzword of blockchain and cryptocurrency was humming as tech giants like Microsoft, IBM, AWS, Oracle and many more started testing the waters. Even in the cryptocurrency space, Banking giants and payment companies like JPMorgan, Wells Fargo, Square, Circle, and Skrill all saw growth in deciding to offer cryptocurrency services.
But before we talk about the future of blockchain let us understand what this technology actually is.
A simple analogy for understanding blockchain technology is a Google Doc. When we create a document and share it with a group of people, the document is distributed instead of copied or transferred. This creates a decentralized distribution chain that gives everyone access to the document at the same time. No one is locked out awaiting changes from another party, while all modifications to the doc are being recorded in real-time, making changes completely transparent.
Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system.
A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger. The decentralized database managed by multiple participants is known as Distributed Ledger Technology (DLT).
Blockchain is a type of DLT in which transactions are recorded with an immutable cryptographic signature called a hash.
This means if one block in one chain was changed, it would be immediately apparent it had been tampered with. If hackers wanted to corrupt a blockchain system, they would have to change every block in the chain, across all of the distributed versions of the chain.
Blockchains such as Bitcoin and Ethereum are constantly and continually growing as blocks are being added to the chain, which significantly adds to the security of the ledger.
The whole point of using a blockchain is to let people — in particular, people who don’t trust one another — share valuable data in a secure, tamper-proof way.MIT Technology Review
Blockchain is an especially promising and revolutionary technology because it helps reduce risk, stamps out fraud and brings transparency in a scalable way for myriad uses.
Future of Blockchain
Experts predict blockchain technology will be implemented for various industries and expect that the future of blockchain is to revolutionize traditional business processes.
So, let’s look at the main blockchain development trends that are expected to occur in the next few years-
Economy & Finance will lead blockchain application
Unlike other traditional businesses, the banking and finance industries don’t need to introduce radical transformation to their processes for adopting blockchain technology. After it was successfully applied for the cryptocurrency, financial institutions begin seriously considering blockchain adoption for traditional banking operations.
- In 2016, ReiseBank AG in Germany completed instantaneous payments between two of its clients on a cross-border basis using blockchain technology in around 20 seconds.
- Regarding a recent PWC report, 77 percent of financial institutions are expected to adopt blockchain technology as part of an in-production system or process by 2020.
Though the concept of blockchain is simple, it will bring considerable savings for banks. Blockchain technology will allow banks to reduce excessive bureaucracy, conduct faster transactions at lower costs, and improve its secrecy.
One of the blockchain predictions made by Gartner is that the banking industry will derive 1 billion dollars of business value from the use of blockchain-based cryptocurrencies by 2020.
Moreover, blockchain can be used for launching new cryptocurrencies that will be regulated or influenced by monetary policy. In this way, banks want to reduce the competitive advantage of standalone cryptocurrencies and achieve greater control over their monetary policy.
National Cryptocurrencies will appear
- Russian President Vladimir Putin was the first who proposed to issue “Crypto Rouble,” a national cryptocurrency.
- Earlier this year, Venezuela has already launched its national cryptocurrency Petro (petromoneda) that is backed by the country’s oil and mineral reserves. The government of Venezuela hopes that this cryptocurrency will allow bypassing the U.S. sanctions and attracting international finances to the country.
It’s inevitable that governments will have to recognize the benefits of blockchain-derived currencies. At the rise of Bitcoin, governments expressed their scepticism regarding the particular application of cryptocurrencies. However, they had to worry when Bitcoin became a tradeable currency that couldn’t be controlled by any government.
Although, some countries like China still ban Bitcoin exchanges, we should expect that governments will finally accept the blockchain-based currency in 2018 because of its potential advantages for public and potential services.
By 2022, Gartner predicts that at least five countries will issue a national cryptocurrency.
Law Integration into Smart Contracts
Besides cryptocurrency, blockchain technology benefits us with another convenient possibility, such as “smart contracts.” The main idea of smart contracts is its automatic execution when conditions are met. For instance, delivering goods after payment is received.
Blockchain Integration in Govt. Agencies
The idea of the distributed ledger is also very attractive to government authorities that have to administrate very large quantities of data. Currently, each agency has its separate database, so they have to constantly require information about residents from each other. However, the implementation of blockchain technologies for effective data management will improve the functioning of such agencies.
- Estonia has already implemented blockchain technology on the government level. Almost all public services in Estonia have access to X-Road, a decentralized digital ledger that contains information about all residents and citizens.
According to Gartner, by 2022, more than a billion people will have some data about them stored on a blockchain, but they may not be aware of it.
Blockchain & IoT
The International Data Corporation (IDC) reports that many IoT companies are considering the implementation of blockchain technology in their solutions. Therefore, IDC expects that nearly 20 percent of IoT deployments will enable blockchain services by 2019.
The reason for this is that blockchain technology can provide a secure and scalable framework for communication between IoT devices. While modern security protocols already appeared to be vulnerable when implemented to IoT devices, blockchain has already approved its high resistance to cyber-attacks.
Besides, blockchain will allow smart devices to make automated micro-transactions. Due to its distributed nature, blockchain will conduct transactions faster and cheaper. To enable transferring money or data, IoT devices will leverage smart contracts which will be considered as the agreement between the two parties.
Apart from the above trends, there is also a likelihood of increase in demand of blockchain experts as the technology pervades the business ecosystem. Upwork, an online freelancing database, has recently reported a fast-increasing demand in people with “blockchain” skills. While the technology is new, there are a limited number of blockchain engineers.
It may be a little early to be hitting the panic buttons on blockchain not reaching its potential and then falling off the radar only to be a wasted opportunity, but cracks are showing.
In 2018, Cisco took only 18 months of blockchain research to realise that there was no immediate future for them in the space and shut down their whole division.
“It will take a while for the many players in the complex markets to get up to speed.”Anoop Nanra, Head of the company’s blockchain initiative, to CNBC.
Blockchain in the future will revolutionize business processes in many industries, but its adoption requires time and efforts. Blockchain will stimulate people to acquire new skills, while traditional business will have to completely reconsider their processes. All in all, we can see more examples of successful implementation of blockchain technology.