As 2017 draws to a close, predictions of what the coming year will bring to the technology sector abound. Here's a look at what we can expect in the near future in the world of blockchain.
What is it?
- This past year saw “blockchain” becoming a buzzword across numerous industries, even if not everyone talking about it had a solid idea of what it meant. Originally developed as an accounting method for the virtual currency Bitcoin, blockchain is a “distributed ledger” technology (DLT): a constantly-growing set of completed transactions, or “blocks.” Records of these transactions get cryptographically protected and automatically distributed to all market participants, eliminating the need for central recordkeeping.
What’s so Interesting About it?
- Blockchain effectively removes nearly all human involvement in the processing of transactions, offering the potential to greatly simplify and reduce operational costs. As an example: Cross-border trades that involve multiple currencies, multiple time zones, multiple-party confirmations and so on can be complicated, lengthy transactions. But the blockchain concept supports “smart contracts” that can be set to trigger actions automatically when certain conditions are met, radically simplifying the process.
- Especially in the context of private networks, blockchain is also secure by design, and has been identified as a potential means for providing materials traceability, storing medical records and even as a tool for preventing cyberattacks.
- Although it won’t happen overnight, the use of blockchain will almost certainly transcend the financial services industry, moving into areas such as health care, supply chain and many more. Online magazine Datamation notes that blockchain’s “smart contract” ability makes it well suited to manage digital copyright for streaming services, for instance; the use case for the technology is liable to greatly expand as it continues to become more visible and better understood.
- Marketing research firm IDG Connect sees blockchain as well-poised to converge with other rising tech trends, like artificial intelligence (AI) and the internet of things (IoT). Here’s an example: Your smart refrigerator, an IoT device, learns your habits and patterns via AI in order to automatically place grocery-store orders for replenishing supplies. But in order for anyone to sign on to this level of potential privacy invasion, there must be an assurance that data is being stored and accessed securely. That’s where the secure design of blockchain comes in.
- We’re also liable to see blockchain powering a new generation of investments through Initial Coin Offerings (ICOs), which can be used as fast fundraising tools for startups. Investopedia describes how investors are motivated to buy blockchain-based cryptocurrency in the hope that the plan becomes successful — in which case the cryptocurrency value is liable to increase. When Ethereum — a smart contracts platform that uses coin tokens called “Ethers” — was announced in 2014, its ICO leveraged Ethers valued at $.40 each to raise $18 million in Bitcoins. By 2016, individual Ether value was as high as $14, which translated to a company market value of over $1 billion.
It’s important to point out that ICOs have stirred controversy for allowing startups to bypass the regulations of financial authorities such as the Securities Exchange Commission (SEC), but the SEC’s mid-2017 announcement that it would begin oversight on coins that it deemed to be equivalent to securities is liable to change this trend — leading to SEC-compliant ICOs that will fuel acceptance of the technology as an accepted investment path.