Why is Blockchain hot right now?
So you've been reading about the promise of blockchain technology, and talking about every Fortune 500 company venturing into Blockchain Technology. If you've been waiting for the Year of the Blockchain to arrive, it has now. 2019 is the year of blockchain.
It is expected to disrupt existing industries and the way we conduct business. After thorough research and speculation, it can be concluded that blockchain definitely isn't cure all, but it is a good solution for a P2P, trustless and decentralized system/ processes.
Wait, but what are the advantages of this new technology?
The potential advantages include enhanced efficiency (faster processes and reduced manufacturing/ delivery times), collaboration (across industries), transparency, and trust, as per the report from financial institutions.
Despite this, adoption has been slow in the past few years. It picked up pace in 2017.
Are we there yet?
Finance executives and institutions were initially slow in exploring the idea of blockchain. In early 2017, most of them had no thoughts on using it or imbibing it in existing systems/ processes. There was a drastic change in attitudes in less than a year.
By Dec 2017, most of them were exploring blockchain use cases and were bullish about cryptocurrencies. According to their risk assessment, blockchain has been perceived to have the lowest possible risk in terms of exposure to financial systems in organizations. This brought a 360 degree change in their outlook towards blockchain technology.
This change shouldn't come as a complete surprise. Cryptocurrencies witnessed peak in market cap in Dec 2017 when Bitcoin hit nearly $19000 and many institutions started exploring blockchain and cryptocurrencies, around that time.
History of Blockchain
Blockchain Technology was introduced to the world for facilitating transfer of P2P electronic cash - Bitcoin (this was also the subheading of Bitcoin's whitepaper). It spread faster than fire and Silicon Valley's creativity and imagination has put forth thousands of use cases for blockchain technology in the existing world. It's like living at the brink of a technological breakthrough, similar to living in the world before the internet exploded.
Institutions using Blockchain Technology
A report released by Greenwich Associates shows the financial services industry is spending about $1.7 billion to move blockchain technology from proof of concept to wider adoption. Blockchain budgets in institutions have increased 67 percent in the past year, with one in 10 banks budgeting in more than $10 million for blockchain technology.
Among others, Bank of America and J.P. Morgan Chase have spent over $2 Million in blockchain research over the past 2 years. Citi bank, France's BNP Paribas, Barclays, Goldman Sachs are among the banks/ institutions who embraced this technology in late 2017.
Blockchains with digital records of students’ academic degrees, professional certifications and other records are a breakthrough for universities that have long relied on transcripts and diplomas to attest to academic achievement.
Central New Mexico Community College was the first college to start issuing digital diplomas in late 2017. They took this one step further by accepting cryptocurrency payments based in blockchain.
Multiple Ivy League colleges and universities are said to have made investments into “at least” one cryptocurrency fund. A technology news site published this information in October 2018. Citing an unnamed source, the report included multi-billion dollar endowments of Harvard University, Stanford University, Dartmouth College, MIT, and the University of North Carolina.
For most technology firms, new trends in technology are always worth checking out. This also means that companies like Apple, IBM and Microsoft are experimenting with blockchain and distributed ledgers.
A patent filing from mid 2018 shows that Apple wants to use Distributed Ledger Technology to timestamp specific data. This may not be a predictable development, however having an immutable record of timestamps and data can be of immense value to any technology firm.
Other companies on the list are Microsoft, Alphabet, Walmart and Amazon. What they achieve is yet to be determined, a lot of their efforts are kept under covers and a lot of different opinions are coming out in public regarding the same.
Adoption by Government Institutions
Governments across the world have been launching blockchain initiatives and embracing this new technology. The Indian Government is exploring the idea of voting, land registry, healthcare and other government initiatives on the blockchain.
Here's an infographic with blockchain initiatives in different countries of the world.
Why Blockchain is the future?
The world went from no internet to major internet dependency in less than a decade, and this may happen even faster with blockchain technology. Our lives largely revolve around our identities on social media, our digital footprint and our social media connections. This caught the attention of hackers and we witnessed an increase in the number of digital identity thefts and hacks. It's like we are a point where there may be no other choice than to adapt to a technology that would protect us, help us grow and bring us newer opportunities.
Real world use cases
This brings me to real world use cases of blockchain and they range from farm to fork (food), identity management, electronic cash transfer (remittances), medical record management, partial ownership of real world assets (securitization), decentralization of social media and governance on blockchain.
And blockchain doesn't have to necessarily disrupt, but essentially take things to the next level in almost all industries.
Cryptocurrencies and Blockchain
Cryptocurrencies have no existence without blockchain technology, as this gives them features like transparency, decentralization and trustless P2P ecosystem. Blockchain is key to cryptocurrencies. The world witnessed a large number of ICOs in 2016, 2017 and 2018 that tokenized use cases that didn't require decentralization and raised large investments for the same. 2019 is more about securitization of real world assets that the world transacts in - like gold, real estate, technology, art, antiques and luxury goods.
2019 is the year of security tokens and real world adoption of blockchain.
When will blockchain see mainstream adoption?
Blockchain adoption is picking pace and in the next 5 years we would see industry giants move new projects to the blockchain. As most use cases of blockchain involve securitization, people would need time to get used to tokens and use tokens for almost everything on the blockchain. This would take a considerable time, as the penetration of digital/ electronic cash took over a decade to become mainstream pan India.
Mass blockchain adoption is predicted in the next 20 years.
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