Early last year, critics of blockchain tolled the bells of doom for the technology. They argued that it was overhyped and did not merit the kind of attention and investment it lured.
Fast forward to 2020, and what we have seen most of last year was countless small- and medium-sized blockchain startups winding up. But at the same time, larger enterprises embracing blockchain became a growing trend.
Amongst the emerging Fourth Industrial Revolution (4IR) technologies, blockchain and AI arguably topped the list of the most controversial technologies. We take a look at the trends that will shape this hotly debated technology.
1. Enterprises are becoming blockchain fans
Large corporations have begun to see blockchain as a real and applicable solution. Walmart, IBM, Facebook, FedEx, and Salesforce have all announced their intentions to adopt with a few already deploying the technology. Walmart Canada recently launched the world’s largest blockchain-based freight-and-payment network, solving supply chain pain points.
Continued investment and development of blockchain by these companies should begin to show real-world results in the coming months and years. When this happens, we should see a quick increase in the adoption as it spills over to small and medium enterprises.
2. Permissioned vs. permissionless is so last year
The discussion of permissioned private versus permissionless public blockchains has since moved on to hybrid and federated blockchains.
While the most familiar type of blockchain is the permissionless, transparent P2P public blockchain requiring no central authority to work (like Bitcoin or Ethereum), such a setup frequently does not work well for companies. Private blockchains are also cheaper and faster, offering operational efficiency private organizations seek.
Hybrid blockchains try to utilize the best characteristics of both public and private blockchains. They allow participants to seamlessly leverage decentralization while also managing sensitive data and improving performance. Using interchain, bridges, and other interoperability solutions, a public and private blockchain working together can combine a traditional back office’s capabilities with logistics and automated smart contract enforcement. Benefits include liquidity and greater market access of public blockchain alongside the privacy and security benefits of permissioned blockchain.
Hybrid blockchains try to utilize the best characteristics of both public and private blockchains.
Federated or consortium blockchain allows multiple entities, as opposed to just one entity in charge (private blockchain), to ‘write access’ privileges in the network. It reinforces the decentralized feature of blockchains and creates a hub system where multiple organizations can exchange information and work simultaneously. Hedera Hashgraph and Libra are instances of federated blockchain implementations.
Examples of hybrid blockchain projects include XinFin and Kadena. Kadena is especially interesting as it was founded by former J.P. Morgan DLT leads and will be launched on January 15, 2020. The creators claim that it “leapfrogs existing smart contract blockchain solutions like Ethereum and solves the proof of work scalability issues of Bitcoin.”
3. Blockchain-as-a-Service to spark an (r)evolution
Blockchain-as-a-Service (BaaS) is establishing the standards for cloud-based enterprise blockchain infrastructure, security, resilience, and maintenance. The entrance threshold has been shrinking as these standards have become increasingly accessible, thereby removing the technical complexities and operational overhead businesses face in operating a blockchain and maintaining its infrastructure.
BaaS is considered the plug-and-play of blockchain solutions, and it solves a host of business problems, such as supply chain tracking, secure transaction storage, personal data management, etc. It has been widely seen as a catalyst for the widespread adoption of blockchain technology across various industry sectors and businesses. The BaaS evolution will continue into 2020 with more new setups working on specific tasks.
4. Blockchain sharing economy gets real
The sharing economy has been made possible by innovative companies like Uber and Airbnb. Grounded by the idea that consumers possess assets that are not utilized all the time, the sharing economy allows the monetization of otherwise trapped liquidity.
Recent improvements in blockchain protocols seem to indicate there could be massive changes down the horizon.
Blockchains allow for smart contracts to deploy software in a secure and decentralized manner. Using a system of tokens, rewards or compensation can be distributed more equitably.
Thus far, blockchain has had a negligible impact on the sharing economy. But recent improvements in blockchain protocols seem to indicate there could be massive changes down the horizon.
According to Will Martino, co-founder of Kadena, a hybrid blockchain system provides the answer to unlocking liquidity with blockchain.
5. Love affair between finance and blockchain continues
It is not surprising that the finance sector continues to lead blockchain applications seeing that the technology came to the forefront through Bitcoin. Bloomberg analysts say the cryptocurrency has had a 9,000,000% rise this decade, making it the decade's top-performing asset.
Initially seen as an alternative medium of exchange to fiat currencies, Bitcoin has become more of a store of value, like gold, for most holders of the cryptocurrency.
For mass adoption to finally happen, the focus will need to be on products that touch the end consumer.
Elsewhere in the cryptosphere, other currencies seem better suited to take on Bitcoin's founding role. Altcoins like Dash and Litecoin and others have been actively creating numerous crypto payment solutions, forming partnerships on all verticals with businesses and corporations.
A PwC report states that 77% of financial institutions are expected to adopt blockchain as part of an in-production system or process by 2020. The technology allows banks to reduce excessive bureaucracy, conduct faster transactions at lower costs, and improve transparency.
Blockchain will revolutionize operations and processes across industries. Adoption and deployment will, however, still require some more time and effort before optimal benefits can be harvested.
For mass adoption to finally happen, the focus will need to be on products that touch the end consumer. In the meantime, we are going to witness further standardization, competition, more interoperability, and relevant commercial applications.
Photo credit: iStockphoto/Deagreez