The media focus around blockchain over the last five to ten years has shifted from the currency bitcoin to the underlying database technology, which is a distributed ledger technology(DLT), now used in a wide variety of use cases.
So, what is the reason behind blockchain suddenly gaining so much traction? McKinsey Report’s Blockchain’s Potentials, Limitations, and Future traces this major development in the bitcoin industry. The reasons for such a change are quite clear. Blockchain managed to penetrate and transform primary industry sectors like healthcare, finance, and banking, and brought about game-changing business practices in many other industries.
Somewhere down the line, the currency lost a lot of its initial popularity, and blockchain gradually filled up that void with promises of clean business practices. As per IDC’s records, global investments on blockchain is forecast to reach $11.7 billion in 2022.
Today, blockchain adoption features on many business teams’ core agenda, though the implementation hurdles are still there. Most industry regulators and operators have acknowledged the potential of blockchain in ensuring “transparency” in all business operations.
Is Blockchain an Immature Technology?
Blockchain Trends in 2019 includes two quotes from Gartner executives. Richard Hunter, Vice President and Gartner Fellow, commented, “Potential use cases are numerous, but real-world examples of those use cases in action at scale are nowhere to be found.” David Cearly, another Vice President and Gartner fellow, remarked, “Current blockchain technologies and concepts are immature, poorly understood.” However, the post asserts that blockchain will be used for Data Asset Exchange in 2019.
According to an IDC report, the financial services sector was the topmost investor in blockchain technology in 2018 ($552 million).
In spite of passing the pioneering stage with flying colors, this technology has confronted doubts, apprehensions, and serious concerns regarding its viability in the global market. The technology is still not well understood, as discussed in the 2019 Trends in Data Management Report, so in that sense, it is immature and uncertain.
McKinsey predicts that blockchain will make the most future impact in those sectors where transparency is of paramount importance. The widespread industry belief is that enterprises need to be committed to deliver blockchain solutions. In 2018, BTC Manager announced that Thailand will make use of blockchain technology in polling.
Thinking Strategically about Blockchain
In 2017, bitcoins and cryptocurrencies took social media and press by storm. Gradually, that media buzz shifted to blockchain.
Episode 2 of a YouTube series presentation, Don Tapscott: Thinking Strategically about Blockchain makes a convincing argument that in the coming years, the “digital distributed ledger” will become the preferred transactional mode for major business transactions.
The Future of Blockchain Technology: Top Five Predictions for 2030 points out that the ultimate goal of blockchain is to deliver a “tamper-proof, asset-tracking system” backed by clear records. By the year 2030, this post suggests, technology vendors will solve limitations of “access controls, scalability, interoperability, and advanced tools,” making blockchain mainstream across global businesses.
Five Predictions for the Future of Blockchain and Cryptocurrency notes that while the past decade witnessed blockchain applications in cryptocurrency only, now this technology has truly spread its wings and shown its magic in finance, healthcare, gaming, and many other sectors. With blockchain’s future linked with election-management, and payments, the future possibilities are endless. The only point of regret is that “the killer app” that everyone has been expectantly waiting for since 2017 has not hit the markets as yet!
What Does the Future of Blockchain Hold?
According to Forbes, with time the trust factor in the capabilities of blockchain is expected to rise. The real impact of a distributed ledger is still under speculation, but given the spurt of applications already crowding the markets, it is only a matter of time before blockchain penetrates every industry sector. This universality of blockchain can be compared to “all things digital,” which Gartner predicted in 2017, and within two years that prediction turned into a formidable reality.
Something that could reduce the growth period for blockchain is the existing transactional-integrity features of cryptocurrency. In near future, critical data will reside on distributed data stores — combining on-premise, cloud, and remote facilities — and blockchain will emerge as a savior for transactional integrity.
According to J. Christopher Giancarlo, Chairman of U.S. Commodity Futures Trading Commission, free markets foster “creativity and economic expression to promote human growth and advancement.” This assertion comes from the belief that “sustained prosperity” is a natural byproduct of “open and competitive markets, free of political interference, combined with free enterprise, personal choice, voluntary exchange and legal protection of person and property.”
As the digital transformation of global businesses continues, blockchain will naturally evolve as the best transactional platform across the globe. How the Blockchain is Powering Our Futureis an Infographic prediction fromVisualCapitalist.
The Future of Blockchain Companies says if blockchain manages to deliver the level of trust that business users have come to expect from it, then very soon Cambridge Analytica type scandals will stop. In that era, businesses will easily exchange assets in a peer-to-peer environment without the fear of regulatory or government interference. One of the drawbacks of the internet is lack of transparency and lack of governance over personal data.
Blockchain Applications in the Real World
In a BizJournals feature, author Jim Basinggame refers to blockchain technology as the future of trust.
In the insurance industry, multiparty insurance contracts can be easily validated via blockchain. Blockchain in the Insurance Industry: What to Expect in the Future? reports that the blockchain-enabled insurance market has been predicted to rise from $65 million in 2018 to $1.4 billion by 2023, a CAGR of 85 percent.
Here are some practical applications of blockchain in the insurance industry:
- Blockchain ensures integrity of personal information, offering full control to the insurer.
- Blockchain enhances trust among all parties involved in an insurance contract or claim.
- Smart contracts enable transparency in claims management. At the time of submission, blockchain checks the validity of the claims.
- Blockchain helps detect and prevent fraud.
- Blockchain can help develop efficient actuarial models, based on the most updated information.
- Blockchain reduces operational cost by automating insurance processes.
Other blockchain applications across sectors:
- In the financial-services sector, blockchain technology has disrupted the industry with many applications, like automated risk assessment and technology-guided portfolio management. JPMorgan has introduced the JPM Coin, a digital token based on blockchain technology, for transfer of payments between institutional accounts.
- In identity management, identity theft is gradually becoming history due to blockchain technology and biometric checks.
- In healthcare, blockchain has facilitated improved medical data access and efficient patient care.
- Startups across sectors are leveraging blockchain to transform traditional business models.
- In marketing, companies are using blockchain to reshape marketing functions. IBM launched blockchain-as-a-service (BaaS) to help brands like Walmart track food production.
Data Governance vs. Blockchain warns that blockchain has a downside; it can hinder or limit Data Governance practices. By disintermediating data management, blockchain actually ensures only “trusted, complaint, and secure” data is available for all.
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