Ten years ago, blockchain technology was born. Distributed ledger innovation presently can’t seem to essentially influence our lives. Is it safe to say that it was overhyped? Or is it just about to make a huge difference? Let’s have a look what happened so far and what is up to come.
For those of you who have attended one of our blockchain education programs it’s easy to understand. Smart contracts and distributed ledgers are the future. Before you continue reading, you might want basic information about blockchain technology. Therefore, we’re offering blockchain consulting services internationally.
First of all, let’s see what smart blockchain coding for distributed ledger technology will bring us in 2020 and beyond.
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Blockchain Technology since 2008
As usual for January, it’s cold outside and thick fog lies over the Crypto Valley of Zug. There is a feeling of quieted expectation as a group of individuals in a small office in Zug, Switzerland, cluster over a screen that displays a map of the world. Another red marker drop over Zurich. Progressively more red markers start to show up. In New York, Toronto, London, Shanghai, Berlin. It’s the zenith of long stretches of work by a network over the globe. The “genesis block” of another blockchain has been made.
Years back, when we started using blockchain technology, the whole-world was full of anticipation. Our febrile feeling of hope encompassed this generally new innovation. For a long time related basically only with the bitcoin cryptocurrency. Presently it appeared to be prepared to break out into entirely different areas. To be sure, there was discussion of it changing the world.
Ethereum Blockchain & Smart Contracts
This blockchain is basically a cryptographically secured digital ledger, distributed over a global network of computers. However, with the dispatch of the Ethereum blockchain in 2015, it was clear that this is the game changer. The brainchild, prodigy Vitalik Buterin, released Ethereum. A self-operating computer program with the logic of a traditional contract. But ensured execution and authorization of payments. Why was it a revolutionary innovation? Simple, it cuts out every middleman. Meaning, no third party service is needed anymore. The execution of a contract can now be decentralized.
Since the bitcoin blockchain, there is no longer a need for a bank to act as an intermediary for the transfer of money. While Ethereum cuts out lawyers and notaries. The use of smart contracts on a blockchain inspired thousands of people all around the world. It was the starting point of rolling out blockchain technology. Right to other sectors than financial services. That implies even governments, manufacturers, supply chain companies, retail stores, or the transportation industry. They all can profit from fast and secure transactions.
dApps – Decentralized Applications
Apple co-founder Steve Wozniak called the capability of blockchain “mind-blowing”. We discussed the numerous sorts of decentralized applications (dApps) that can be created on Ethereum. We also noticed the enthusiasm of huge organizations regarding the capability of blockchain. The future is bright, with a totally different decentralized world-wide-web. Decentralized independent associations will exist on the blockchain. Running completely without the need of human mediation. It might just take a little longer.
The Difference Between Clouds and Distributed Networks:
We returned to evaluate differences which may have occurred after a year. As much as there are many constants a lot has also changed in different ways, for example,
the price of bitcoin had grown from around $2,500 to a pinnacle of more than $19,000 in December 2017. Just before dropping down to one third within two weeks.
The price of Ether, the digital money related with the Ethereum blockchain, had followed a comparative tipsy direction. Some people became rich for sure. While numerous others were taking a gander at huge real or paper losses.
Meanwhile, the bitcoin bubble had made dispersed record innovation. Our theme for discourse at working class evenings around the globe. As far as the dApps that had been grown, apparently the most discussed – had been CryptoKitties. Which permitted clients to purchase, breed and sell computerized cats. This was not actually the sort of world-changing new application we had hoped for.
The Years of ICOs
In any case, the blockchain world had delivered at any rate one pivotal thought: a progressive path for speculators to discard cash. The Initial Coin Offering (ICO) is a sort of crowdfunded variant of the conventional IPO. Permitting juvenile companies to raise capital.
The fundamental component for an ICO is that an organization distributes a white paper. Itemizing its thought and afterward investors purchase tokens from the organization. That can be utilized in various manners once the undertaking has really propelled. At first, speculators tossed cash at these plans. Ending with numerous new companies getting a huge number of dollars in not more than minutes. In any case, the majority of them ended up being hugely exaggerated, and some were simple scams.
A recent report found that 86% of the main ICOs from early 2019 had fallen underneath their underlying posting cost, while 30% had lost all their value.
Our most famous meme of the time summarized the general frame of mind to ICOs, indicating an image of a horse divided into three parts. The left-hand side is impeccably rendered and headed “Whitepaper”. The middle part, titled “Production”, shows the image transforming into something extensively less refined. Also, the right-hand side, called “Actual Product Release”, shows a kid’s drawing of a horse.
Web 3.0 The Blockchain after 2019
We addressed some of the above issues to Joseph Lubin, co-founder of Ethereum and founder of ConsenSys, a New York-based blockchain programming company that is in the vanguard of improvements on the Ethereum stage. It was in the ConsenSys office that our earlier year’s realistic recreation was found.
Lubin was bullish. In spite of the fact that he expected more crypto bubbles, driven by eagerness and dread, and said that was “unfortunate”, he liked to focus on the “huge number” of ordinary organizations currently taking an interest in blockchain innovation. Attempting to make sense of methods for fusing it into their procedures. He certainly predicted that Ethereum is the “world computer” on which Web 3.0 is built now. It could be quite a while from now, maybe in five years. It’s extremely difficult to tell on the grounds that, while there’s a colossal measure of action, there are still loads of unpretentious issues to be worked out.
Which carries us to this year 2020. Where are we now with blockchain? Did the promised land come nearer? Have its unobtrusive issues been settled? Also, specifically, are huge organizations currently really prepared to draw in with blockchain innovation?
Is Blockchain Technology just a Hype?
The research firm Gartner has built up a method for demonstrating the ordinary course of desires that encompass another innovation. It’s called “hype cycle” normally shows a quick ascent from the first “innovation trigger” to a “peak of inflated expectations”. This is then trailed by a correspondingly steep plunge into what Gartner expressively depicts as the “trough of disillusionment”. For big organizations, there is by all accounts particularly a feeling that blockchain is on the verge of this phenomenon.
The Hype Cycle by Gartner:
We at iMi Blockchain have seen a ton of endeavors topping down on their interest in blockchain pretty much all of last year. As a blockchain consulting firm focused on distributed ledger technology we’ve realized that clients namely corporates, government and startups, who are scared of reporting lower quarterly earnings. Lots of headcount lost their blockchain jobs. These organizations have not seen a transient return, so they’re simply going to hang tight for the time being. We see a lot of that.
Individuals dunked their toes in the water and now they’re stating, “alright, I’m simply going to trust that somebody will give me something that is industrially practical before I contribute anymore.” We don’t have the foggiest idea whether we’re at the base of that Gartner bend yet. I believe we’re going to see a couple of more undertakings not so much getting the kind of appropriation that they’re seeking after, both on the endeavor side and the new businesses side.
We have spoken to several corporate customers in the course of the most recent three years, and it’s giving us “a calming view” of the present situation in blockchain adoption. There is a gap between the desires of those legitimately put resources into this industry with an enthusiasm to make it effective versus the obligations of managers to deliver bottom line profit. That gap has developed. Contracted at different occasions in the course of the most recent couple of years. The history books showing us that the early good faith this would have been a silver shot for huge. Costly IT projects and issues around trust and sharing information has not worked out as expected. Aside from with some quite certain, very specialty vertical models.
Blockchain’s Occam Problem
McKinsey recently published a paper called “Blockchain’s Occam problem“. The title is a reference to the philosophical standard of “Occam’s razor”, which expresses that the best means through an issue is generally the most straightforward one. While recognizing there’s been impressive interest in the innovation, including $200m by IMB in a blockchain-fueled information sharing solution and around $1.7bn yearly by the financial industry on experimentation. The paper highlights discrepancies, calling attention to the allotted cash and time expenditure. Almost no substantial accomplishments nor a versatile use for blockchain is fast approaching. It infers that blockchain is only pertinent if, similar to Occam’s razor, it is the easiest response to a specific issue, and if there is a reasonable business case for its utilization.
There is a really long development cycle to get from a proof of concept to something enterprise-grade to actually being implemented. But just until this technology finds a natural home and businesses find real value from it.
The poll of 1,386 senior executives in a dozen countries by Deloitte earlier 2019 provides mixed messages on corporate attitudes to the blockchain. Not surprisingly it shows fintech as the sector showing the most interest, but also finds that the technology, media, telecoms, life sciences, and healthcare sectors, as well as governments, are expanding and diversifying their blockchain initiatives. Just over half of respondents say that blockchain technology has become a critical priority for their organization (up ten points on the previous year), but only 23% have initiated a blockchain deployment (down from the previous year’s 34%). And 43% see blockchain as overhyped – up from 39%. That picture is confusing and needs to be addressed.
The Legitimacy of Blockchain Technology
In every company, there are different departments and different individuals with different views on blockchain’s legitimacy. It’s maturity its usefulness and all the rest it’s still challenging. We’re very upfront and honest when we’re consulting around blockchain and it is a relatively young technology still. There’s not the kind of maturity around it in terms of numbers of tools or systems or products or the number of companies involved that you expect from more established technologies. In some cases, the technology just doesn’t yet do what companies might hope it will do. Lot of the foundational work that will power really interesting and exciting things in the future is still being built.
Here the Advantages if you use Blockchain Technology:
Nevertheless, some enterprises are doing more than just dipping their toes into the blockchain pond. Let’s have a look at VAKT, a consortium of leading energy companies and banks. They have leveraged blockchain to create a platform for managing the process after global commodities are traded. That means planning physical oil deliveries, tracking them and managing the multitude of things that need to happen across the process. Previously, the systems were very siloed and disconnected. In many cases, there were paper documents being scanned and sent around. The platform allows all parties involved in a given trade to see just the bits of information that are relevant to them. It cuts through all of the breakpoints that they have today. Where different parties to a deal have different versions of where they think something is. Now this is a game changer for sure.
The fact that more than a dozen major companies have come together to make this happen is key. One of the big challenges is because blockchain is fundamentally different compared to other technologies. You need multiple parties to participate together who are sometimes competitors. They all need to sign up to the same governance and rules and technology choices for this to even begin. We at iMi Blockchain call it “co-opetition” that is currently the major blocker. And companies who wait too long might find themselves out of the game. The nature of the blockchain opportunity is that there will be an ecosystem, a network of companies who can very flexibly do business with each other. We are sure it will reach the point where companies who are not part of an ecosystem are completely excluded from doing business.
Walmart & Hyperledger Track and Trace
Walmart is pioneering the use of blockchain in the food supply chain. Essentially they have been the “big gorilla in the room” when they formed a consortium, giving partners and suppliers little choice other than to sign up.
At the Thinking Digital conference in Gateshead, we’ve talked about blockchain too. It was clearly stated that this technology is ready for prime time. 2020 is the year of blockchain. It absolutely is.
Because we are now for the first time, seeing a few real-world use cases of blockchain with some really big brand companies involved. It’s a massive step change from three years back when it was in the labs and the pioneering smaller companies were playing around with it and making predictions. But we all completely agree that we’re sliding down the curve at the moment, and it’s a very healthy position to be in because three years ago when bitcoin was surging, there was just way too much hype out there.
In 2020 Blockchain Becomes Mainstream
The next big changing step is going mainstream, where it is not just big companies having an attempt at setting something up, it will be where we’ve got cases in the real world making real money out of it and it’s then proliferating through every aspect of commerce and the economy.
We believe a comparison can be made with the way that artificial intelligence has developed. For years all of these startups and even corporations were trying to replicate the human brain and create general intelligence like in the movies, but they realized that it’s very hard and it wasn’t even very commercially viable. But most of the AI companies are still around. They abandoned all of that and they’re focusing on one small thing, such as using machine learning in the legal sector to read documents. It’s what you could call “simple AI”, but it works and it makes money for people. Blockchain technology is going to have to do the same thing. Rather than trying to decentralize the world, we rather focus on a few things where blockchain really delivers value for stakeholders.
Use artificial intelligence to support Blockchain Technology!
We have a number of clients both on the enterprise side and on the startup side that has understood that they need to shift the focus to a smaller problem. One that they can solve that is commercially viable and people pay for. On the enterprise side, there are very large corporations in most sectors doing things that are going to be deployed and many people aren’t going to hear about. There are not things you’re going to interact with in your daily life, but they are going to be empowering areas of your healthcare, your financial transactions, and so on.
The Real Business of Blockchain
At the beginning of their recently published book, The Real Business of Blockchain, David Furlonger and Christophe Uzureau list a few of the current ways that companies and organizations are actually using blockchain. The examples range from asset clearing and settlement on the Australian stock exchange to offering better access to patients’ hospital records in Taipei, and from trying to prevent ticket fraud at European football matches to creating immutable “passports” for Volkswagen and Renault cars. There’s even an ID system for the homeless in Austin, Texas, to help them get better services.
While Furlonger and Uzureau would not use the term “stupid Blockchain” for these use cases, they fit with our depiction of niche applications of the technology, as opposed to something much bigger and further reaching. They make the case that the technology we currently call blockchain should more accurately be termed “blockchain-inspired”. No mainstream enterprise or government is yet building “blockchain-complete” solutions, which is what is required for the tech to escape the hype cycle’s “trough of disillusionment” and climb to “slope of enlightenment” to the promised land of the “plateau of productivity”.
In particular, they highlight the lack of two key elements of blockchain technology: tokenization and decentralization. The former allows the digital transfer and storage of assets of many kinds, while the latter implies the absence of a central authority – which can be a scary idea for big businesses.
If you add those two elements, that’s where things start to get much more positive. It’s arguably more complicated, but it holds a huge opportunity compared to the current focus, which is track and trace technology. You need to look at it through that lens.
Decentralized Tokens are the Future
What do we mean by blockchain? Be more granular in that focus. And then look at the evolution that firms hopefully will go on over the next ten or 15 years. Some research leads to predict – quite confidently, it has to be said – that we will reach the “blockchain-complete” era within three or four years. And that’s when things will truly begin to get interesting.
The big upgrade comes from tokens operating in a decentralized environment using smart contracts. Tokenization allows you to create new assets and represent illiquid assets in a form that can be autonomously traded.
Decentralization drives the use of consensus to authenticate users, assets, and transactions and ensures that no central provider can own or control the underlying mechanisms of trade in these assets. In other words, we really might be just a few years away from a world revolutionized by blockchain.
Most of the experts also have this same feeling. The only problem, it seems, might be convincing big business that the opportunity is real. While most businesses still looking at blockchain basics, some innovators are already implementing it.
We hope this snapshot and outlook was useful. We deliver more information about blockchain. If you have any question or thoughts, then please leave a comment below.
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Blockchain Technology FAQ
What's blockchain technology?
Blockchain technology is a protocol of linked lists. Blocks containing data can be shared over the internet without the need of any third party. This technology is used if you need security, privacy and transparency.
Who uses blockchain technology?
Everyone can use blockchain technology. From individuals to large enterprises. The bitcoin cryptocurrency is only one type of application. You can use it for smart contracts as well as for track and trace applications.
Is blockchain technology the future?
Yes, blockchain technology is the future for sure. Security and privacy issues are increasing due to centralized cloud applications. Furthermore, there is a real need for transparency as well as for the elimination of expensive third party services.
Where and how to invest in blockchain technology?
If you want to invest in blockchain technology the easiest way is to start buying cryptocurrency like the bitcoin. Financial investors might choose ETF like the KOIN, Amplify, IBM or similar. For serious entrepreneurs we recommend to build your own blockchain applications. iMi blockchain consultants will show you how to invest the smart way.
Where blockchain technology is used?
There are thousands of different blockchain technology applications. The starting point was the finance sector by launching cryptocurrencies. The next step was track and trace applications. The future is decentralized applications called dApps.
What is blockchain technology with example?
To understand blockchain technology with example we can look at the Bitcoin. One sender wants to transfer assets (like money) directly to one receiver. By using blockchain technology you don't need a bank any longer. You store the money yourself and send it straight to the receivers wallet.
What is blockchain technology good for?
Blockchain technology offers multiple advantages compared to centralized applications like cloud computing. 1st enhanced IT security, 2nd improved traceability, 3rd full transparency, 4th increased efficiency, and 5th it helps to reduce IT costs.
How do you use blockchain technology?
The use of blockchain technology is pretty simple. You want to share data or any type of asset with someone else. Therefore, you create different blocks with crypto code and distribute it over a peer-to-peer network. It's simple as that.