The future direction of the blockchain is rapidly revealing itself, and it will have ramifications for a variety of industries beyond finance, its first home run.
Blockchain technology, which originated as the foundation for cryptocurrencies like Bitcoin, and can now be used across a wide range of businesses, is simply a virtual ledger capable of recording and validating large volumes of digital transactions.
The question is, is there enough impetus for change to accommodate its use - and will that change be marked enough to overthrow the power central authorities hold in so many areas of our lives?
If the financial services industry is an indicator, it certainly looks as though there is a rapid change blowing through the old established norms
Despite slipping from a record high in 2018, annual financing to blockchain startups has more than quadrupled since 2017, compared to its origins in banking and cryptocurrencies.
According to CB Insights' Market Sizing Tool, annual expenditure on all blockchain solutions will reach over $16B by 2023.
Blockchain has uses in a wide range of fields, including insurance, gambling, and even marijuana.
However, because of the success of its use with Bitcoin, blockchain's potential outside of finance was obscured to investors and entrepreneurs for ages. They are only just catching up with all the possible applications for blockchains.
Transparent, verifiable registers of transaction data have nearly limitless applications, thanks to blockchains' decentralized foundation, which eliminates the need for central oversight and makes them impervious to fraud.
The increased openness and authenticity that blockchain is bringing to the digital information ecosystem is increasing interest in blockchain technology across a wide range of industries and policy areas.
Some of the most cutting-edge ways businesses are using blockchain to their advantage today.
The financial sector is way out in front when it comes to already utilizing the blockchain in a number of applications.
For example, Credit Suisse employs blockchain technology to settle US stock transactions in partnership with New York-based firm Paxos.
JPMorgan Chase, on the other hand, has launched the JPM Coin, which it plans to utilize to make transfers between institutional accounts more seamless.
Other financial institutions, such as Goldman Sachs and Citigroup, have dabbled with blockchain technology.
All of the above are experimented with by using Axoni's Axcore blockchain to conduct a seamless equity transfer test between them.
Generally speaking, blockchain has the potential to totally disrupt the $5T+ banking sector by disintermediating the fundamental services provided by banks, such as payments, clearing, and settlement.
Financing cross-border transactions generate $224 billion in payments income for banks each year.
Blockchain technology provides a safe and low-cost method of moving money that eliminates the need for third-party verification and reduces the processing time compared to conventional bank transfers.
Companies like Santander and Western Union are working with Ripple to make cross-border payments more efficient.
Ripple has over 300 clients.
Its xCurrent solution offers a two-way communication protocol for banks, allowing for real-time messaging and settlement to take place
The central bank of Switzerland employed R3's distributed ledger technology for a pilot to settle big transactions between financial institutions using digital currencies.
R3 is a significant participant in distributed ledger technology for banks going forward.
Blockchain will be used by banks for anything from trade financing to customer KYC and fraud prevention - blockchain technology is also reshaping the world of stock trading and hedge funds.
Recently, new blockchain-focused firms are attempting to automate and safeguard the stock trading process in a way that hasn't been possible with any previous solution.
Overstock subsidiary T.com plans to use blockchain technology to facilitate stock trades online.
Transparency and auditability are improved by integrating the tZERO platform's cryptographically secure distributed ledgers with current trading operations.
Existing trade networks and exchanges will help blockchain gain traction in the marketplace.
As a result of Chain, a blockchain business bought by Stellar in 2018, the Nasdaq stock market and Citibank's banking system have been securely linked.
The hedge fund concept, which employs a slew of traders and quants, is being decentralized by Numerai.
Numerai, sponsored by First Round Capital and Union Square Ventures, delivers encrypted information to its thousands of dispersed quants and asks them to create predictive models, and the top contributors are rewarded with Numeraire, Numerai's token.
The approach is then used by Numerai to build a trading meta-model.
A new Numerai project dubbed Numerai Signals will take signals from models trained on any dataset, the company has revealed.
In order to reward "the most unique signals," the corporation has put aside $50 million in Numeraire tokens.
Crowdfunding blockchain technology is reshaping crowdsourcing too.
By allowing supporters (also known as "pledgers") or private investors direct access to artists and entrepreneurs, the crowdfunding sector has evolved to help "disintermediate" capital formation.
BRAID, for example, was the first major feature film to be funded through an Ethereum blockchain "crowd sale" of tokens via its $1.7M campaign on Weifund.
Another form of blockchain-powered crowdfunding is Initial Coin Offerings (ICOs), in which corporations sell cryptocurrency-backed tokens in their companies in the same way that a publicly listed company sells the stock.
In order to assist blockchain startups to build legal and compliant ICOs, businesses like Coinlist — which originated as a partnership between Protocol Labs and AngelList — are bringing digital assets into the mainstream.
Waves, a platform for storing, managing, and issuing digital assets, and Republic's crypto project are two more firms developing in the ICO industry that seek to allow individuals to engage in ICOs for as little as $10.Decentralizing the process allows
Pledgecamp, is a Kickstarter and Indiegogo rival, which boosts transparency (via smart contracts) and provides "Backer Insurance." When a project's financing goal is met, monies are sent to an escrow wallet and unlocked over time.
Investors may track the progress of their funds and have a say in how the project is doing, such as voting on whether or not a new phase of development should be started.
Exchanges for cryptocurrencies blockchain technology are causing havoc on cryptocurrency markets.
Enigma, a well-known initiative in this area, has the backing of MIT and Flybridge Capital.
Catalyst, an off-chain decentralized exchange, and investing platform, was created by Enigma with the goal of eliminating the requirement for a third-party clearinghouse to facilitate transactions.
0x, an Ethereum-based decentralized exchange is also well-known.
In the decentralized exchange arena, centralized exchanges like Binance and Coinbase have made inroads, establishing Binance DEX in 2019 and purchasing Paradex in 2018, respectively.
The use of blockchain technology has the potential to upend traditional wills and inheritances as well.
Using smart contracts for wills makes perfect sense since they're so narrowly defined.
Litigation over a will sometimes entails questions about the "genuineness," or whether the court's interpretation matches the deceased's wishes, as well as verification of the death itself.
However, the use of blockchain technology will make it simpler to discover accurate information, offer verifiable transaction data and discard assertions that are not supported by the facts.
Japanese start-up Zweispace is working on a blockchain-based self-executing will system that distributes assets from an inheritance trust to beneficiaries immediately upon confirmation of the trustee's death, removing the need for executors and court disputes over the validity of a will.
As you can see, there isn’t an area where blockchain technology isn’t making an impact:
- Loans and credit
- Automotive manufacturing
- Car leasing and sales
- Ride hailing
- Aerospace and defence
- Air travel
- Industrial IOT
- 3D printing
- Construction architecture and building
- Real estate
- Energy management
- Health information exchanges
- Claims management
- Research and clinical trials
- Government and public records
- Gun tracking
- Law enforcement
- Federal mail
- Public transportation
- Waste management
- Public assistance
- Retail and CPG
- Food and beverage
- Gift card and loyalty programs
This is just the tip of the iceberg, there are thousands of other areas where the brightest minds on the planet are making sure that the blockchain is being applied where it will have an effect.
As we have seen, some areas are far more advanced in their implementation than others.
The depth of penetration into traditional industries like law, insurance, and accounting shows how versatile and all-encompassing the blockchain can be.
Combined with AI (artificial intelligence) technology, on balance, humanity is completely capable of casting aside central authorities and “de-fi-ing” convention.
The next decade will witness the dissolving of the power of central authorities by sheer force of numbers if nothing else.
We live in interesting times.