I get asked all the time 'Is Blockchain for real? Do you think it is here to stay? Why do you think this technology will have a fundamental change to the way we do business?'
Here are some data points, answers, and thoughts, as ultimately I don’t have to convince anyone about Blockchain.
It is already here.
I remain convinced the Internet is about to get an Operating System upgrade (Blockchain), moving from the Internet of Information to the Internet of Value and then another upgrade soon after as M2M AI Smart Contracts using IoT by 2018, delivering Internet 3.0 connecting the world.
I have set aside time to understand Blockchain and its potential impact, and studied closely how it will work in real business situations that many experts agree will redefine industries, the nature of work itself and society. Remembering the distributed has no centre…
Here we go again
It feels like another 1993/94 Internet moment as a new technology (Blockchain) gains acceptance and real things start to get delivered that create real impact.
Blockchain is no different except that today things happen quicker, acceptance happens quicker, scale is achieved quicker, development lifecycles (SDLC) is quicker, networks are getting quicker and the digital age ramps everything. Think AngryBirds and Pokemon where in days/weeks things can go mainstream and take off…share prices can go wild and then in a day or so things go back to normal…
There are other factors at play that will accelerate the adoption of Blockchain and cryto-currencies. Parallel technologies such as Artificial Intelligence and Deep Learning serve as a catalyst as IoT (Internet of Things) and new technology standards enable more collaboration as the Sharing Economy also takes a place at the top table.
The next 25 years will see the focus on trading value less about trading things... All of these and others events, breakthrough technologies will accelerate the adoption of Blockchain (read Bitcoin and other crypto- currencies, Smart Contracts, Ethereum and Augmented Reality). They amplify the impact like a boxer throwing all his punches at once, in the first 30 seconds of the first round…
Blockchain solutions for real Business Problems are emerging…
A few months ago I wrote a paper asking is ‘Blockchain a solution looking for a business problem to solve…? Whilst the answer may be in part yes, this is only because 90% of the developments and projects that are taking place have yet to be formally launched…but they exist…
The dominant market activity relating to Blockchain remains Banking and Capital Markets, Government and Supply Chain activities where the blue chip companies and major brands have now put many dollars into developments, start ups and building stuff.
There is a lot going on in general and below is a taster of what I have found…
There is Movement and it is on a Massive Scale…
There are several more dominant Blockchain movements emerging as a real force that covers multiple investments and interests from banks to government and other vested parties. And then like any emerging technology you have the tester that is the ‘Build it and they will come’ stage, which is exactly where Blockchain is right now. Many people won't know what Blockchain can do until they see it.
By 2020, people will look back having accepted what Blockchain has to offer as the new norm. Transparency, security, immutability, instant payments, control over personal information and tradable value - what they won’t see is that trust in the background of all things has returned to a world where it has been lost.
And here is the thing, peer to peer is being adopted, digital wallets and mobile payments is being adopted and used - today already it is different.
I found out recently from an Andreessen Horowitz partner the other day the combined computing power of the ‘Miners’ that verify and deliver consensus oversight at each Blockchain ‘node’ that write to and generate new Blocks has many thousands of times the processing power than Google, Amazon, IBM and most of the others put together… BOOM!
There is mucho activity
There are more than a dozen crypto-currencies increasing in value and starting to trade as I found out recently with my STEEMit (steam currency) that has gone up over 10% this week alone. There are at least x80 versions of Blockchain and more than 100 Blockchain start-ups backed by billions in invested capital, and there are many very clever people building platforms that will change everything.
**Below I have compiled quite a long list of the primary activities in Blockchain. You may decide to go to the Summary section at the end although you will miss all the fun**
The Hyperledger is a project started in December 2015 with support from the Linux foundation is an Open Source collaboration involving 55 organisations to create advanced Blockchain technologies for recording and verifying transactions across industries with an eye on creating industry standards.
Ripple is focused on low-cost payment technology using Blockchain to transfer funds (cross-border) between subsidiaries is supported by many financial institutions and banks. Ripple have now introduced a crypto-currency XRP and launched a derivatives market and now trade virtual currencies in New York. Ripple also runs separate projects with banks such as Santander, UBS, and UniCredit.
R3 is one of the larger consortiums of x55 banks (and growing) and other financial institutions focusing on private, permissioned Blockchains embedding Smart Contracts to manage cross-border activities, and facilitate issuance of financial instruments that can be traded and recorded on what they call the Corda ledger – covering corporate bonds, swaps, insurance, trade finance, settlements, and payments.
Microsoft has invested millions and about to launch Blockchain as a Services (BAAS) working with partners in banking and asset management, all sitting on Azure.
Amazon Web Services is creating a stripped back version of the Blockchain and versatile components for Smart Contracts and have most Blockchain start-ups sitting on their cloud solution. Both AWS and Microsoft are pumping huge effort into Blockchain.
Nasdaq using Blockchain for trading shares in pre-IPO companies and working with filament on energy trading. Nasdaq is investing heavily in Blockchain and moving into new areas. They were the first major exchange to adopt Blockchain as a strategy.
Chain is another group that builds Blockchain components to deploy and operate public Blockchain networks with a focus on managing assets. Chain is a new breed of ‘Builder’.
Digital Asset Holdings gained traction in 2015 is building permissioned Blockchain solutions directly aimed at financial services settlements to track balances and transfers on an open ledger amongst the participants. It is aimed at replacing legacy equities settlements and clearing hubs. Amongst interested parties are CME (Chicago Metals Exchange), ABN Amro, Deutsche Borse, BNP, Goldman Sachs and ICAP. They are also working with the US Treasury focusing on settlements and clearing for mortgage-backed securities.
Circle China that includes Baidu is developing payments systems on Blockchain.
Blockstream supported by AXA develops interoperability software that will connect different Blockchains together of which there are more than x80 versions.
Axoni Smart Contracts was live-tested early in 2016 for handling post trade life-cycle events and has JP Morgan, Bank of America. Citi and Credit Suisse behind it.
Circle, Consent, Several, Wave are start-ups working on Blockchain solutions focusing on money payments, KYC and identity & separately supply chain management with Barclays.
Abra has been around for a while now is supported by American Express is a project to use Bitcoin for mobile payments for peer to peer remittance and global cash transfers. Popular in emerging markets and where micro-payments are most useful.
Coinbase an early designer of Digital Wallet Exchange to buy and sell Bitcoin cross-border now has commodities and Bitcoin Debt Cards.
SmartAngels Crowdfunding using Blockchain backed by BNP Paribas recording transaction on SmartAngels ledger.
BKCoin was launched by Bank NewYork Mellon as a crypto-currency aimed at tokenizing rewards as gift cards etc.
Factom in China is developing smart cities (smart administration) based on Blockchain to improve government admin, auditing, and verification services.
People's Bank of China is developing Blockchain for electronic cash management. And then there is Alibaba and Tencent.
Shenzhen Consortium is another Chinese group comprising x31 banks and financial institutions exploring Blockchain akin to R3.
Dubai Blockchain Council of comprises of x30 UAE participants government, banks working on several projects including healthcare and medical records, diamond trading, title transfer, digital wills and value and shipping. Partners include Cisco, Microsoft, SAP, and IBM.
21 Inc backed by Cisco and Qualcomm is a Bitcoin community and miner.
Citi Bank has launched a crypto-currency CitiCoin.
Credit is working with the Isle of Man government using Blockchain for identification purposes.
Setl is a settlement platform handling securities trading on Blockchain.
IBM and Credit Mutual are working on identity KYC for verification for transaction support.
Standard Chartered working with Ripple on trade finance and with the Singapore Gov.
Central Banks in the UK, US, Australia, Singapore have launched Blockchain projects and Labs. Dutch Central Bank launched a digital coin DNBcoin the tradable crypto-currency.
Visa and Mastercard have live projects around cross-border payments and Visa is working on car leasing on Blockchain allowing for instant verification (identity) and payments.
Wanxiang Labs comprising several commodity exchanges and traders in China are working on Blockchain solutions for smart contracts to handling all aspects of trading support and settlement.
Goldman Sachs has launched another crypto-currency called SETLcoin and so it goes on and on...
Dept Homeland Security, DOD, NATO have Blockchain projects looking at encrypted messaging and recording.
Philips is building a Blockchain solution for medical records management.
Siemens is accelerating projects in IoT to record data on Blockchain to become the Ledger of Things.
BlockCypher, Bloq, and Consensys supported by Deloitte is working on banking, insurance, and payments on the Blockchain. And has a division called RUBIX allowing clients to test Blockchain concepts.
Blockchain Collaborative Consortium comprises x34 Japanese companies and banks creating solutions using Blockchain supported by Consensys.
Various Governments working on Blockchain to handle company registration, voting, land registry, electoral registry and verification including US, UK, Holland, and Singapore.
Sweden uses Blockchain for conveyancing and title deeds for land registry using smart contracts.
Several Stock Exchanges around the world - Nasdaq, NYSE, Sydney, Deutsche Bourse, LSE - have live projects testing Blockchain for secondary market securitization. Euroclear is about to launch a settlement service for Gold called itBit.
Big four - PwC, KPMG, Deloitte and EY - are supporting a wide range of start-ups and projects on the Blockchain.
Nomura, Bank of Japan, Mitsubishi creating a securities project on the Blockchain.
MIT, along with most other universities, are contributing to Blockchain labs, incubation, and developments.
Intel developing the Sawtooth Lake Platform for distributed ledgers to allow customers to develop their own Blockchain services.
There are literally thousands of projects, hundreds of start-ups consuming the best minds in technology and billions of dollars of investment.
And this list is not complete by any means as this focuses mainly on banking and financial services, government and supply chain. Add into the mix music, pharma, health and other industries all starting on their Blockchain journey.
So what are you and your organization doing?
The areas of most focus for Blockchain development and deployment remains – Payments (P2P and micro payments), cash transfers and cross-border payments, remittance, KYC and identity verification, trade finance, settlement and clearing, land registry, asset tracking (diamonds) and new digital currencies…
What is interesting is that most of these functional areas are staffed with roles where there is a great deal of non-value added work by people checking and re-checking, verifying and reconciling. Because the current process of identifying the components of a valid transaction between parties is inadequate, because the data is wrong, not complete and each party has a different version. All of the issues that Blockchain handles well as a single version of the truth deliver disruptive outcomes by simplifying relationships and counterparty connections. Blockchain amplifies the shortcomings of existing systems.
There are vast online communities and dozens of start-ups coming to market each month, each intent on launching another Blockchain public or permissioned concept. Things have come a long way since Bitcoin’s simple scripting language and developers of their version of their Blockchain are increasing the clock speed of the distributed application, to process more and more transactions per second (TPS). Blockchain is scaling and the brakes are off.
There are others that are developing layers that connect Blockchain with the old 1970s computing world to extend the execution of Smart Contracts with traditional accounting, payments, and other transaction systems although ultimately doomed.
‘The old world will connect in but won’t be invited to the party’.
Ethereum is also gaining ground given the rich language available to develop business solutions and embed active code as smart contracts. Things are getting clearer. The underlying Chain or Block that store the encrypted transactions responding to the business logic that sits in the smart contracts as active code, that responds to the primary application sandwiched between the user interface. The Blockchain stack is simpler than ever before.
Blockchain is reaching critical mass very fast. There is real momentum behind it. Blockchain development is more in reach than before and it is time to for you and your organization to respond properly. Don’t get left behind…or you could be dis-intermediated (what an awful expression).
Do something; find out for yourself, understand the threat or opportunity that is the Blockchain. Or do you choose to ignore it? The topic of another article…
What are its disruptive properties that will impact revenues and profits? Has it the power to change markets and the balance of entire industries?
More than at any time before you need to know…
If you need help contact me at Blockchain-X or send me a message.