Cryptocurrency - The future is exciting
The future is exciting! Over the past few years, a wide range of interesting technologies has picked up steam and promise to change the way we think and work. Three technologies that have the potential to create the significant impact on our lives are the Internet of Things (IoT), Artificial Intelligence (AI) and Block-chain. The blockchain is a technology that has the potential to impact a lot of industry verticals by transform-ing processes that take significant time, effort and resources today. I have been exploring and working with Blockchain for over 3 years and would like to share some insights into where this technology is leading and what is expected in the future. Block-chain as a technology has generated the tremendous amount of hype in 2017 and this continues in 2018. This is due to many reasons - let’s explore some of them here.
Most of the hype and interest in Blockchain started in 2017 with the meteoric rise in the prices of cryptocurrencies like Bitcoin. Cryptocurrencies, especially Bitcoin, was founded as a means of enabling peer to peer (P2P) transactions without requiring a trusted third party like a bank. As more people got involved in cryptocurrencies, they started discovering new applications for the underlying Blockchain technology. Interest in Blockchain shot up when the Ethereum blockchain launched. It allowed people to write smart contracts that eliminated middlemen and enabled use cases in different industries. Interest in Blockchain skyrocketed in 2017 when speculation drove the prices of cryptocurrencies to all-time highs. With the dramatic increase in prices, the media started talking more about cryptocurrencies and more people became aware of it.
In 2018, the price of cryptocurrencies has fallen due to regulatory scrutiny and an outright ban in some countries. There is also uncertainty in the market as many regulators are working on frameworks to tax and regulate cryptocurrencies. This uncertainty is expected to continue until there is more clarity on how various governments and regulators intend to treat cryptocurrency transactions and any tax implications on them.
With rising interest by investors in cryptocurrencies, many start-ups suddenly discovered that they could raise money and fund their operations by offering tokens (a.k.a alt coins) in exchange for established cryptocurrencies like Bitcoin and Ether, or for fiat currencies like dollars. The advantage of this fundraising model was that a startup need not give up any equity in exchange for funds. All they did was offer a promise of multi-fold rise in the price of their tokens when their product launched. This type of fundraising came to be known as Initial Coin Offering (or ICO). At its peak, ICOs have allowed companies to raise billions of dollars in exchange for their tokens (e.g. Telegram and EOS have raised more than a billion dollars). With the promise of easy money, many bad actors launched ICOs that have turned out to be scams. This has given a bad name for ICOs and has pushed regulators like SEC to formulate regulations on how an ICO can be launched that is legally safe.
Going forward, it is expected that ICOs will become more regulated and make it difficult for bad actors to easily raise funds from the public. The SEC has started treating many ICOs as security offerings and this will lead to less number of ICOs launching in 2018.
3. Decentralised Applications and Permissioned Blockchains
This is an area that has generated maximum interest amongst enterprises. Decentralised applications, also known as DApps, promise to bring operational efficiencies and cost savings in existing business processes. Permissioned Blockchain platforms (and Distributed Ledger Technology, a.k.a DLT) enable companies to setup private or consortium Blockchain networks for their specific requirements, without having to depend on public networks like Ethereum or NEO. In 2017, many companies began experimenting with permissioned Blockchain applications. According to a study (https://www.juni-perresearch . com/resources/infographics/ - blockchain-enterprise-survey-august-2017) conducted in 2017, more than 56% of companies having more than 20000 employees are interested in exploring Blockchain technology, or have already begun the process of building proof of concept applications. Not to be left behind, cloud platform companies like Microsoft (Azure), Amazon (AWS), IBM and Google have all come out with Blockchain related offerings to simplify the deployment of permissioned Blockchain networks in their respective cloud datacenters.
In 2018 and beyond, the interest in Blockchain will continue to rise and many proof of concept applications will start going into production. With the adoption of Blockchain applications leading to positive results for organisations, the hype will turn into reality. This will lead to a large jump in demand for Blockchain application developers and engineers. Today, I consult for, and see many companies that are already upskilling their IT teams to handle Blockchain related projects.
4. Banking and Financial Transactions
One of the biggest impacts of cryptocurrencies and Blockchain technology is expected to be on the Banking and Financial domain. The threat of P2P transactions eliminating the need for third parties like banks has scrambled these organizations to explore how they can leverage Blockchain technology and stay relevant. Ripple, Stellar and R3 Corda are some of the Blockchain platforms that are being considered by banking and financial institutions to enable use cases like micro-payments, instant remittances and faster settlements that what is supported by today's technology. Many banks, financial institutions, and insurance companies are either forming or joining Blockchain consortiums to explore and integrate Blockchain into their existing processes, or to enable new use cases. Some of the consortiums in operation today are: https://b3i.tech/home.html - The Blockchain Insurance Industry Initiative that comprises of many European insurance companies to implement Blockchain based solutions https://w-ww.r3.com/ - R3's global Blockchain network boasts of over 200 banks, financial services firms, central banks, and regulators who are trying to leverage the open source R3 Corda Blockchain platform for finance and commerce.
The Blockchain landscape is still in its infancy. Every Blockchain platform is undergoing rapid development and it is expected to take some time before we see some stability, less breaking changes and backward compatibility with previous versions as new versions of a platform is released.
In 2018 and beyond, the uptake in Blockchain is expected to continue as new platforms and protocols like EOS and Ethereum Casper are launched. These new launches promise to address the present challenges of scalability and high cost of implementing Blockchain technology in public and private networks. With higher performance and scalability, more use cases will become eligible to be implemented using Blockchain technology.
- Girish Nuli,
Founder & CEO,
Antara Software and Consulting (P) Ltd