While it’s true that the media hype over blockchain, bitcoins, and distributed ledgers has died down, organisations continued to invest in research, development, and deployment of these technologies throughout 2019. This year will almost certainly be no different – Gartner analysts have once again highlighted blockchain as one of their top 10 technology trends for the coming year. You might also be interested in my video on using blockchain for business:
Don’t fall into the trap of thinking that blockchain and distributed ledger technology is yesterday’s news. In fact, it’s still very much in its infancy – only a relatively small number of organisations have achieved a sufficient level of maturity in their digital operations that they are in a position to successfully leverage it. The future of blockchain is very much intertwined with other emerging and nascent technologies like AI and IoT. These are some of the issues I have considered in my predictions for 2020, which you can read below:
Financial services still the early adopters but others will follow
With blockchain’s debut on the world stage taking the form of digital cryptocurrency Bitcoin, its not surprising that finance was the first sector of industry to take an interest, and has been buzzing with innovation and breakthroughs ever since. This activity hasn’t been limited to the idea of virtual currencies – blockchain can be used to build fraud-resistant clearing and settlement systems, smart contracts (digital contracts which execute themselves when conditions are met), and greatly speed up digital transactions.
IBM – which says it is has helped launch more successful blockchain initiatives that any other company – sees investment in blockchain technology by financial services organisations increasing throughout 2020, but it certainly won’t stop there. And Gartner has predicted that by 2020 more than $1 billion of value will have been derived by banks from the use of blockchain-based technology.
But it certainly won’t stop there. Blockchain technology has undeniable value for any area of industry that requires that records of transactions are kept secure, and that activity can be carried out in a traceable way. Current initiatives include tracking the provenance of agricultural products and livestock it moves “from farm to fork, ” and even ensuring the provenance of diamonds and other precious stones can be proven.
Facebook launches its digital currency
Facebook plans to unleash its own cryptocurrency on the world early in 2020, and although many of the details are still under wraps, it’s already generating a lot of excitement – and also concern.
There have been a lot of cryptocurrencies in the past – well over 1,000 have launched since Bitcoin arrived in 2009, with the vast majority quickly sinking without trace. But none have been launched with the backing of an organisation the size of Facebook- a factor which could mean that the implications of this particular coin go far beyond anything we have seen yet.
It’s certainly been a rocky road – late this year Mastercard and Visa both announced they are withdrawing their support due to uncertainty over regulatory issues. This would be enough to kill most commercial ventures – however Facebook (a company with a value of $550 bn – more than either of the credit card giants) is pressing ahead regardless.
While technically a cryptocurrency (a method of payment which relies on computer encryption to guarantee the integrity of the network), Facebook’s Libra works differently to Bitcoin and the majority of other digital currencies. Its blockchain network will be centralised – under the authority of the association responsible for running it – and not a distributed, “trustless” system, as championed by the cryptocurrency pioneers. But if it takes off, it could be the first virtual currency to live up to the promise of disrupting the existing, currency-based global monetary system.
Blockchain and AI integration continues to gather pace
One of the problems when it comes to integrating artificial intelligence (AI) into people’s lives is that due to the volume of data that drives its decisions, AI can be very complex and difficult to understand. Many people think that blockchain could be an antidote to this, due to its ability to make decision-making traceable and ensure that the decisions are based on verified and provable information.
The benefits go both ways – as well as blockchain increasing the usefulness of AI, AI can be put to work to make blockchains more secure, and blockchain-based tools easier to operate and user-friendly.
By combining these breakthrough technologies, companies can make predictions more quickly and accurately, cut waste generated by production processes, streamline supply chains, and more quickly match their products and services to new markets. With the value of this technological partnership becoming more apparent, its highly likely we will continue to see an increase in this type of innovation throughout 2020, and the appearance of the first combined blockchain and AI platforms from cloud service providers.
Blockchain technology securing the Internet of Things
It’s an unavoidable fact that the more connected devices we use to share and process data in our personal lives and in business, the more opportunities there are for attackers to hijack that data – or for it simply to be lost or misplaced. As industry moves increasingly towards digital transformation and more and more work involves machine-to-machine communication, it becomes increasingly important that information is stored and recorded in a trustworthy, tamper-proof manner.
Blockchain and other forms of distributed ledger, of course, provide a solution to this that is as close to perfect as it’s currently possible to get. Every transaction of information is permanently recorded in a way that is transparent to all parties – an essential factor when organisations rely on machinery, tools, and software from many different suppliers. This means that when things go wrong, its comparatively simple to understand where a breakdown in communications, or even a breach by a malicious third-party, caused a problem.
According to Gartner’s research, a majority (75%) of organisations that have adopted IoT technology either have already integrated blockchain, or are planning on doing so during 2020.
Other jurisdictions follow Wyoming’s lead
This year, the state of Wyoming became the first in the US to clear a legal framework designed to allow blockchain innovation to flourish, while providing the regulatory oversight needed to protect against the potential pitfalls.
When the first cryptocurrencies emerged, and anonymous, digital transfers of value between anyone in the world became possible for the first time, regulators and central banks were quick to draw attention to their obvious potential in money laundering and other nefarious financial activity.
So far, it’s these concerns that have largely kept digital currencies out of mainstream use – the US Securities and Exchange Commission (SEC) has consistently rejected applications to establish publicly-traded cryptocurrency-based financial instruments.
The decision by Wyoming legislators doesn’t change this. However, the decision to issue 13 laws designed to provide a legal framework for blockchain and digital currencies is a signal that, in some locales at least, there’s a belief that regulation should be an enabler rather than a blocker of technological innovation. During 2020 we can expect lawmakers in other states, and around the world, to be keeping a close eye on Wyoming, and perhaps even following in its steps.
Blockchain is one of my 7 top tech trends for 2020, cheque out this video to learn about the other six: