As blockchain technology shakes off its initial hype and begins shifting toward maturity, organizations are starting to focus their applications on more practical issues of governance, connectivity, and scaling.
While a survey cited by Microsoft senior director Mike Walker reveals that 43% of executives still feel that blockchain technologies are overhyped, the industry will keep on growing and is set to reach $3.1 trillion by 2030 according to Gartner. As more organizations leverage the technology for more practical business values, adoption and acceptance will likely progress more steadily.
Pioneering companies like IBM and The Linux Foundation have been working round-the-clock in the past few years to demonstrate the universal application of distributed ledger technologies to a host of industries. This includes finance, real estate, governance, media, energy, and healthcare. And as blockchain use cases become more focused, it’s important to understand the trends that will likely shape its development this 2020. So, here are three of the most critical developments you should look out for:
Current blockchain applications build digital ecosystems for businesses and industries that often work in silos. But as these ledgers proliferate in the corporate world, enterprises will want their platforms to be able to communicate with other platforms that potential business partners operate. This presents a whole issue of interoperability.
While some companies and vendors like AWS have created APIs that enable the flow of data from one blockchain platform to another, security and accuracy remains a challenge. That’s why institutions like MIT are leading the charge to solve this governance issue — to help organizations agree upon pertinent data to be shared and standardize operations. Last year, Accenture managed to synchronize platforms like Digital Asset, R3 Corda, Hyperledger Fabric, and Quorum to enable cross-platform business processes. Core monitoring mandates that BlocWatch provides will also be crucial in solving data governance.
As enterprise blockchain applications grow, they will have to penetrate the commercial backbone of most economies — small and medium enterprises (SMEs). From alleviating resource constraints to creating new opportunities, new applications like China’s Guandong Blockchain aimed at creating alternative credit ratings for SMEs will start to be in focus.
IBM has also recently unveiled its blockchain with a ‘pay-as-you-scale’ business model to lower the barriers to adoption for businesses. Easier access to blockchain technology is good news for entrepreneurs, as tech reporter Daniel Ling says that blockchain can be especially helpful for small to medium enterprises in developing economies. These applications will provide greater opportunity for startups and smaller businesses to leverage their potential for financing, innovation, and scaling.
As current blockchain applications continue to be enterprise-focused and consortium-run, more incentives will be needed to catalyze adoption. Token-based reward systems will likely be a widespread tool for this, like the Intel and Microsoft-backed token-based reward system offered by the Enterprise Ethereum Alliance consortium. This approach will also help ease the high upfront costs of joining industry-wide platforms.
While nothing new, asset-backed tokens will find themselves in center stage this year as bigger organizations and even governments back the technology. Russian mining and smelting giant Nornickel has announced its Atomyze tokens backed by a combination of palladium, cobalt, and nickel, which the company produces. Similarly, business and government contracts can be tokenized and integrated with Ethereum-based smart contracts to minimize the cost and complexities in business logic. As tokenization continues to mature, more complex financial services can be replicated and transferred onto the blockchain.
You can expect blockchain to be more present in enterprise transactions, digitization initiatives, and innovation.