Bitcoin, the world’s first decentralized digital currency, surged around 1,600% in 2017. For the past couple of years, crypto assets have been in the limelight, grabbing attention of traders, investors, technology enthusiasts, bankers and regulators alike. For many, Bitcoin has become synonymous with blockchain. Although blockchain is the technology that facilitates Bitcoin and altcoins, it is so much more than a database supporting crypto assets. Moreover, the concerns associated with cryptos are wrongly imposed on blockchain.
Blockchain is a distributed ledger that records transactions between two parties in a verifiable and permanent way. Being decentralised, Blockchain eliminates inefficiencies and security threats inherent in traditional systems. Also, this revolutionary technology is highly scalable; and can be used to record different types of transactions between two parties, with incredible integrity and resilience.
The Evolution of Blockchain Beyond Bitcoin
It’s true that the first blockchain was conceptualised for Bitcoin. It was introduced in 2008 by an anonymous person or group known as Satoshi Nakamoto; and was used solely for this digital currency for half a decade. It was only in 2013 that Vitalik Buterin described how the capability of blockchain could be extended for running decentralised applications. In 2015, Ethereum went live with a blockchain-based platform with smart contract functionality. Smart contracts are smaller, autonomous programs stored on every node of the blockchain. They can execute automatically, once certain criteria have been met, while also incorporating predetermined conditions. The drawback of this system, however, was its slow speed, with every node being required to calculate all the smart contracts.
Despite the shortcomings, Ethereum highlighted the immense potential of blockchain, resulting in the wave of blockchain R&D witnessed in 2017. Last year saw companies, both established multi-nationals and start-ups, launch pilot programs with innovative deployments of this amazing technology across multiple industries.
In 2017, $3.88 billion was raised via ICOs to fund innovative blockchain projects. Although the financial services segment led the way in blockchain applicability, the technology was deployed across multiple segments including data storage, data analytics, communications, healthcare, machine learning, social network, legal and identity management.
If you thought $3.88 billion was jaw-dropping, companies raised $5.8 billion via ICOs in the first three months of 2018. Apart from the sectors mentioned above, the first quarter of this year saw blockchain being used in energy & utilities, supply & logistics, compliance & security as well as art & music.
Blockchain is Changing the World
Blockchain is a way to securely and efficiently transmit data and maintain a database. This has the power to disrupt any industry, not just banking.
For companies, blockchain offers cost efficiency (by eliminating intermediaries), auditability (permanency of records) and transparency (creating trust between parties). For individuals, blockchain facilitates peer-to-peer transactions. For example, people are now selling excess power generation to other users without having to go through an energy provider. Artists are sharing their music with listeners and receiving the complete payment.
Blockchain can change everything, from the way we manage our digital identities to the way we earn money, and from ensuring greater security and transparency in government programs to the way companies maintain and share records (like patient medical history or statutory documentation).
Blockchain is still at a nascent stage and it’s difficult to predict how it will evolve. What is certain is that it has immense potential. And the way it is progressing, it won’t be long before every industry adopts this technology to overcome speed, security and trust challenges of legacy systems.