We’re still in the early days of Blockchain as a technology, and so we’re yet to see the full impact that it will have on the world that we live in. Still, it’s already showing potential across a range of industries and started to enter the public consciousness, so the real question is what will happen when Blockchain technology starts to mature.
Fig. 1 : Timeline of Blockchain Developments
Right now, speculating on the future of Blockchain is like trying to predict the future of the World Wide Web in 1990. It’s just too early to say for sure, but we can at least be reasonably certain that it’s going to continue to grow as more and more uses cases are found for the exciting new technology. In the meantime, all we can do is watch and learn. [2]
In a new era of Europe's General Data Protection Regulation (and other similar online data privacy legislation on the way), Blockchain is poised to take its place at center stage in today's economy. It’s likely that this change will be top-down: People won't be demanding Blockchain, so businesses will have to lead the charge in transitioning to this system. [3]
Fig.2 : High Level Summary of Blockchain Risks and Challenges
Blockchain will face many changes and obstacles but still provides many promising applications; the following list discusses both challenges and applications of Blockchain technology in 2019 and beyond:
1. A Reality check for Blockchain
Blockchain is suffering the same type of over-hype that virtual reality is. For years, people in various sectors have been hearing about Blockchain. It’s been portrayed as a true game changer. The problem is that so many people still aren’t seeing real world benefits. To them, like virtual reality, it remains a nifty technology without a practical application they can really wrap their heads around.
In 2018, we saw an increase in funding for Blockchain startups. However, like any new technology, Blockchain is still immature in its implementation; as a result, many Blockchain startups are expected to be just a waste of time and money. False starts in Blockchain deployment will lead organizations to failed innovations, rash decisions, and even complete refusal of this innovative technology.
Undoubtedly, #Blockchain technology in the future will affect every aspect of businesses, but this is a gradual process that requires time and patience. Gartner predicts that most traditional businesses will keep an eye on Blockchain technology, but won’t plan any actions, waiting for more examples of the best applications of Blockchain technology.
The reason for this is that traditional enterprises require more transformation for Blockchain deployment than newly-appeared businesses. According to Gartner, only 10% of traditional companies will achieve any radical transformation with Blockchain technologies by 2023. [4]
Fig.3 : Blockchain Plans
This isn’t to say that Blockchain doesn’t have amazing potential. It certainly does prove that the gap between Blockchain hype and application is a problem. If businesses stop exploring its potential, it won’t matter how useful the technology is. But this may be changing as well. [1]
2. The ‘Emerging Disruptor’ startups fueled by Blockchain
The Blockchain ‘emerging disruptor’ companies are fast growth startups that have found themselves in the position to be able to disrupt other businesses in their sector. They often have the benefit of being well-funded, and headed by executives who are experienced and well-connected in their industries.
These are the businesses that are often able to apply Blockchain technologies in ways that are truly a part of their business model, as opposed to supplementing it. Competing with big names like Amazon, Google, Facebook, Apple and Microsoft. [1]
For example Blockchain could be useful for content streaming companies like Netflix because it could be used to store data more securely and to pave the way for interoperability. If nothing else, it could provide something resembling an API, allowing third-parties to read and write data to the Blockchain.
But there could be a more practical use for Blockchain in the streaming industry and in other industries which require large amounts of processing power. In the same way that mining for bitcoin just taps into dormant computing power from across a network of machines, streaming companies could witness huge decreases in their operating costs by spreading the load across unused machines via the Blockchain. [2]
3. Blockchain and Cybersecurity
The global figure for cyber breaches had been put at around $200 billion annually [8]. Because Blockchain was created as a means to ensure the security of transactions, it shouldn’t come as a big surprise that this is the niche where much of the innovation still occurs. Blockchain is playing a huge role in cybersecurity especially. [1]
With the growing prevalence of data breaches and the massively interconnected world we live in, new ways to verify identity and protect privacy will be game changers. Blockchain is a natural for this role because the whole point of it is to provide robust, incorruptible — yet encrypted — record keeping that anyone can easily verify.
An example for such application; Blockchain can be used for shopping security, whether online or in person. Blockchain in this space can create a "universal shopper profile" that is undergirded by Blockchain. Unlike most systems these days, in which your purchase histories are stored and carefully scrutinized and shared by big names such as Google, Blockchain restricts the information collection and sharing to only those entities that you (the consumer) grant it to share, and give consumers incentive to see ads by tokenizing the process and give rewards. [3]
For a Blockchain system to be penetrated, the attacker must intrude into every system on the network to manipulate the data that is stored on the network. The number of systems stored on every network can be in millions. Since domain editing rights are only given to those who require them, the hacker won’t get the right to edit and manipulate the data even after hacking a million of systems. Since such manipulation of data on the network has never taken place on the Blockchain, it is not an easy task for any attacker.
While we store our data on a Blockchain system, the threat of a possible hack gets eliminated. Every time our data is stored or inserted into Blockchain ledgers, a new block is created. This block further stores a key that is cryptographically created. This key becomes the unlocking key for the next record that is to be stored onto the ledger. In this manner, the data is extremely secure.
Furthermore, the hashing feature of Blockchain technology is one of its underlying qualities that makes it such a prominent technology. Using cryptography and the hashing algorithm, Blockchain technology converts the data stored in our ledgers. This hash encrypts the data and stores it in such a language that the data can only be decrypted using keys stored in the systems. Other than cybersecurity, Blockchain has many applications in several fields that help in maintaining and securing data. The fields where this technology is already showing its ability are finance, supply chain management, and Blockchain-enabled smart contracts. [8]
4. Internet of Things (IoT) meets Blockchain
It’s no secret that the internet of things is coming to connect our devices and to make it easier than ever for us to create and store data about ourselves. This applies to everything from wearable devices to home hubs, connected fridges and any other type of internet-connected device that you can imagine.
But all of these internet-connected devices will need some sort of security system that ties them together and that makes their data secure. That could be where the Blockchain comes in, but only if different manufacturers can agree to come together and agree on the specifications of the Blockchain that’s required. [2]
The International Data Corporation (IDC) reports that many #IoT companies are considering the implementation of Blockchain technology in their solutions. Therefore, IDC expects that nearly 20 percent of IoT deployments will enable Blockchain services by 2019.
The reason for this is that Blockchain technology can provide a secure and scalable framework for communication between IoT devices. While modern security protocols already appeared to be vulnerable when implemented to IoT devices, Blockchain has already approved its high resistance to cyber-attacks. [4]
Besides, Blockchain will allow smart devices to make automated micro-transactions. Due to its distributed nature, Blockchain will conduct transactions faster and cheaper. To enable transferring money or data, IoT devices will leverage smart contracts which will be considered as the agreement between the two parties. [4]
Since the beginning of 2018, analysts have been predicting that IoT DApps might just become the next key development in Blockchain application development. By 2019, 20% of all IoT deployments are predicted to have at least basic levels of Blockchain services enabled.
Fig.4 : IoT Security Flaws
IoT security flaws generally revolve around three major events: authentication, connection, and tractions (Fig. 4). Thanks to these vulnerabilities, already hackers have managed to take control of implanted cardiac devices, disable cars remotely, and launch the largest DDos attack to date.
Given that security is one of the main challenges of IoT, as well as, data integrity, it goes without saying that Blockchain could potentially revolutionize this sector. Blockchain technology makes it possible to stabilize complex IoT systems. It also eliminates the risk of single points of failure for an IoT network as a result of malicious attacks. [6]
5. Increased use of smart contracts
Smart contracts are one of the most interesting aspects of Blockchain technology because they have the potential to bypass third parties and to create airtight agreements that must be honored. This has plenty of practical applications in all sorts of industries, from finance and real estate to logistics and recruitment. Any industry that relies on agreements to function can get a lot out of smart contracts.
The idea behind these contracts is that they offer increased transparency and security while simultaneously speeding up the whole process. Contracts could be signed and verified in real-time in a secure environment, and that can make all of the difference when it comes to getting things done and reacting quickly to changes in the market. [2]
You should also keep in mind that smart contracts are decentralized and aren’t regulated by any authority. But what should parties do in case of any disagreement? Participants of smart contracts usually agree to be bound by regulations, but what if a dispute appears between parties from different countries. Now, it remains to be unclear how contractual disputes should be settled. Thus, the rule of law should be enforced into smart contracts in the near future for resolving any disputes between the parties. [4]
6. Increased regulations
As Blockchain becomes more widely used in all sorts of different industries, it’ll also start to receive more attention from regulators and lawmakers, especially if governments can find ways to use Blockchain technology on a large scale. And let’s not forget that cryptocurrency is technically classed as a property and not a currency when it comes to taxation, at least in the United States.
Whenever a new innovation like Blockchain comes along and starts to create large sums of money for those who are able to take advantage of it, it tends to receive intense scrutiny from people in power. But that’s not necessarily bad news for Blockchain, because additional interest in it from powerful organizations may help to increase consumer trust whilst providing the framework needed for further growth. [2]
7. Financial institutions will lead Blockchain evolution and revolution
Unlike other traditional businesses, the banking and finance industries don’t need to introduce radical transformation to their processes for adopting Blockchain technology. After it was successfully applied for the cryptocurrency, financial institutions begin seriously considering Blockchain adoption for traditional banking operations.
In recent PwC report, 77 percent of financial institutions are expected to adopt Blockchain technology as part of an in-production system or process by 2020.
Though the concept of Blockchain is simple, it will bring considerable savings for banks. Blockchain technology will allow banks to reduce excessive bureaucracy, conduct faster transactions at lower costs, and improve its secrecy. One of the Blockchain predictions made by Gartner is that the banking industry will derive 1 billion dollars of business value from the use of Blockchain-based cryptocurrencies by 2020.
Moreover, Blockchain can be used for launching new cryptocurrencies that will be regulated or influenced by monetary policy. In this way, banks want to reduce the competitive advantage of standalone cryptocurrencies and achieve greater control over their monetary policy. [4]
8. National cryptocurrencies will appear
It’s inevitable that governments will have to recognize the benefits of Blockchain-derived currencies. At the rise of Bitcoin, governments expressed their skepticism regarding the particular application of cryptocurrencies. However, they had to worry when Bitcoin became a tradeable currency that couldn’t be controlled by any government.
Although, some countries like China still ban Bitcoin exchanges, we should expect that governments will finally accept the Blockchain-based currency in 2019 because of its potential advantages for public and potential services. By 2022, Gartner predicts that at least five countries will issue a national cryptocurrency. [4]
9. Blockchain integration into government agencies
The idea of the distributed ledger is also very attractive to government authorities that have to administrate very large quantities of data. Currently, each agency has its separate database, so they have to constantly require information about residents from each other. However, the implementation of Blockchain technologies for effective data management will improve the functioning of such agencies.
According to Gartner, by 2022, more than a billion people will have some data about them stored on a Blockchain, but they may not be aware of it. [4]
10. Blockchain experts will be in high demand
Despite Blockchain is on the top of its popularity, the job market experiences a lack of Blockchain experts. Upwork, an online freelancing database, has recently reported a fast-increasing demand in people with “Blockchain” skills. While the technology is new, there are a limited number of Blockchain engineers. [4]
11. Blockchain and Artificial Intelligence (AI)
One of Blockchain’s most promising use cases lies in the fact that it has to potential to facilitate certain parts of an AI implementation. In order for AI to function, machines require access to big data. Up to now the processing of big data has not been economically viable. However, with the support of the Blockchain, this may all change.
Blockchain can provide the data authentication on which AI models depend since the data stored on the ledger cannot be changed and is available publicly. That makes data stored in a Blockchain more relevant than data that is delivered on unproven platforms that have embedded errors. [6]
The quest for artificial intelligence has been a long-standing one. Ever since the emergence of computers, scientists have been looking for ways to develop thinking machines. AI is basically an algorithm that allows machines to exhibit functions that they weren’t programmed for. The most complex devices on the planet still only work within the limits of their programming algorithms. When successfully implemented, AI will birth machines that can quote “learn how to learn.”
Just like in the case of the IoT, the Blockchain has been identified as having the potential to facilitate certain aspects of the AI implementation. In order to function to its fullest capacity, machines capable of learning require access to “big data.” The majority of the big data available for mainstream use is reserved for analytics. Exchange of big data hasn’t been economically feasible but with the aid of the Blockchain, this could all change.
Blockchains can provide a secure environment for big data owners to connect with AI developers. By so doing, complex machine learning algorithms can be developed to help smart devices take advantage of the data available to them in order to achieve artificial sentience.[7]
Fig.5 : Challenges Facing Blockchain
12. New Blockchain Platforms with Better Processing Power and UX
Ethereum is a well-known platform for Blockchain technology but it has a major fundamental flaw; its highly inefficient usage of the Blockchain’s processing power (Fig. 5), other Blockchain platforms are emerging to fill the gap. Instead of Ethereum, DApp developers are turning to other Blockchains, such as NEO and Hyperledger.
NEO offers an advantage over Ethereum because instead of proof-of-work, it makes use of an energy-efficient consensus mechanism known dBFT (decentralized Byzantium Fault Tolerant). As a result, NEO can process transactions at a much faster rate of 10,000 transactions per second.
Additionally, it also supports more computer languages while developers can only use Solidity for Ethereum developer. NEO supports Java, C#, Python and Go, making it a more accessible option for startups and established businesses who are looking to hire dApp developers.
Hyperledger offers a major advantage over Ethereum because it allows developers to create DApps with private Blockchains, as well as, permissioned Blockchains. Hyperledger offers low node-scalability which enables high performance scalability. With Hyperledger, nodes can also assume different roles and tasks in order to reach consensus which enables fine-grained control over consensus. [6]
While Blockchain projects have mostly been focused on taking advantage of the versatility of Blockchain technology, usability has been severely overlooked. In 2019, you can expect to see new projects that aim to make things easier for everyone, for end-users, as well as, developers.
New platforms are making things easier for developers with functional programming languages and easy-to-deploy and customizable Blockchains. On the user end, the end goal is for users to not even know that they are using Blockchain technology. For example, Blockchain developers are building on platforms, which don’t require users to pay fees. [6]
Final Thoughts
There’s nothing but opportunity ahead for businesses who want to utilize Blockchain. However, most Blockchain application development trends in 2019 require more than just developers. You’ll also need to make changes to your workforce, as well as, your overall business strategy in order to effectively leverage the benefits of Blockchain technology. [6]
