Blockchain is the most trending topic of 2018. This technology has promised to shake up the IT outlook with its decentralized structure, unchangeable and transparent transactions, and real applications in finance, insurance, public administration and other government organizations. In the public sector, the focus will be on digital identities and eVoting.
THE BLOCKCHAIN REVOLUTION IS SPEEDING UP
Parallel with the huge amount of data in our economy, the demand of a trustworthy system able to manage our data with reliability and transparency is increasing.
In 2018, the impact of blockchain on our society is going to rocket. Blockchain won’t be a one-hit wonder, but it will represent a fundamental switch of perspective where centralized and proprietary networks will become decentralized infrastructures able to record our data indelibly, transparently and impartially.
What does blockchain mean?
I have already written an in-depth article about blockchain and bitcoin, where I explained exactly what they are and how they work.
However, I can summarize this concept with the words of Don and Alex Tapscott, authors of Bitcoin revolution (2016), who have defined blockchain as «an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value».
The advantages of a public digital ledger can be applied to many sectors, from the identity management to the recording of any kind of transactions, from the creation of confidential public reports to the global economy, finance, customs and governments which will be able to manage great data volumes with transparency and immutability.
Cryptocurrencies
Cryptocurrencies, in particular bitcoin, may represent the most common application of blockchain. Bitcoins are encrypted digital assets resistant against fraud and hackers' attacks which can be transferred online internationally.
The main characteristic of cryptocurrencies is that they are not issued and managed by banks or central authorities. So, they are immune to manipulations and other interferences.
They can be exchanged internationally without commission fees or delays and, for this reason, virtual currencies fit perfectly in this digital era.
The increment of cryptocurrencies compounding has been spectacular. It passed from $16 billion USD in 2016 to $450 billon USD in 2017 (source: Key4biz, January 2018).
The raising of new financial tools like futures on bitcoins, crypto hedge funds and others will contribute to keep the demand of cryptocurrencies and tokens high.
Another blockchain potential application to cryptocurrencies is on micro-transaction payments among machines (M2M). It is only an idea for now, but researchers will surely explore this horizon during 2018.
Imagine you're on the tennis court and your smart racket notices that your tennis balls have lost inflation. The racket, which has been tracking your swing performance and sending the data to your smart devices, decides to order and pay for three more balls from the auto-roving ball dispenser.
Your device also determines that the auto-rover is using your favorite open source code, so it makes a small extra donation to the rover to help support future development via smart contract.
Cryptocurrencies sanctioned by governments
Putin was the first to jump on the bandwagon announcing the crypto Ruble. It also is probable that other countries will take into consideration the pros of using cryptocurrencies rather than banning them, like China did with bitcoin.
Fintech
Cryptocurrencies are quickly making their way in the Fintech sector. Bitcoin has reached great valuations of $18.000 USD before dropping again at the end of 2017. Nevertheless, people are still not used to this scenario.
Quite simply, an infrastructure doesn't exist yet to be able to sustain the mass use of bitcoin. The latter also has to face the incumbent hostile economic and financial systems, and regulatory authorities that are afraid of the disruptive potential of this new currency.
The major usage besides finance
The potential pros of blockchain in the financial sector are loud and clear, but a concept of multi-point distributed network to record transactions can be applied in all sectors that deal with data processing and management.
For example, according to the IDC Health Insights, 20% of organizations which are testing blockchain in the health sector will switch to a full operational phase by 2020.
In the staff selection and human resources sector, blockchain applied to CVs during a recruiting phase allows lightening the selection process of verifying candidates’ qualifications and experiences.
Regarding the legal sector, blockchain can simplify monitoring several ownership transfers, for example in the intellectual property and real estate property records fields.
In the manufacturing and industrial sector, the Blockchain Research Institute (founded by IBM, Pepsi and FedEx) expects blockchain to become the “second generation” digital revolution after the internet. An example of blockchain application to record transactions within the supply chain can be represented by Foxconn.
Smart contracts
Smart contracts represent the first application field of blockchain technologies which will smartly manage an agreement by saving the accesses, funds, and other information on a public ledger.
This system will be able to erase any form of intermediation and inefficiency caused by human failure in document management.
Mainly, the many phases of a contract should be automatically executed when the conditions are met. In other words, payments can be automatically made and every contracting party’s information can be recorded in the blockchain.
The advantage is the removal of intermediaries that encourages a direct relationship between providers and clients.
For example, once an agreement is subscribed, the payment of bonuses to the achievements of certain goals can be automated. Similarly, an order can be met once its payment is made.
The AIG insurance company is testing a smart contract system to manage and make complex insurance policies which require international cooperation.
SparkleCOIN
There are already many startups which deal with blockchain and cryptocurrencies. For example, SparkleCOIN has created a special “ecosphere” based on a series of companies and platforms which should sustain the passage to an open virtual currency-based economy.
As time passes by, more people will understand how to use new digital currencies and appreciate the advantages of central authority-free transactions managed by decentralized systems (blockchain).
The new generation of both startups and investors will focus on how to innovate using blockchain.
It’ll take time, because the “incumbents” are trying to keep the status quo as long as they can even if they need to reorganize global information in accordance to the huge amount of data produced.
BLOCKCHAIN: GROWTH TRENDS
2017 represented a year of growth for blockchain technologies and many companies tried to pass from an experimental to operational phase. Although some companies achieved poor results, others like Ripple have reached interesting goals.
Ripple is a cryptocurrency which outclassed bitcoin and counts already hundreds of members and a billion dollars in transactions.
Another success story for the financial trading sector was brought up by Digital Trade Chain. Who could have ever expected the compounded growth of cryptocurrencies and the related boom of the ICO (Initial Coin Offering)?
During 2018 there are some common trends that will boost blockchain stabilization:
New blockchain-based solutions will be produced hand in hand with the launch of first affordable services;
Cryptocurrencies will continue to grow;
Companies will adapt and focus their business model on blockchain;
New ecosystems based on smart contracts will integrate with actual industries;
The Initial Coin Offering will be targeted by professionals and lead to a new model of IPO 2.0 (Initial Public Offering);
Companies will intensify their investments in blockchain’s scalability and performance.
Next applications
The closest blockchain application concerns the Fintech market, particularly payments and finance where it is expected, respectively, an overall saving of 50-60 and 15 billion dollars.
Blockchain meets the Internet of Things
Many people are wondering on possible interactions between blockchain and IoT, and it seems that security represents a common field of application.
In terms of security and control, blockchain’s trustworthy and encrypted nature could give the right response to the increasing number of connected devices in our house and office.
Blockchain’s computing power, now applied to bitcoin, can be used to lock down the interconnected objects against “data-thirsty” hackers.
Promising markets
In the payments segment, the blockchain market will continue to expand and its great pros will push banks to align to this new landscape for real time data processing, lower costs and better accountability.
Blockchain will lead the actual industries to a new balance, for example, it can be said central European banks have provided a renovated overall accountability.
New business models
In a world where the role of intermediaries becomes even more obsolete, companies should stop thinking through closed doors and be open to becoming partners within new ecosystems or wider platforms.
It means taking decisions on new business models that fit better in the new context of platforms, products or multichannel strategies.
Above all, new business models will prefer services which combine artificial intelligence with IoT in order to make new types of marketplaces that will replace traditional silos.
An example can be represented by the agreement between Deon Digital and Mercedes Benz for the development of a new operating system which will contribute to drop silos need in the mobility market.
Also Skycell, thanks to IoT and blockchain, has launched a pharmaceutical supply chain for payments, invoicing and digital insurance.
Instead, TEND is investing in high value assets aiming at the Sharing Economy 2.0.
Metamorphosis of the Initial Coin Offering (ICO)
In 2017, startups have gathered 3,5 billion dollars from public cryptocurrencies donations (source: Key4biz, January 2018), a clear sign that new tokens were launched together with new democratic models of venture capital.
We can expect that people experienced with the IPO (Initial Public Offering) will start to invest in tokens during the next 12-18 months.
Scalability and ecosystems
One of blockchain’s keys is its scalability and performance, so it is expected blockchain’s energy consumption will decrease in 2018 thanks to technology improvements.
In this environment, the IOTA is born, a new generation encrypted token, built to be used with Internet of Things. It represents a counter-trend compared to the other cryptocurrencies which are made for different goals and based on complex blockchains.
Localized blockchains will become more popular and nowadays, Switzerland represents a great example with its Crypto Valley.
THE HOTTEST STARTUPS TO WATCH IN 2018
Since 2017, blockchain has become more popular, particularly, it has caught the attention of the financial sector. The growing interest towards this technology, made to manage distributed transactions of bitcoin, was pulled by the rocketing of bitcoin’s value. The US startups which provide financial services based on blockchain were tanked up and gathered 240 million dollars venture capital funds in the first semester of 2017 (source: Key4biz, January 2018).
Nowadays, the interest for potential applications of blockchain technologies is reaching other sectors.
The most promising pioneering startups that deal with blockchain development and promotion
On January 2018, the cryptocurrencies market compounding was 615 billion dollars (source: Key4biz, January 2018). The bulk of cryptocurrencies is the blockchain technology, so big organizations and governments are understanding the operational opportunities and uses that this market can give.
IBM, Walmart, Microsoft, Overstock are only a few names among the companies which have invested in blockchain. The latter is object of study for several startups that are trying to win many business and organizational challenges. Here is a list of the most promising startups of 2018:
Ripple
This startup based in San Francisco (CA, U.S.A.) offers a real time payment system which supports banks and financial institutions worldwide to conclude transactions without the need of a central authority.
Ripple also is a real time wholesale clearance of payments, currencies exchange and money remittances.
The startup was founded in 2012 by Arthur Britto and Chris Larsen. Ripple coin was worth 2,25 dollars and had a compounding of 8 billion dollars at the beginning of 2018 according to a Coinbase’s survey.
Blockchain
Blockchain is a startup located in London which provides a web-based bitcoin platform to simplify bitcoin usage in terms of security and ease of use.
The platform aims at both other businesses (B2B) and consumers (B2C) worldwide. Its mission is reinventing the way transactions are made.
Founded on the 28th of August 2011 in London, Blockchain is the most popular bitcoin wallet in the world, the most used API blockchain (Application Programming Interface), the most exploited blocks explorer and the most completed search engine, so that it is considered the most reliable brand for bitcoin. Blockchain gathered 30 million euros on October 2014 from Lightspeed Venture Partners and Wicklow Capital.
It has registered a super expansion equal to 2100% in a year and a half thanks to the booming of its platform that passed from 100 thousand to over 3 million subscribers. The startup has gathered overall 70 million euros of funds.
Power Ledger
Power Ledger has developed a series of blockchain applications in the energy market, such as its P2P (Peer to Peer) trading app for solar energy. Basically, Power Ledger enables owners of renewable energy assets to decide to who and what price to sell their energy surplus.
The system is transparent and able to automatically close transactions in the residential and commercial segment, linking houses and companies in existing electrical distribution networks or micro grids.
Power Ledger empowers consumers giving them the control of the energy economy while maintaining the value of traditional distribution networks.
Power Ledger has gathered 35 million dollars of funds so far.
Crowdz
Located in Sunnyvale (CA, U.S.A.), Crowdz has founded the first marketplace for eCommerce based on blockchain. Exploiting this new technology and artificial intelligence in tandem with the classic principles of B2B and B2C, Crowdz automates the search of products and sources, speeds up commercial transactions and enables predictive analyses through analytics.
Crowdz’s technology is waiting on the approval of 7 patents and a beta version of the platform which is now used by 240 companies offering 1,6 million products.
Crowdz was founded in 2014 and is led by Payson E. Johnston, former B2B supply chain senior manager at CISCO. Crowdz has only gathered 1 million dollars of funds.
Colu
Colu allows the use of digital wallets to instantaneously pay from smartphones and empowers local business. It is a new startup which creates local currencies for micro-systems based on blockchain.
This startup, located in Tel Aviv, was founded by Amos Meiri, David Ring and Mark Smargon in 2014. Their goal is to change the way money is made and used, enabling people to exchange virtual currencies to support the economic development of local communities.
According to Colu, the use of local currencies allows an increase in local businesses, food and social life by strengthening the economy and enhancing social responsibility by raising people’s disposable income self-control. The startup has gathered overall 26,6 million dollars of funds.
Coinfy
Coinfy is the main cryptocurrency service provider and supports 14 different digital currencies like bitcoin, ether, ripple and so on. This company is a global virtual currency provider funded by SEED Capital Denmark, SEB Venture Capital and Accelerace.
Coinfy offers virtual currencies and payment processing for trading services: users can buy and sell the blockchain-based currencies which run on the platform; merchants can accept payments via blockchain in 15 different currencies and cash in real time.
The startup has gathered overall 9 million dollars of funds.
Sensay
Sensay is a startup located in Venice (CA, U.S.A.) which connects people who need to do transactions. It is a platform based on an artificial intelligence chatbot: a “friend” that can be reached out to at any time, with anything and have a one-on-one, meaningful conversation. It instantly matches with a human who has the experience another user needs, right when he needs it.
Everybody can connect and use Sensay to gain tokens through all communication systems like SMS, Slack, Facebook Messenger, Telegram, We Chat…
This startup was founded in 2014 by Ariel Jalali and Crystal Rose. It has gathered 21 million dollars so far.
Crypterium
Crypterium is a digital public cryptobank with credits in subtokens. It is an integrated banking system which provides a real time, vertical and complete payment service for any kind of cryptocurrency to purchase in 42 million shops worldwide.
This contactless cryptobank has been funded for about 24,3 million dollars.
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