In the past, blockchain -- which is known as a distributed ledger technology for both financial and non-financial transactions -- seemed like a mysterious concept that only technologists could understand. However, the various advancements in blockchain applications in 2016 helped more people and more businesses see its potential.
For others in the business environment, blockchain is something they're still just exploring. But as we get further into 2017, there are a few trends that I think will be interesting to trace as the year progresses.
In working with blockchain myself as part of the payments industry, where most applications are tied to some type of banking or financial application, I see some of these trends already in progress. However, some of them go beyond payments and may offer application for other business segments, helping startups and established businesses address a particular need.
Growth In Applications
With ongoing research and greater understanding of how the blockchain works, one of the biggest trends I predict in 2017 is the use of this technology in new application areas across industries. I see this happening especially in business segments that have always had a middleman as part of the transaction. This means that many service-oriented businesses decentralize. For example, ride sharing transactions could be handled directly by drivers and passengers using the blockchain, which could then give once-disruptive companies like Uber and Lyft a run for its' money.
Other applications include streaming services. We could let artists decide how their music is sold and shared, and everyone -- from the writer to the producer to the singer -- could receive a payment immediately through the blockchain when a song is downloaded, rather than getting their share later on. Rather than waiting for royalty checks to arrive that are processed by a publishing company, the artist can take greater control over their process from publication to payment through blockchain applications.
Regulatory Frameworks
One of the most challenging aspects of giving blockchain the space to grow into what it is capable of becoming is the lack of a regulatory environment that would help countries feel more comfortable about its use. Recently, countries like Japan have gone as far as to create legislation that would regulate bitcoin in their country, while other countries have formed task forces to research what’s involved in the use of bitcoin and blockchain. These are both major first steps toward a larger global framework.
Since everything to date has been fragmented in terms of a standardized regulatory framework to allow blockchain to work across geographical borders, blockchain has been slow to catch on. However, there are signs that greater progress will be made across multiple countries to determine some type of regulatory process that will increase use.
An Urban Solution To Manage Future Smart Cities
One of the coolest applications I see for blockchain is its use in the development of internet of things “smart cities” as the solution for many of the issues plaguing today’s urban areas. An article for BTCManager.com noted how this new version of urban infrastructure connectivity would work in physical infrastructure, including various types of devices, vehicles and utility stations, and how it would capture and exchange data to manage the specific systems used to run these cities.
Across neighborhoods and commercial districts, this physical infrastructure could use blockchain to oversee the data exchange and ensure a secure and efficient process for these interconnected networks. In 2017, there will be more urban projects in various cities set to test the data integrity of this type of blockchain-managed information. This will help us better understand how it could improve urban areas in the future. For example, Australia is currently examining the potential of blockchain for applications from improving coordination among government departments, to food security, to transportation and logistics across the country.
New Levels of Security And Privacy
With issues related to online security, blockchain will gain greater general interest in relation to its security and privacy capabilities. This applies to everything from payments, where hacking and data breaches have plagued online retailers, to companies that provide contracts, agreement forms and data storage.
Once blockchain is tested it could grow rapidly. So 2017 will be a real test in terms of what blockchain can do to tighten existing security and privacy protocols. Scientific American published its research on blockchain and concluded that using it as the framework for a "digital infrastructure could improve society’s public records repository and reinforce representative and participatory legal and governance systems," as well as provide for enhanced security and privacy during data transfer.
Global Involvement
While much of the blockchain research has occurred in the western world, I’ve seen interest in what it can do from countries throughout Asia, especially from China where developers and companies have sought out blockchain experts in other countries for advice and insights. The fact that major world powers are now advancing their interest is a good sign for blockchain, as it means that it’s really starting to catch on and could become a more mainstream – albeit still exciting – technology in 2017.
