Over the past few years, blockchain technology has emerged as a buzzword-phrase within our collective lexicon. It is now poised to revolutionize virtually every industry imaginable in some capacity. In this article, 10 experts weigh in with some compelling insight on where blockchain technology is going in the next 5 years.
The Government Of Dubai Will Become The First To implement Blockchain At An Operational Level
“In the next 5 years some major developments are expected to take place within the Blockchain ecosystem. The Government of Dubai will become the first government worldwide to implement Blockchain at an operational level. This opens the doors for the public sector to look at all the possibilities. Use cases within Logistics, Transportation, Identity Healthcare, Fintech and other areas continue to grow. From Walmart to Goldman Sachs to Credit Unions and Banks and countless other organizations are looking at utilizing Blockchain as a trust enabler.
The next 5 years will see the stabilization of initial use cases and maturity of the technology. We will also see a stabilization of cryptocurrencies and digital payment systems enabled through Blockchain.
I see a positive outlook for Blockchain, not because of Crypto, but because of use case maturity at a global level and the success of some key projects that are already underway.”
Ian Khan, Technology Futurist, Director of the Documentary, Blockchain City
Until The Regulatory Structure Is Clear, Many Companies Will Be Hesitant To Use The Technology
“Blockchain in industry, like blockchain technology itself, is in its infancy, but on the peak of rapid expansion. Businesses that see the potential and are proactive in its adoption will likely be the frontrunners in innovation and ahead of the curve when the benefits are fully realized. There is an opportunity for efficiencies in transparency and cost-cutting, and a few high-profile applications are taking hold. When the regulatory landscape evolves with the technology, more businesses will likely follow.
The biggest challenge to blockchain adoption is that the regulatory treatment is unclear for many uses with blockchain and virtual currency technology. It seems as if every federal regulatory agency has chimed in on blockchain issues, but none have taken the lead. For example, The IRS has classified virtual currency as property, and the CFTC has said they are commodities. The SEC has implemented a securities structure surrounding ICOs, and no agency has labeled virtual currency as an actual currency. This is true with blockchain. Until the regulatory structure is clear, many companies will be hesitant to use the technology to innovate their business processes.
Most companies would benefit from some aspect of blockchain technology, from gadgets, apps, blockchain, patented extraction, and many other uses.
Blockchain has vast potential. Companies looking to innovate and are proactive in its uses will likely reap benefits in ways we can imagine and in likely unimagined areas. As the regulatory framework progresses with innovation, companies will benefit. But that regulatory framework will likely lag the innovation, and frustrate those willing to adopt new technology.”
Braden Perry, Attorney, Partner, Kennyhertz Perry, LLC
Asset Classes That Can Be Beneficially Adopted For Blockchain
“Cash equity: The settlement of cash equity can be reduced to T+0 from the current T+3 settlement cycle. There will be automatic reconciliation, as all the participants/nodes will be sharing the same ledger. Similarly, the front and back offices will be relying on the same ledger, leading to increased operational efficiency. The only glitch is that such transactions will be processed in huge volumes, and the blockchain needs massive computing power to process and validate such volumes of data.
IRS, Equity Options, Futures, and Repos: Blockchain can simplify processing of the trade lifecycle, maintain one common ledger among the participants, and use smart contracts to trigger period payment(s) based on events. As the blocks made are immutable and maintain all the records from the start, an efficient audit trail can be maintained.
Exotic Derivatives: Standardized terms and conditions will allow automatic validation of economic parameters and adding to a blockchain, with automatic payoff triggered by events and automated settlements. A distributed ledger will also allow transparency to other participants of verified asset holdings.
Blockchain in OTC Derivative: The use of a distributed ledger system and smart contract is likely to enhance efficiencies in transacting derivative products in the OTC market. The benefits of using blockchain technology can be:
- Automating the execution of OTC agreements by using smart contracts on the blockchain network, wherein agreement terms can be implemented and confirmed without any human intervention.
- Peer-to-peer architecture will allow parties in an OTC trade to transact directly with their counterpart, without the need of a third-party.
- Maintaining the same ledger with both sides of the transaction increases transparency, which allows counterparties to view the data during the life cycle of the swap.
- Regulators can access any information in real-time, by using their authorized nodes in the blockchain network.”
Bhooma Chutani, Author, Consultant, How Blockchain is Transforming Capital Market
At Least One G-20 Nation Will Have Its Own Digital Currency
“Blockchain technology is heading mainstream in the next five years. We are going to see every major Fortune-500 company talking about how and why they are integrating it into their business. There is going to be clear regulation and at least one G-20 nation will have its own digital currency.”
Kyle Asman, Partner, BX3 Capital
Widespread Adoption In Third-World Countries
“Over the next five years, the blockchain is first going to experience rapid and widespread adoption in third-world countries. People who face economic instability, volatile inflation rates, or difficulty getting bank accounts are pushed to turn towards blockchain-based solutions and products faster than people in first-world countries. At Belacam, our adoption is heavily driven by users in Venezuela, Bangladesh, and Vietnam. Development for the past 5 years in the blockchain space has been financially focused — many products are built around peer-to-peer lending or decentralized banking. This market segment of the blockchain space is beginning to get saturated, and new developments are beginning to take place in the cross-section between industries like social media and the blockchain or data storage and the blockchain. Many of these companies have been in development for a year or two now and will be really hitting their stride over the next few years.”
Tyler Marx, CEO, Belacam
Blockchain will Revolutionize International Trade
“By 2025, most of the global trade will be conducted leveraging blockchain technology.
I believe in the next five years; blockchain can provide significant business value and bring a revolution in the international supply chain department. The current world trade sector is flawed and chaotic in many ways. There are a fragmented set of business relationships among parties that are untrusted. We are experiencing inefficiencies, frauds, adulterations, and errors in the world trade sector. Blockchain will end this!
I think the real-world business problems that are currently unsolved can be fixed leveraging blockchain technology. With blockchain technology, there would be no more counterfeit auto parts, no fake Gucci glasses, no adulterated medicines, and no grey market.”
David Mitroff, Ph.D., Business Consultant, Piedmont Avenue Consulting, Inc.
The Number Of Tech-Space Industry Operators Will Grow Steadily
“Even with the creation of highly secure and high-speed blockchains that offer the guarantee of faster transactions processing and a better platform for hosting the company systems and applications, you can still detect a lot of resistance from most of these companies. In the next five years, however, you should expect faster blockchain adoption across the world and the number of tech-space industry operators to grow steadily especially with the looming launch of Facebook blockchain. This is already evidenced by the fact that major technology companies like PayPal, Visa, and Mastercard that had previously shunned away from Blockchain technology have already joined Facebook in developing the biggest blockchain yet – Libra. And with the social media giant plus its backer’s global reach and influence, you should expect a lot of awareness on matters Blockchain. The next five years will, therefore, be marked by a global steady adoption. It will form a defining moment and the base for the next phase –in the next 10 to 15 years – where the material impact of the blockchain will be felt across the world. But this is, however, pegged on the outcome of the recent onslaught by key global economies that are calling out for a level of
control and regulation on blockchains and their associated cryptocurrencies.”
Edith Muthoni, Chief Editor, Leanbonds.com
Mass Use Cases For Blockchain Technology Over The Next Five Years
“As major industries and startups continue to test blockchain technology for various facets of business transactions, I expect that we will see formidable, mass use cases for blockchain technology over the next five years. Today, many major corporations are already either exploring, testing, or using blockchain technology for to help run more efficient and effective business operations. Interesting current initiatives include UPS implementing a blockchain-powered logistics monitoring and management solution while Alibaba is already using blockchain to track and verify luxury goods on its e-commerce platform. Blockchain tech will continue to proliferate, especially in the areas of the supply chain, financial technology, data security, and consumer privacy. Also, mass, niche consumer adoption will start to take place in the next half-decade, most likely starting with ‘blockchain hidden’ applications (where a consumer doesn’t know that blockchain is the underlying tech used) in the areas of gaming, payments, gambling, and social media. Major companies like Facebook will have help with this consumer push if they can get cleared to proceed by regulators. Other smaller companies will help with adoption as well, such as Japan-based Quras who allows consumers and enterprises to experience the best of blockchain technology when it comes to both data privacy, transparency, and efficiency gain. Regulation will be fragmented by country, as it is today, but that won’t slow the speed of innovation in this next technology era.”
Simon Bogdanowicz, Founding Partner, BlockTeam Ventures
The Best Consortium Model Is Multi-Industry, But Geo-Specific
“Enterprises seem to have grasped the implications of Blockchain and will seek to not only save costs but also generate revenue from it. The use cases for Blockchain will assign it one of three roles – a ledger to exchange financial value, an information ledger, or a notary ledger for public services. We expect significant commercial adoption of the information and notary ledgers – for purposes such as digitizing trade documents and land records – but traction in the value ledger will take time since it requires more clarity, including on the regulatory front.
Based on our experience in co-creating India Trade Connect, a Blockchain-based ecosystem of 13 banks and some insurers, service providers and other businesses, we believe the best consortium model is multi-industry (for a broad ecosystem) but geo-specific (for focus and control, and to get it going). It is crucial to recruit a large number of participants to take the ecosystem to a minimum viable size that delivers meaningful value. The rise of ecosystems will be accompanied by increasing coopetition as different banks pool their complementary strengths for mutual benefit.
There is also growing interest in deploying blockchain in trade finance and supply chain finance, and in 2019 we expect that at scale in both retail and corporate banking. This will need the involvement of large, influential entities. An example comes from Australia, where a stock exchange has decided to replace its legacy system with one that is Blockchain-enabled, and will, therefore, drive all capital market participants, from custodians and brokers to dealers and asset managers, to align with a single technology stack and follow standardized processes. In the case of trade/supply chain finance, this responsibility must be taken up by parties who interact at scale.”
Sanat Rao, Chief Business Officer and Global Head of Finacle
Blockchain Is Where Opportunities Connect
Nataliya Kalava, Founder and President, Araliya Valuation Consulting LLC
Although no one possesses the oft coveted gift of prophecy, the future is bright for blockchain technology. Where that future will lead us, only time will tell.