It is now a decade since the publication of the infamous bitcoin white paper, ‘Bitcoin: A Peer-to-Peer Electronic Cash System’, and the launch of the bitcoin blockchain, writes
Is that early promise, espoused crypto-evangelists, that blockchain technology will “change the world”, getting closer or is it still a far-fetched dream?
In 2016 and in early 2017, crypto currencies became more mainstream, which led to hysteria, and relentless fear of missing out. That was the rationale for many investors who entered the market in late 2017 and early 2018. This was followed by a monumental crash.
Some of the most prominent cryptocurrencies decreased in value by 90% from December 2017 peak prices. Around half of blockchain companies that ran ICOs during mid-2017 to mid-2018 have now failed altogether.
However, fast-forward to now, 2019. Blockchain can improve businesses’ efficiency and processing times in a secure manner. As adoption and innovation grows, the technology will be hugely disruptive to several industries, not least banking and real estate.
Everything from cybersecurity, healthcare, car leasing and sales, energy, IoT, cloud storage, government and governance, supply chain, music and IP ownership are all ripe for change.
Whilst early predictions that cryptocurrencies would bring financial institutions to their knees were wildly overstated, blockchain technology can impact the banking sector to the extent that the internet affected publishing. It will enable the faster, safer transfer of huge sums of money.
Whilst this may impact the profits of certain banks and clearing houses, customers will favour institutions that offer the transparency of these improved services. For this reason, it is estimated that 25% of banks will adopt, or plan to adopt, some form of blockchain technology during 2019.
Real estate, with the processes to rent or own property fraught with bureaucracy, is slow. It requires the involvement of multiple intermediaries and large capital outlay, with the end result being the ownership of an illiquid investment.
Over decades, very little has changed in transactional methods. Given its somewhat archaic processes, blockchain stands to transform the sector.
Smart contracts, written on a blockchain protocol, can simplify the rental and purchase process, removing several intermediaries.
Since use of a blockchain can create an immutable record that is public, storage of title deeds also represents a good use for the technology.
Perhaps the most important change will be the ability to create fractional ownership of property through digital tokenisation of assets. This will bring property ownership to an even bigger audience and allow individuals from all over the world to easily own a small piece of some of the most exciting construction projects or lucrative developments.
The biggest difference will be that owners of these digital tokens won’t need to wait for the sale of the property to realise their investment, with secondary markets being available for trading of those tokens, via exchanges.
Endless names from the banking and financial services world recognise the potential.
Now that Microsoft, Intel, and IBM have announced the development of their own blockchain solutions, JP Morgan has developed its own digital currency, eBay and Facebook have announced plans to do the same, and Whole Foods will start accepting digital currency, with the underlying technology being based on an ethereum payments network.
For those involved in the sector a little longer, the volatility of markets is nothing new, though the highs and lows have never been quite so drastic.
Rather than faith being placed purely in cryptocurrencies as a means of replacing traditional, fiat currencies and becoming the primary use of the technology, many of those same people knew the real promise is in blockchain technology — an important distinction frequently overlooked.