What can be described as one of the finest examples of blockchain technology, Bitcoin – recently hit the symbolically significant $10,000 threshold. The price of bitcoin has risen more than 70% since October and over 900% since the start of this year. With the kind of hype growing around cryptocurrency, the price of the digital coin is likely to reach US$40,000 by the end of 2018. There has been a crazy rise in cryptocurrencies with a net worth of US$333 billion. Blockchain is the common denominator for these things.
Cryptocurrencies are driven by the blockchain infrastructure explaining the fact that 35% of all the Initial Coin Offerings (ICO) funding this year took place in blockchain centralized projects. Moreover, an additional US$240 million was also raised in venture funding by blockchain focused financial services startups.
Now, with people really getting the hang of the concept of blockchain technology, there are a few predictions regarding the disruption and innovation of this technological trend in 2018.
1. Know That it is a Slow Database
With Bitcoin emerging as a case for defining digital money, too many other organizations are expecting too much from this technology. Companies need to understand that they need to fit the technology in their business model and not the other way around. Since blockchain is actually a really slow database, as an organization, you need to evaluate how best this technology will work for you. Randomly taking your business models (for FinTech, Banking, Advertising, etc.) and applying it to a blockchain and expecting a rise in savings and efficiencies is not intelligent. For the next year, it is expected that organizations don’t use this technology for the sake of it and really analyze it and see if this solves their problems in real time. Rushing in without clear expectations will only lead to costly waste of time.
2. Multi-Sector Applications
Information recording, sharing and transactions form the basic part of financial services and hence it is quite understandable for blockchain technology to be heavily used in this sector. This is a tedious task but if used during payments and trade, blockchain could save a significant amount of money. Goldman Sachs recently revealed that according to one of their survey results, blockchain helped save US$6 billion annually only in stock market operations. There are many other industries besides finance that could make better use of blockchain technology. For instance, legal work involving the transfer of ownership like intellectual property rights (IPR’s) could be made more efficient using distributed ledger technology. In the food industry, by tracking food from the supplier to the shelf, blockchain could help reduce food poisoning and waste.
3. Automatic Execution of Contracts
Terms of buyers and sellers directly written into lines of code leading to automatic execution of contracts are known as ‘smart contracts’. The idea was originally conceived by cryptographer Nick Szabo in 1993 as a digital vending kind of machine. Ethereum, Bitcoin’s rival, is one of the leading supporters of smart contracts. They make use of a language that allows developers to write their own programs. The language is ‘Turing-complete’. The contract is filled once conditions are met. Thereafter, whatever a contract typically defines, say, for instance, payments, they’ll be automatically made.
4. Web-Mining and Security
Web-mining is a cryptocurrency mining technique directly used in a browser with a special script installed on a web page. Attackers can easily upload scripts to a compromised website and engage visitors’ computers in mining. In 2018, web-mining will dramatically affect the nature of the Internet, leading to new ways of website monetization. Captcha verification- the security system that distinguishes humans from bots will no longer matter with replacement by web mining models wherein any kind of visitor could pay with mining.
5. Moving to Real Transactions Cost
Companies like Visa or MasterCard charge an excess fee to clear transactions. These companies could do the same in much cheaper and efficient way without charging the customers for every swipe. It could lead to improved service offerings by other companies but the only hindrance is that changing price models will not be that easy for the banks.