Interest in blockchain has skyrocketed over the past year, and rightly so. Gartner predicts that by 2022, a blockchain-based business will be worth $10 Billion. McKinsey prognotiscates that blockchain will generate between $80 and $110 billion in impact, and will grow to full maturity within the next five years. Recently, IBM put out a report that stated that “15% of banks and 14% of financial institutions intend to implement full-scale, commercial blockchain solutions in 2017.” Conclusion? The future of blockchain is in sight, and preparation for the future must begin now.
What is blockchain?
As the name implies, blockchain is a connected chain of transactions. Each transaction record or “block” is chained to the previous block and immutably secured using cryptographic assurance mechanisms. The ensuing chain of transactions is shared with all network participants but cannot be altered by any single participant. Interest in blockchain is skyrocketing due to it’s potential to introduce a model for economic trust in traditionally untrusted environments.
Blockchain as a concept is relatively mundane. It functions on the three basic principles of sharing, distribution, and data visibility. While it shares roots with traditional data management, it has the potential to eliminate the inefficiencies of data management. Blockchain is the revoulution that could change how data is shared and governed. As a distributed ledger, blockchains help resolve the problems associated with data provenance and trustworthiness
Bitcoin: the first success story
Bitcoin is currently the most famous and successful expression of blockchain on the market. While bitcoin sometimes functions in the same way as digital currency in that it is exchanged virtually and not through a physical manifestation, bitcoin is not a digital currency (PayPal). Bitcoin is a cryptocurrency. One major difference between a cryptocurrency and a digital currency is the issuing body. Digital currency, while a virtual representation of currency, is still controlled, issued, and valued by government bodies. Your one dollar bill is equivalent to one dollar on your PayPal account. However, cryptocurrency is unregulated by any central bank. This dramatically impacts our understanding of money. If any computer can create its own value through cryptography, the potential for both payoff and chaos is unpredictable.
Blockchain’s future impact & where to begin
Blockchain technology will reshape commercial ecosystems. The programmable economy, empowered by "smart" distributed computational resources, represents a massive transformation of global economic systems, industries and businesses. This “smart” economic system of the future will enable the production and consumption of products and services on a massive scale by enabling a variety of value exchange options. Business and IT leaders need to begin preparing for the impact of distributed ledger technology.
Currently, blockchain is creating the largest impact in the financial services and insurance industry. However, blockchain has the potential to explode in industries such as manufacturing, government, healthcare and education. But it is difficult to know where to start. Perhaps investigation into blockchain technology becomes a part of corporate strategy and is allocated a substantial chunk of the innovation budget. In that case, how will you ensure your innovation budget is used effectively? How will you determine which projects will have the greatest impact on the execution of corporate strategy? How will you keep your people engaged, involved and informed? If you are looking to innovate by using distributed ledger technologies, you need to know about how Mavim can help you create impact by enabling the design, visualization and execution of your business strategy.