Despite the recent media frenzy about the price of bitcoin, Blockchain has been described by many as “the real value in bitcoin”.
Stephen Holmes is Virtusa xLab’s CTO. He investigates the application of core technologies in solving digital banking challenges, including Blockchain technologies and smart contracts.
The underpinning technology of bitcoin (Blockchain) continues to evolve and many new advanced versions of blockchain have been created to address many specific industry problems.
Business is more global than ever with people collaboratively creating goods and services independent of where teammates physically sit in the globe. This has huge implications in areas such as legal and compliance, just to name a few. Technology reaches every part of the world and touches almost every part of our lives. In some areas, technology is moving at an unbelievable speed, while other technologies stall and are themselves ripe for disruption.
The technology supporting many large organizations today has not fundamentally changed to reflect many of the new realities they need to deal with. Companies have their own databases and, within this model, co-operation rarely means no more than allowing read access to a subcontractor, while different legal entities still maintain their own records in different jurisdictions.
The lowest common denominator for collaboration often seems to be the business purchase order, or invoice. All businesses produce them, send them to other organizations, and in turn check their records, but integration is typically limited to email and electronic files.
Regulation is another area where collaboration seems limited and antiquated. Regulators request information, which people and organizations supply in agreed formats, usually either a form or an electronic record. This occurs after the event and so cannot give regulators an up to date or real-time view of tax and compliance events.
But what if we could have one distributed ledger that all parties could agree to as the one version of truth? This is the real promise for Blockchain and Distributed Ledger Technology (DLT). Once you have a mechanism to create a centralized view of both digitized assets and activities performed on those assets, then you can benefit from enforced distributed automated trust, driven by the blockchain technologies.
Distributed Ledger technology can lead to not only Straight Through Processing (a longstanding banking nirvana) but also the ability to automate and use IoT, machine learning, and artificial intelligence. These could even be used in conjunction with blockchain to create cost and time savings, or cost-effective ways to deliver new distributed business models.
In 2018 we will start to see the next generation of blockchain proof of concepts go into production. We will see enhancements to the technologies and some new, novel and innovative applications will emerge.
Standards will continue to take shape for blockchains and DLT, with de facto industry standards emerging from industry leaders. Simultaneously, international standards will be drafted and initial versions published. Blockchain and Distributed Ledger Technology will evolve to address some of the initial shortcomings and integration challenges, enabling new business applications to be developed and deployed more easily.
Disruptive technologies often start off performing below the performance of current technologies, but over time the performance takes off with a hockey stick curve, quickly overtaking current tech. We have seen this to date with blockchain, where permissioned private blockchain and DLT systems are now hundreds of times faster than the original public bitcoin blockchain protocol. This rapid acceleration gives us a sense of what lies ahead for this disruptive technology.
In 2018, we will start to see new innovative features that are unique only to blockchain, as the new blockchain versions are rolled out and new applications built upon them. If you consider that blockchain and DLT are simply databases, it’s clear that it will be the distributed applications that drive the value from blockchain and DLT.