Blockchain technology built on a distributed ledger is being tested in everything and everywhere. Even a single mention of this can cause a huge spike in the price of a firm. However, it’s not needed everywhere and it is not yet ready for an implementation on an industrial level. But that doesn’t deter from the fact that we are witnessing a new technological revolution which will definitely take place, but not as fast as everyone would like.
The distributed ledger system on which the legendary bitcoin is based is a decentralized book of transactions. Each node of the network is independent, there is no central server and the downing of one or several nodes of the network does not affect the workflow of the system. In order to make decentralization real, the network has to be spread out through the whole globe. Currently, even the bitcoin’s network is in the hands of the Chinese Bitmain corporation - 42% of it to be exact. There is also the remaining 58% but on the other side, what sort of decentralization is this?
Let’s take a look at ethereum, the second most popular blockchain which is also far smarter than bitcoin, as you can get smart contracts, scripts which are implemented in accordance with the pre-programmed conditions. The node distribution is different, the role of China is marginal, the majority of nodes is situated in the U.S, but for now, the decentralization is not the most important thing, there is another problem and that is speed. Countless games like CryptoKitties, ICO’s and other forms of active usage of the ethereum network, overload the network so it’s unable to process a large number of transactions. That leads to an increased cost of transactions and makes it unable to service industrial needs: when you can’t predetermine the speed of the network and the price you can only have fun on the system.
When integrating blockchain into a business, public solutions are not ideal and that’s where the big players come in. Perhaps IBM had the biggest year with its Hyperleger programme. News that this or that company has obtained a blockchain patent appear almost every single day. Saudi Arabia tests blockchain in several aspects of its governmental life: from registering new legal entities to identifying the citizens. Moving on from IBM, Microsoft with its Azure blockchain solution is characterized by a more distinct integration with its own products. Together with IBM whey already have divided up the majority of the market.
The use of commercial blockchain can be started by using several means: either downloading an open source code, modifying and deploying on your own infrastructure or just taking up services of a manufacturer. In the first case it’s mostly free, but in the second, it would mean spending a large sum for integration.
“XXX to Integrate Blockchain” - this is perhaps the most popular title among the business-minded media. As soon as a representative of a large company speaks this magic word - journalists flee to report on it as if it’s fully implemented. In practice, everything isn’t this rosy: most integrations are just pilot projects. They work alongside the existing solutions, testing it, studying, reporting on successful transactions - so to say that a large company has really changed the technology it uses - it's a bit too early. Even De Beers, that now uses a blockchain-based platform to track the logistics of diamonds, does this only for a dozen or so large stones.
However, it's also time to admit the truth. The blockchain is neither always necessary nor needed. Not all sectors of the economy need a distributed register, and not everywhere integration will lead to a significant reduction in costs or a fundamental increase in capitalization. But there are also industries that this technology can revolutionize, especially when it comes to the public sector. Here, an independent moderator is needed, alongside an independent data warehouse that cannot be edited - especially if a state is riddled with corruption.
The most profound example, which is already being taught in some universities is the transfer of the land registry of Georgia to the blockchain, which was introduced by BitFury. In this case, reliability increases while administrative costs are reduced, and most importantly, it is no longer possible to substitute a piece of paper or undertake any illegal corrections - the blockage keeps everything and remembers everything. So even if someone has a desire to alter something, it will be reflected in the logs.
Transparency and the inability to modify can help in other areas of our relationship. Identifying the person, storage of personal data, numerous registers, from real estate, to the settling of court cases. And most importantly, improve something that is lacking in some parts of the world - an honest voting. The fact that the computer becomes a moderator, replacing a person, greatly enhances transparency and thus the trust. Blaming an independent algorithm for an unfavorable result is more difficult than doing the same with a person.
Another area where blockchain can also be utilized is for logistics in the agricultural sector, to control the supply of food. Some are already experimenting tracking the coffee bean production from the plantations to being packed. In the UK, blockchain is now being deployed in slaughterhouses. Considering that high-tech British farms can equip everything that moves with sensors, it would be rather easy to pan out a full life cycle of a beast, from birth to its appearance in a supermarket. There is also FedEx testing its tracker of oncological drugs.
The copyright management and the impact of new technologies on the art world is also a big, big debate. Where, if not on a distributed registry is the best place to keep the history of ownership of a painting. Tokenization - linking a physical object to a digital token - makes it possible to build a system of rapid rights assignment. Of course, if we are talking about buying a beautiful trinket to decorate home - new fancy technical solutions would not be relevant. But if this is a mass trade of art objects - a digital token can become a comprehensible derivative.
Same goes for fixing the rights of authorship. Developments that allow storage of the hash of a newly created digital product, pictures, photographs, 3D models or any other form of art are being chased by both the tech giants and independent developers. For example, the CastArt service is extremely simple - one loads an object into the blockchain and it gets a unique hash, which can always confirm the ownership. All this is fine and well, but the market for art is rather conservative.
This issue is also covered by the sector of contractual relations between people and companies. The technology of smart contracts, where scripts are executed under certain conditions, would seemingly leave lawyers without a job since everything is intended to work automatically. In theory, yes - but, contracts must be written by someone, and someone has to audit them. And no matter how much you think about legalizing the process, it is too early to dismiss the need for lawyers. However, in processes where blockchain is at the center, a smart contract system can improve an overall performance and productivity.
And finally, we get into the finances. Setting aside the cryptocurrencies as a phenomenon. Ledger is that exact accounting book recording all transactions and expenditures, the center of any institution associated with money. And here is where blockchain can truly thrive.
Such consortiums as R3, pool banks for cross-border transactions, so SWIFT should already be feeling the blockchain breathing down its neck. Mastercard is submitting patent applications, that in the future would form the basis for the evolution of one of the largest payment system. Payments between individuals are already a reality. Banks are becoming the large holders of marquee patents. That's where the world really changes! Despite the volatility of rates, all those who have anything to do with money, seek to provide services based on a blockchain. The reason for this is not simply the desire of business to introduce new technologies but also to address the customer requirements. Our hope for a bright future is always stronger than in the past.