Bitcoin and blockchain are technical terms that have now become commonplace in the financial industry. In 2017, bitcoin’s meteoric rise in price on a wave of speculation highlighted blockchain’s capacity especially in the world of finance.
Since then, the conversation has shifted from bitcoin and cryptocurrencies as novel technologies to the blockchain. A special report by Zage shared opinions of over 100 industry experts on the current state of blockchain and its future applications.
In a world where trust in social institutions and government is declining, respondents from the special report like Colin Pape (Founder at Presearch and ShopCity) agree that blockchain and the decentralized movement can produce a “massive shift toward more open, transparent and equitable communities and services.”
Across the board, a majority of the respondents agreed that blockchain was a welcomed reprieve. Apart from transparency and openness, this technology (according to the report) will “address the needs of the underserved in all nations." Even so, current practical blockchain uses are predominantly in the finance industry.
Blockchain's massive potential in finance
According to Zage’s Real World Application of Blockchain Technology report, more than 56 % of respondents believe that blockchain technology will “have the most impact in the next five years” when “applied to the financial services industry."
“There will definitely be a general increase in blockchain processes going on across value chains," says Abraham Cambridge, CEO of The Sun Exchange.
At its core, blockchain technology operates like an immutable database. While responding to a question on the special report, Franklyn Richards, Litecoin foundation founding director, explains that the “key difference between blockchain and a database is that trust is spread.”.
Tim Draper (Founder at Draper Associates) adds that “blockchain is just a perfect ledger” that “keeps perfect information on any data”.
As an immutable accounting system that enables the frictionless transfer of value, nowhere has blockchain’s application been more obvious than in finance. Given that 45 percent of financial intermediaries suffer from economic crime every year, one of the biggest problems that blockchain can solve in the financial industry is fraud reduction.
A majority of banking systems are vulnerable to cyber attacks due to their centralized database structure. Blockchain’s distributed ledger eliminates the vulnerability that comes with a single point of failure thus adding a layer of security to the database.
Thinking blockchain beyond finance
Despite the great potential that blockchain has in the finance industry, regulation has long since become the antithesis of mass adoption. However, as blockchain experimentation continues sentiments around regulation are starting to neutralize.
Draper mentioned in the report that, “People are already using blockchain in everyday life.”
With reports showing an increase in the global acceptance of bitcoin, countries with growing economies and larger groups of the unbanked and underbanked are set to benefit the most. Furthermore, countries with hyper-inflated economies like Venezuela, have bitcoin and other cryptocurrencies already in active use as safe havens since they are not affected by political whims.
However, George Coxon, COO of Nano foundation, believes that adoption “is still undeniably in an embryonic stage and that the vast majority of real-world examples are relatively low".
Even though the future of blockchain technology in the finance industry has massive potential for growth and innovation, Coxon believes that a blockchain revolution will take place "once greater trust and understanding are established."
However, despite the growing acceptance of bitcoin around the world and increased blockchain experimentation by financial institutions, can blockchain’s capacity be extended beyond finance?
Well, Sunny Lu, VeChain’s CEO certainly believes that blockchain’s adoption can extend beyond finance. In his response to a question about what industries are most likely to use blockchain, he says that “non-financial industries are more likely to realize the massive adoption of real use cases rather than the financial industry.”
Stelian Balta, the founder of Hyperchain Capital, also predicts a future where blockchain’s use can go beyond finance. In his response, he mentions that “the games industry and e-commerce could be important industries where blockchain technology can have a real impact in the next 5 years.”
What does the future look like?
Whether bitcoin will go mainstream in the next 5 years is anyone’s guess. However, the buzz surrounding real-world applications of blockchain technology is taking a different tone beyond finance. As Draper puts it, blockchain can be used to “secure data for everything ranging from medical records to certification of education.” This means that when blockchain does become mainstream, the potential ramifications of this new nascent technology will be large and hard to fathom today.
About The Author
Nick Brogden is a marketer and writer based out of Sydney, Australia. My work is regularly published industry-leading media sites such as Startup Daily, Yahoo! News, Kochie's Business Builders, Tech in Asia, E27 and SEMrush.