As many call it, 2017 was the year of bitcoin and cryptocurrencies. But upon observing more closely, one would realize that it was blockchain technology that earned real fame through the bitcoin boom. By the end of 2017, bitcoin’s price had started depreciating, which eventually dropped from approximately $20,000 to $2,900. This resulted in massive criticism of cryptocurrencies from the masses and the government authorities. While the cryptocurrency community still kept believing in the potential of bitcoin and other crypto assets, the authorities have had their negative opinions already carved on stones.
Throughout this price appreciation and depreciation of cryptocurrencies between 2017 and 2018, the one thing that remained constant was everyone’s interest in blockchain — the technology that powers cryptocurrencies.
Despite the fall in prices of most crypto-currencies, initial coin offerings, commonly referred to as ICOs, kept bringing in investment into blockchain projects. Initially, the intent of investors might have been making quick money from investing in attractive cryptocurrency offerings, but the market started maturing by mid-2018. More investors now wanted to invest in innovative projects rather than doing so in some random cryptocurrencies.
With many people scamming investors in the name of ICOs, this form of fundraising too soon started to face a setback. Again the crypto industry found itself amid heavy criticism from everyone. The image of cryptocurrencies was further stained in the minds of many. But, still, blockchain thrived through it all. To stop the innovation through blockchain seemed impossible. Serious players, despite all the criticism and fear in the market, kept coming up with out-of-the-box blockchain solutions for whatever industrial vertical they could.
Now that innovation was happening at such a high level, large scale investors couldn’t resist the temptation to step into the blockchain game to try their hands on it. Even governments of most significant countries showed their support for blockchain innovation in spite of having a distaste for cryptocurrencies. Billions of dollars from large scale investors were now flowing into blockchain projects. Governments had set up funds to specifically aid entrepreneurs in developing solutions with blockchain technology. Universities tied up with various organizations to conduct intense research on blockchain.
The blockchain industry accelerated from a “just some new technology” to one of the most talked-about technologies after the internet and A.I. Most industries took compelling interest in blockchain and how it could help improve their work processes. Big players in the banking and finance industry, which was considered a rival of the blockchain and crypto industry, also realized the potential of blockchain. Healthcare, agriculture, online gaming, A.I., IoT, supply chain, real estate, and many other sectors too couldn’t keep their feet off of the blockchain sphere.
Innovation was in full swing for blockchain then. And the same continues today. The rate of adoption of this technology is accelerating consistently. According to recent reports, the size of the blockchain industry would reach $28 billion valuations by 2025. The same in 2017 was a mere $411 million. This speaks volumes of the rapid growth of the technology.
Now let us take a look at the major factors driving this growth.
Government Plans and Initiatives
The growth of technology into a mainstream one is next to impossible without thorough government support. When governments support a technology, not only does it gain financial support to have a wider reach, but it also increases more credibility as a reliable technology. And the same is true for blockchain.
As of now, over 15 countries are working on their own cryptocurrencies, and even more, countries are investing heavily in blockchain.
So far, among the major countries across the globe, China has been proactive in the field of blockchain. Not just one, but the Chinese government has set up multiple sandboxes that fund and support up and coming blockchain projects. China also has blockchain as a part of its 13th Five-Year Plan.
The United States of America, though behind China in terms of blockchain innovation, is also actively supporting blockchain innovation. Several federal departments in the U.S., ranging from the U.S. Treasury Department to the U.S. Department of Defense Transportation Command, are testing their blockchain solutions. According to reports from April 2019, the U.S. government spending on blockchain is likely to increase from $4.4 million in 2017 to $48.2 million in 2022. This would be an almost 1000% rise in investment.
Russia, too, isn’t far behind the U.S. and China in terms of blockchain innovation. Russian President Vladimir Putin, in 2017, went from a blockchain critic to a full-on blockchain supporter. Since then, Russia has realized multiple major blockchain projects. In April 2019, the country also set plans to launch blockchain sandboxes to test and develop more new blockchain projects.
Similar to the above-mentioned countries, most European countries too have gone all-in on blockchain technology and some on cryptocurrencies too. The United Kingdom plans to implement blockchain for tracking and tracing food products. They have also invested 10 million pounds through the Innovate U.K. program to test blockchain in fields such as voting, digital identity, and energy.
Although the above major countries are making a significant impact on the adoption of blockchain technology, there are several smaller countries that have actually become the hub for blockchain innovation. To top the list of such countries, we have Malta, which is nowadays also dubbed the blockchain island. Malta was one of the first countries to bring crypto and blockchain specific regulations that supported the growth of the technology. Due to this, many innovators moved their startups from their own country to Malta. Other countries that are a hub for some major blockchain innovation include Singapore, Gibraltar, Bermuda, etc.
With such substantial support from governments all over the world, blockchain has gained tremendously in value. Things around blockchain are more severe and regulated in the industry. And, of course, there is more financial support from that is adding to the bottom line and is helping boost the net valuation of the industry.
Big Techs Investing in Blockchain
Big firms with a proven track record in business and technological solutions share equal importance when it comes to making a technology mainstream. For example, cloud, A.I., IoT, and other booming technologies would have taken far longer to be at the point where they are today had companies like Amazon, Microsoft, Apple, and Google not stepped into it.
Today, most of the major tech giants are directly or indirectly involved with blockchain innovation. And they also bring with them other non-tech companies to try the technology. In May 2019’s Microsft Build conference, Microsoft announced that it was helping Starbucks track coffee beans from the farm to the cup through its blockchain. Similar cases are there of companies such as Amazon, IBM, and Delloite, bringing major companies into blockchain for better workflow.
Here’s a list of some of the largest companies across the globe working or planning to work on blockchain technology:
- Apple: In 2019, Apple filed for a patent to create and store timestamps using blockchain technology.
- Berkshire Hathaway Inc.: A subsidiary of Berkshire Hathaway, Richline group, are exploring blockchain to manage their supply chain.
- Wells Fargo and Company: In partnership with a famous blockchain consortium, R3, Wells Fargo is trying to ease the process of tracking home mortgages.
- Toyota Motor Corp.: The automobile company, Toyota, is experimenting with blockchain to implement it for payments in self-driving cars.
- Daimler AG: The group behind Mercedes Benz, Daimler AG, issued €100 million corporate bonds using ethereum. The group is also working on creating its own cryptocurrency.
These listed companies are only a few among the hundreds of others getting ready for the future of blockchain. Many other banks, technological firms, supply chain groups, food companies, and organizations from different verticals are also spending millions into innovating with blockchain.
With the inclusion of such names into the industry, the way ahead for blockchain has become very simple. And it’s a clear indication of the growth of the blockchain industry towards the projected $28 billion net valuations.
Potential to Disrupt
The one most important thing about blockchain that is driving such fast-paced growth is its potential to disrupt not one but many industries. Governments are investing in blockchain because they realize it will have a significant payback. It is the same way for big firms joining the blockchain bandwagon.
Below are a few examples of how blockchain could innovate some major industries around the world.
Cross-border payments and the cost of operations are two major issues in the banking industry. Banks pay a fee to intermediaries to complete a cross-border transaction, and hence, it is the sender who has to pay anywhere between 5% to 20% as transaction fees. Besides, operating manually with records and other necessary documentation adds to the operating costs for these organizations.
As we know, transactions over the blockchain neither require intermediaries nor have a high transaction fee. Hence, banks are implementing blockchain to disrupt their cross-border payments system. Also, blockchains are highly secure ledgers where documents can be verified and written without any human interference. This would save millions for banks annually.
Digital Identity Management
Digital identity has been a concern ever since the internet came into existence. The identity access and management market are expected to surge to $14.82 billion by 2021. And even then, there are hardly any effective ways to safeguard the digital identities of people.
However, with the advent of blockchain, there is soon expected to be a mainstream solution. Blockchain is a highly efficient and secure data management system and can be used to manage digital identities and crop out the risks of hacks and thefts.
The voting system used today is obsolete. The biggest concern with online voting was the threat of hacks, but the blockchain is free of that. A blockchain does not have a central server; instead, it is maintained by several nodes. Hence, no ill actor can try and tamper with the data on the blockchain. This makes blockchain a perfect system for people to cast votes online, from the comfort of their homes. Votes, once registered, will have no chances of being changed. Also, people living overseas would be able to make their votes count quite easily with the help of a blockchain voting system.
The present electronic health record management system is inefficient. Even the pharmaceutical supply chain is ineffective in keeping counterfeit products from hitting the markets.
With blockchain, we can strike off both these issues. Blockchain can act as an easily accessible EHR system that is interoperable and accessible from anywhere. Also, with blockchain’s potential to disrupt the supply chain system, the healthcare industry can tackle the issue of counterfeit drugs to a great extent.
As can be easily made out, blockchain, when put to use in the right places, can revolutionize many industrial sectors. And thankfully, both governments and major industry players have been quick to understand the potential and put it to use.
Seeing the pace at which the innovation is happening in the blockchain industry, the $28 billion valuation does not seem like a distant goal in the next six years. The only thing to see now is how many more solutions will blockchain provide us in the times to come.