The term “blockchain” has turned into the latest catch phrase rather than the latest technology.
There’s no one universal definition that everybody agrees on. In fact blockchain technology has inspired so much hype and interest that it seems like everyone is claiming to be developing blockchain platforms or piloting new blockchain use cases.
Note that cryptocurrency like Bitcoin is the most famous example of blockchain technology, but blockchain and cryptocurrency are not interchangeable. Cryptocurrency was built using blockchain technology.
At its core, blockchain is a technology that enables digital transactions to be conducted securely in a decentralized peer-to-peer network of records duplicated across a web of participants. Because the records are replicated across all nodes on the blockchain and need to be validated before they can be added in a “block,” blockchain is thought to be resistant to fraud and abuse.
Blockchain networks can be public or private. The rules that govern how transactions are validated vary. Modern general purpose blockchains, like Ethereum and Hyperledger, have rules attached to each action, so the platform can execute a smart contract.
The potential of blockchain is a big deal, and it holds a lot of promise. The ability to get rid of centralized systems and facilitate peer-to-peer payment systems or to handle land title, currency exchange, or energy markets in an accurate, secure, unalterable digital environment is remarkable. The potential to save billions down the entire supply chain or manage patient health data holds incredible promise.
That’s undoubtedly why there were no fewer than 134 blockchain startups with initial coin offerings of at least $500K between 2014 and 2017. And that’s why Gartner predicts that blockchain tech spending will reach $9.7B over the next three years (up from $945M spent in 2017).
But the truth is blockchain technology is fairly new. It was actually a 1976 paper called “New Directions in Cryptography” that marked the initial discovery that led to the creation of Bitcoin in 2009. So far, most of the uses of blockchain outside of cryptocurrency exchanges have been tests or pilots by major companies and organizations around the globe, including Mastercard, Walmart, IBM, and the U.S. Food and Drug Administration.
Analysts predict that 2018 will be the year that large-scale uses of blockchain will put the technology through its paces. And in fact, IBM and Maersk just launched an open blockchain shipping platform that they hope the entire ocean-going market will adopt, from ports to transit companies to customs authorities to shippers.
But until we have a few more years under our belt, it’s safe to say that blockchain holds tremendous promise, but it is complex and needs to be deployed in smart ways to meet specific business needs.
That’s where Valence comes in. We’ve been living and breathing blockchain since its inception, studying both its strengths and its pitfalls. We know what works and what doesn’t. We are experts at adapting existing platforms (like Ethereum and Hyperledger). Plus we have deep expertise in creating new use cases across different industries. Want to know more about how blockchain can help your business? Contact us, and we’ll help you separate the hype from the reality.