After emerging to prominence as a byproduct of the cryptocurrency movement, blockchain technology is definitely having a moment of its own.
In many ways, it arrived at the perfect time.
While news headlines reflect the mounting concerns about the current internet structure’s viability in the digital age, the blockchain brings needed security and usability upgrades to the forefront of the tech scene. For this reason, many people consider the blockchain to be the third iteration of the internet, or the internet 3.0.
Although it’s still an early-stage technology, the blockchain is anything but new. The first blockchain originated as the accounting backbone for Bitcoin nearly ten years ago, and its development and deployment has been swift and steady. Today, there are hundreds of public and private blockchains addressing everything from cryptocurrency transactions to supply chain management.
Moreover, as the mounting corporate investment and governmental support demonstrate, many people are aware of the blockchain’s capabilities and are working hard to transition to blockchain-based databases and storage solutions.
For example, this week, The World Bank priced the first bond sale to be managed on the blockchain. The arrangement is being handled by the Commonwealth Bank of Australia, which is testing the technology as a way to speed antiquated bond sales procedures.
At the same time, tech juggernauts like IBM and Microsoft have ambitious blockchain initiatives underway. In fact, at an enterprise level, IBM’s blockchain, Hyperledger, is quickly becoming an industry standard bearer for the possibility and scalability of the blockchain.
When asked about the technology by The Wall Street Journal, Bridget Van Kralingen, IBM senior vice president for global industries including blockchain, expressed her enthusiasm saying, “I could go on forever.”
Indeed, her sentiments are shared by many people. There is an unbridled enthusiasm about the technology’s disruptive possibilities, which is generating a cacophony of buzz and hype.
Despite the blockchain’s seeming immediacy and inevitability, for most people and businesses, blockchain integration is something that’s talked about more than it’s used, and that’s problematic for blockchain’s proliferation.
There is a vast chasm between potential and implementation, and the blockchain has real shortcomings that will need to be addressed before mass adoption makes the technology as usable and prolific as it should be. Solutions to these problems and the companies that promulgate them will be an integral component of the blockchain’s continued advancement. As champions of the dot-com bust can attest, without mass adoption a good idea will fail to mature into a great product or platform.
The Challenges of Mass Adoption
The blockchain is rapidly advancing, but it’s doing so in a siloed environment where disparate platforms develop their own technologies that lack compatibility with one another. There is no official count for the total number of blockchains in the world, but some ancillary data gives us an idea of how broad the ecosystem can be.
Since the beginning of 2017, more than 1,000 blockchain based companies have launched digital currencies to power their initiatives. Of course, this number doesn’t account for the currencies created before 2017 – including the most prominent tokens, Bitcoin and Ethereum – and those that launched without an ICO. Moreover, many companies are building their own blockchain infrastructure to meet the niche demands of their industry. Even governments are getting in on the action. For instance, this year, South Korea’s budget includes funding for blockchain technology, and the U.S. Congress already asserted its validity in a series of hearings this summer.
In total, the decentralized ecosystem is vast, and it’s continually expanding.
Unfortunately, blockchain connectivity is severely lacking. In fact, the disparity is so profound that Deloitte identified this challenge as one of their top tech trends for 2018. In their report, Deloitte concludes, “operational siloes keep some companies from either developing clear business plans around blockchain or collaborating with ecosystem partners for mass adoption.”
Of course, the blockchain is a tokenized ecosystem, with each blockchain being powered by its own native token. It’s rare for these currencies to be compatible with other blockchain ecosystems, which makes broad adoption extremely difficult. Furthermore, unlike the internet, which is built for cohesion and communication, the blockchain is intended to facilitate fast and secure data or value transmissions, and those tasks frequently require different protocols.
In short, the segmentation of cryptocurrencies are preventing mass adoption, and unifying technologies will need to emerge so that the vast crypto ecosystem is cohesive and cooperative.
Building Bridges for Blockchain Assets
In many ways, this problem isn’t entirely unique. As the financial system moved away from paper money and embraced a digital-first approach to transactions and storage, banks had to find a way to correlate their accounts with one another. With nearly 200 different currencies in the world, their problem closely resembles the current cryptocurrency scene but without the multitudes. Today, on a global scale, the banking industry can communicate amongst itself using the SWIFT network, a communication and data transfer network that connections the world’s financial institutions.
For cryptocurrencies, there are two solutions to this problem. First, it’s a “meta-chain” could become a standard, secondary blockchain that all other blockchains are a member of. This methodology would functionally create a third-party gold standard for cryptocurrencies that would be used when transacting two different tokens.
For obvious reasons, this is not the most advantageous solution. Not only are blockchains and their developers notoriously autonomous, but it would take an incredible amount of work to build this third-party platform, and getting everyone to join could be equally as challenging.
The simpler solution is to create a system of inter-chain addresses and protocols that are assigned to participants on different blockchains. Using connector nodes, blockchains can connect and interact with one another, creating a seamless system of interoperability. In addition, the development of an inter-chain protocol that establishes norms and rules for linked ledgers.
The blockchain is poised to be the next-big-thing with implications for virtually every industry and every technological ambition. However, it’s unlikely to achieve mass adoption until the many platforms, and the multiple digital currencies can coordinate with one another. The solutions are quickly becoming available, and forward-thinking companies can begin to capitalize on their burgeoning abilities, reaping the benefits of the blockchain while making it more usable for everyone else.