We will remember 1995-2015 as the 20 year era of the centralized client-server Internet. As we enter 2016 and the “blockchain awakens”, let’s take a quick look at how we got here:
- HTTP documented and HTML 2.0 released
- Netscape IPO; Netscape Navigator browser makes web accessible
- mySQL, an open source version of SQL, makes web databases easy
- Amazon.com sold first book online
- eBay founded
Web companies of every kind built Web 1.0 on centralized databases. By 2000, Salesforce.com , eBay and Amazon.com delivered the first API’s to move data between organizations.
In 2010-2015, enterprise Big Data grew with open source NoSQL, R, and Data Lakes. Amazon, Google, and Microsoft brought the enterprise “cloud”, “cognitive computing”, and “machine learning-as-a-service”.
Until 2015, virtually every organization from Amazon to Uber relied on centralized databases. That model started to change in 2015.
Bitcoin’s blockchain was designed as a peer-to-peer system to securely transfer ownership of Bitcoin, in a decentralized and transparent network without having to trust the other party. Bitcoin’s objective was to transfer value without financial institutions as intermediaries. While the size of Bitcoin today is still small at about $6.5B market cap, it has proven the concept of secure digital currency and has attracted the attention of governments and regulators and entrepreneurs.
- Venture capitalists poured approx. $1B into bitcoin and blockchain ventures in 2015.
- Ethereum Foundation launched its next generation Turing-complete blockchain protocol, dubbed Ethereum Frontier. Also referred to as a “world computer”, it has the genius of being able to store data states and executable “smart contracts” (i.e. programs) securely on the blockchain. (Ethereum was invented by Toronto-based Bitcoin developer Vitalik Buterin). This will facilitate encoding complex business processes.
- World Economic Forum identified blockchain as one of six mega-trends
- R3CEV assembled a consortium of the world’s largest financial institutions to explore a global ledger fabric / protocol.
- Goldman Sachs filed a patent for a virtual settlement currency (“SETLcoin”)
- Cryptobonds and securities were issued as trials. SEC approved plans to issues stocks via Bitcoin’s blockchain.
- Microsoft announced Blockchain-as-a-Service, serving up Ethereum blockchains for enterprise.
- Linux Foundation and IBM announced its OpenLedger project alongside London Stock Exchange, banks and SWIFT
Think of Blockchain in 2015 as the Internet in 1995. We could certainly see its disruptive potential but it would take some time to fully realize and understand everything we could make better.
As 2015 was the dawn of decentralized computing, 2016 will be the year that the blockchain and smart contracts become integral to every company’s 5 year technology strategy. While it took the Internet 20 years to mature, today’s accelerated innovation will most likely see Blockchain technology mature in the next 10 years. Whether it be private and permissioned blockchains or public blockchains, next generation blockchain solutions like Ethereum will deliver Web 3.0 by encoding business processes as decentralized applications (DApps) running on this new computing platform.
While some may have focus conversations differentiating between centralised vs. decentralised business models, we can expect the ultimate discussion to centre around trust. Up until Bitcoin and blockchain came, did we just learn to trust that Amazon, Uber, Facebook, Google, Target, Anthem, Experian and others would keep our private information secure? A new generation of entrepreneurs and developers will be offering ways of interacting with these cryptographic services with pseudonymity and deliver new promises to keep our data more secure.
Just as the global banks formed an industry consortium facilitated by R3 in 2015 to find billions of dollars of efficiencies promised by blockchain analysts, strategists in all organizations will be wise to look at shared ledger applications within their natural industry consortia. Where intellectual property and competitive advantage is not eroded, competitors will be asked to join forces to take advantage of the shared ledger technology to reduce costs. As the new ledger initiatives take hold, large enterprise software vendors will take notice. Finally, government and industry regulators will need to ensure they’re involved.
- Permissioned-consortium blockchains will be prototyped by global banks. This will not include Bitcoin. Existing consortia may align interests with the Linux OpenLedger consortium to support the greater economic good. Financial regulators will be playing catch up.
- Securities Exchanges will increasingly be issuing cryptoshares and cryptobonds on blockchain.
- Decentralized eBay disruptors such as OpenBazaar, will gain traction.
- Like Barbados in 2015, Bitcoin will be considered a foreign currency reserve by more small country central banks.
- Land registries in developing countries, like Honduras in 2015, will increasingly be put on the blockchain.
- Smart contracts will increasingly be interacting with physical objects enabling digital micropayment for use cases such as property rentals.
- Accounting and financial management software vendors will announce projects to include blockchain technology in their product roadmaps.
- Blockchain-based Uber and AirBnB disrupters will be launched as DApps using smart contracts.
- A global blockchain-based, proof of existence patent service could become inventors’ first stop, followed by government submissions. Governments will likely not be the initiators of this reimagination of blockchain protection.
- Universities will expand experiments putting transcripts on permanent blockchain ledgers. This could potentially lead to a global University consortium.