The world of blockchain technology has certainly seen some major changes over the course of the past decade. Although there were early inklings of the technology dating back to 1991, it wasn’t until 2008 when Satoshi Nakamoto implemented it as the base component of bitcoin currency that it really took off.
While traditionally, blockchain has been instrumental in the financial arena, 2016 and early 2017 saw other industries dipping their toes into the technology’s shallow end. As we’ve reported over the past few months, we’ve seen blockchain technology moving into industries like supply chain, digital advertising, election voting, governments, insurance, and even the sharing economy.
According to CoinDesk’s 2017 State of Blockchain, the six trends impacting the current affairs of blockchain technology are the following: bitcoin’s “true volume” revealed; enterprise incumbents move on blockchain; token sales challenge traditional VC investment; consortia gain steam; the push for privacy continues; and bitcoin volatility continues.
Basically, blockchain technology can be applied to anything that involves a digital contract or money exchanging hands. To help better understand how blockchain technology has evolved over the years including misconceptions, potential regulations and what the future holds, we sat down with biometric authentication company Veridium‘s CTO, John Callahan.
Here is an excerpt of the conversation:
PYMNTS: What were the initial concerns upon blockchain’s 2008 inception and how have these evolved today?
JC: The early stereotypes of bitcoin (and subsequently, blockchain), were that it was the preferred currency of criminals. It’s doubly mysterious in that it has no central bank or even a known creator. Additionally, some have expressed concern that in its decentralized, immutable and anonymous form, banks couldn’t actually function.
These arguments are still alive today, but the voices behind these arguments have softened as blockchain continues to be embraced. The utility of blockchains to exchange information between untrusted parties has overwhelmed the initial negative perceptions. Claims of identity, escrows, property, title exchange, proof-of-possession, etc. are being exchanged daily between legitimate businesses. IBM and Sovrin have contributed the Hyperledger software and infrastructure to the open source community. Ethereum has opened their blockchain as well to developers and a large community of legitimate purposes. Bottom line: the good has overwhelmed the bad.
PYMNTS: While blockchain was initially developed for the finance industry, it has now started to spread to other industries. What change would need to occur in order for blockchain to be successfully implemented in industries outside of finance?
JC: Blockchains can be used in almost any industry, especially in the age of IoT. In order for it to be successfully implemented, however, it must be widely adopted – after all, blockchain exists through a peer-to-peer network. Public blockchains and private MDLs require a critical mass of peer-to-peer nodes to be effective, available, and redundant to a degree that it survives network partitions, node failures and shutdowns, and many other shocks. Some will succeed, many will fail.
To succeed, blockchains must (1) serve a wide range of applications, not just a single industry vertical market; (2) offer open toolkits, SDKs, test chains and currencies that allow broad implementation of new applications; and (3) avoid hard forks but admit problems early and transparently. The stewards of each chain or MDL must open participation to many players who will become dependent on the chain’s success and contribute their energies toward its future.
PYMNTS: Is it possible to regulate a decentralized system like blockchain? Why or why not?
JC: It is possible to regulate a decentralized system like blockchain but not in the traditional sense from a centralized authority. That’s the beauty of blockchains – it’s cryptographically impossible to fake or manipulate. Therefore, blockchains and MDLs regulate themselves. Information recorded on the blockchain can be later retrieved, verified, exchanged, transferred, decrypted or used as proof of possession, non-repudiation or for attestation depending on the use case and context. Everything from property deeds, birth records, money (e.g. bitcoin and various alt-coins) reside on a blockchain backbone. The trick, however, is to formulate blockchain transactions, protocols, data structures, and other operations in such a way that lends itself to self-enforcement. Hence, the Linus’ Law: “given enough eyeballs, all bugs are shallow.”
PYMNTS: How has blockchain evolved over the past decade?
JC: The bitcoin blockchain was the first but many public and private chains have followed. Some have failed, some survive (e.g., Ethereum). Additional chains will be created in the future, perhaps as hard forks of existing chains but these have been and will be rare events.
PYMNTS: What do you see as the future of blockchain?
JC: In the future, blockchain will be used in all industries – from healthcare, to tracking votes, to deeds and mortgages. The largest impact will be in identity: passports, driver’s licenses and national ID cards can be lost but imagine not worrying about proving who you are, that you have a college degree, that you own a specific house, car etc. Your biometrics and knowledge (a password or other secret) will be all that is needed to connect you with the chain of claims on a blockchain. The public transparency and auditability will hopefully give us comfort regarding the incorruptibility of such claims and give us more convenience in our lives without fear of needing access to physical objects that can be forged, lost or stolen.