By Mary Ann Callahan
Blockchain moved beyond being just the technology behind bitcoin in 2016, showing it has the potential to disrupt many different industries.
Today blockchain is moving past proof-of-concept products and towards implementations that provide real value. Here are five blockchain trends engineers should pay attention to in 2017.
Bitcoin proved blockchain could enable quick, cheap and safe transactions between peers without a third party. However, for large corporations, bitcoin is still far too volatile to be used as a currency.
Large companies still suffer from the same international payment problems as individuals. Transactions are slow and expensive, and it can be difficult to trace payments if things go wrong. To solve this, BNP is already trailing real-time payments using blockchain for corporate clients. These payments don’t require expensive third-party verification and can be cleared in seconds.
With fast, cheap payments, businesses will be able to start making smaller, more frequent transactions. Developers and engineers will need to design systems that can handle this change. Users will start to expect real-time transactions across international borders, and applications will need to keep up.
The cloud is already having a huge impact on businesses and the way they operate. However, many are still concerned about privacy, cost, ownership and the power of big cloud providers like Amazon.
Decentralized cloud storage offers an alternative, using open source blockchains. These technologies break up, encrypt and distribute files among many different nodes in a network.
Even though data is distributed, only it’s owner has access. Also, the systems are highly redundant, so all data is available even if parts of the network are offline. Projects such as Sia already offer such services.
However, this approach requires many times the amount of storage used for a centralized solution. Network communication overhead also can be a problem, so hardware will need to be able to deal with higher storage and communication costs.
Traditionally, IT systems are kept safe by building a security wall to keep intruders out. The problem with this approach is that security engineers are always one step behind the attackers, and it’s impossible to know if the security has been compromised at any given time.
Blockchain-based solutions take a completely different approach. The data itself is encrypted, so there is no single point of failure. Also, thanks to the sequential hashing, the integrity of the data is guaranteed–it’s impossible to tamper with data without being detected.
While this solves many of the difficult cybersecurity problems, it also opens up issues of scalability. Using mathematics to ensure integrity is computationally expensive, and gets worse as a network grows. It’s predicted that the bitcoin blockchain could use as much energy as Denmark by 2020.
Supply blockchain management
A long time ago, supply chains revolutionized how our society runs, now suppy chains are being revolutionized by blockchain. Current supply chains can lack transparency and traceability, two things at which blockchain excels.
A system built on a distributed blockchain ledger can record the transfer of goods as transactions. Any item’s history could be traced back all the way to the raw materials, identifying all parties involved. The system would be tamper proof, no single party could manipulate the records to their advantage.
This transparency can ensure the cost of goods will more accurately reflect the actual cost of manufacturing them. It also can draw attention to issues such as use of forced labor and illegal sourcing of materials.
The music industry has been living through a painful migration to digital technology since the debut of Napster in the 1990s. Once listeners could copy and send each other songs for free, music recordings lost their scarcity, and artists’ profits plummeted.
Projects are already attempting to implement crypto-based music distribution where songs are added to a blockchain and user pay for listening using a small amount of cryptocurrency. Such systems are more efficient and fair system than current ones where artists are at the mercy of big labels and streaming services.
It’s still possible for users to copy and redistribute the songs. The blockchain music platforms need to be cheap and easy to use to encourage their adoption.
All of these trends are taking advantage of the reduced cost of providing trust through blockchain. However, these decentralized approaches need to be designed with a focus on scalability and usability if they are to become world-changing applications.
–Mary Ann Callahan is a journalist working on articles on blockchain security, bitcoin purchase guides and bitcoin regulations in different countries at CEX.io, a cryptocurrency exchange.