Welcome back to our 360° blog regarding Blockchain, its history, present and future. Summarizing what we discussed so far, Blockchain is “a vast, globally distributed ledger running on millions of devices, it is capable of recording anything of value. Money, equities, bonds, titles, deeds, contracts, and virtually all other kinds of assets can be moved and stored securely, privately, and from peer to peer, because trust is established not by powerful intermediaries like banks and governments, but by network consensus, cryptography, collaboration, and clever code.” (source)
As we discussed in the last post, the disruption enabled by Blockchain, started first in the financial sector (“How Blockchain is changing finance” by Alex and Don Tapscott). The Spanish bank Santander estimated that using blockchain as backbone of their banking infrastructure, they could reduce frictions and costs achieving potential savings of around $20 billion a year (source). The consultancy firm Capgemini calculated that consumers could save up to $16 billion in banking and insurance fees each year through blockchain-based applications (source).
Given its potential, blockchain applications soon expanded to other sectors. As of today, we can count hundreds of public blockchains that amount to a total market cap of almost $100 billion, excluding many more private blockchain installations. The World Economic Forum is even going as far to predict that 10 percent of the global GDP will be stored on the blockchain in less than 10 years. Currently, according to today’s global GDP, the number would be $7.8 trillion. (source: Global Agenda Council on the Future of Software & Society, “Deep Shift: Technology Tipping Points and Societal Impact,” World Economic Forum, 2015)
So, as it is argued by Dr. Julian Hosp (co-founder and CVO of TenX), “here a challenge arises: If we, as a community, do not find a way to connect blockchains, these $7.8 trillion will be dispersed in such a way that its true value is a lot lower.”
The solution lies in the same transition that happened before the invention of the TCP/IP protocol, when the Internet was dispersed in many intranets (local networks). The revolution happened when the future-to-be internet dropped the requirements allowing almost any intranet to join gaining access to almost the entire world over the following years. Something similar is foreseen to happen for blockchain in order to ultimately increase its scalability. Many projects are already in advanced phase to achieve such consensus network (InterLedger, Cosmos and Polkadot) whose aim is to create the so-called “Internets of Blockchain”.
Apart from the fancy names, the main takeaway is that Blockchain technology is just at the early stage and it keeps evolving. New consensus protocols (such as Proof of Stake) and novel scalability solutions like state channels or Sharding are already being implemented, together with many other innovations (i.e. zk-SNARKs for privacy) that will emerge in this novel technology sector that is moving at an incredibly fast pace.
Whether Blockchain 3.0 will mean Internet of Blockchains or new broad-purpose protocols, it is clear that many industries besides FinTech are looking at how their future will be with Blockchain, including the energy sector, as we will discuss in the next post coming up next week. Stay tuned!