4 Blockchain Macro-Trends: Where to Place Your Bets
The challenges (and opportunities) ahead for enterprise applications of distributed ledger tech.
2016 was a rollercoaster year for those of us following blockchain and distributed ledger tech. Whether it was bitcoin pushing toward $1,000, a consortium of banks open-sourcing software with R3’s Corda, or government and central banks supporting blockchain experimentations, you can’t deny the subject has been everywhere. While some have grown tired of the endless press releases and bickering about ledger designs, in the background, real progress is being made, and major organizations are already placing their bets. In 2017, I’m watching for maturity in the active projects both from startups and blockchain communities, as well as the incumbent financial services companies. Evolution and revolution are necessary, and I believe we can learn from both. But, if you’re new to this space, it may not be obvious where you should invest your time or resources. To help you make those decisions, I’ve identified four macro-trends I see happening in 2017.
1. Revenue becomes the big question“Where is the end product?” My projection is, this will be a common question this year as executives and mainstream media look but fail to see the traction being made. But for the first time, 2017 might see it answered as the launch of the first real distributed ledger products go live, likely with a focus on gold trading. Right when you think you don’t have to do anything, real-world, scalable financial products hit the financial markets. So while the ‘end product’ question will emerge (and go away), others will debut. As 2017 is unlikely to be the year DLT scales for corporates, many will begin to ask, ‘Where’s the revenue?’ The business cases are out there, they’re just not obvious from 30,000 ft.
2. The beginning of ‘new businesses’While everyone is obsessed with who’s in what consortium, what’s more interesting is what systems people are building and what that will mean. We’re seeing the beginnings of real structural change in financial markets. If you imagine financial markets today as being 100% centralized, with bitcoin being 100% decentralized, then financial markets are taking baby steps away from centralised power. Over time, any shift in the first number is significant. My guess is that as banks talk more about “smart contracts” and DLT instead of “blockchain.” The market will recognize that these corporate things are neither shared databases nor blockchains, but some new interesting thing. For now, this has been given the label “DLT,” but likely needs a more accurate one. Yet, in financial markets, where new asset classes or financial agreements become revenue opportunities for banks and financial market participants, a new narrative must emerge. One that moves away from “cost and efficiency” only.
In 2017, I’m watching for maturity in the active projects both from startups and blockchain communities, as well as the incumbent financial services companies. Evolution and revolution are necessary, and I believe we can learn from both.