By David Drake
After a difficult 2018, the cryptocurrency industry is expected to recover after a tech review done by the Massachusetts Institute of Technology (MIT) predicted that blockchain is likely to go mainstream this year. This prediction is a departure from the reports highlighted by Boston Consulting Group (BCG) and Forrester Research last year.
In its report, BCG suggested that the potential of blockchain in the commodity trading industry was being overhyped. According to the consulting group, trade volumes that were being run on blockchain were minimal. This made it challenging to estimate how long it would take for the technology to go mainstream in the commodity trading space.
On its part, the report by Forrester Research predicted that most blockchain projects initiated in the US would be put on hold by the end of 2017. At the same time, the report indicated that companies that had been working towards integrating blockchain in their operations were either pulling back or scaling their ambitions down.
In the backdrop of the issues highlighted by these research firms, why does MIT predict that 2019 could be the year that blockchain technology goes mainstream?
The International Monetary Fund (IMF) Chief, Christine Lagarde has recognized that government-backed cryptocurrencies could offer better privacy, security, consumer protection and reach more people compared to commercial or private cryptocurrencies. At the same time, several governments have taken a step in developing their own cryptocurrencies. Venezuela was among the first companies to launch an oil-backed digital currencies and though it appears to be flopping, central banks in some 15 other countries appear to be serious about developing national cryptocurrencies. Though there may be none issued in the course of this year, we can expect the dialogue to continue this year as companies adopt new payment methods.
Entry of Financial Institutions
Financial institutions are beginning to demonstrate interest in cryptocurrencies. According to Michael Hull, Chief Editor of FamilyOffices.Today, this interest emanates from the potential that these institutions see in blockchain.
He says, “The financial sector is top on the list of sectors that will lead in integrating blockchain. It has the potential to provide alternative payment and settlement methods that are not only faster, but also cheaper. But most importantly, it is its transparent, immutability and security features that make it an ideal technology in the financial sector.”
Last year, Fidelity Investments formed a new platform, dubbed Fidelity Digital Assets, to offer its clients digital asset solutions. Through the platform, Fidelity Investments will be investing in the crypto market while supporting institutional investors. Further, New York Stock Exchange owner, Intercontinental Exchange (ICE), announced plans to roll out an exchange for digital assets this year. ICE is among the most influential Wall Street players.
In the corporate world, Walmart is leading the way. This retail giant has been running trials on a private blockchain for years now. This coming September, the retail store will begin using blockchain to track food supplies, specifically leafy green vegetables.
Real Smart Contracts Use Cases
Smart contracts help in execution of agreements made between two parties. As their use cases become more real, these kinds of contracts are set to eliminate intermediaries. Companies like Chainlink are already piloting smart contracts. Chainlink is part of an academic research team that is creating a decentralized oracle network that uses cryptography to add data to smart contracts on blockchain. One of its real smart contracts set to launch this year is legal technology. Chainlink is already partnering with OpenLaw to develop simple legal agreements that are based on smart contracts.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.