- It's not unreasonable to believe
that blockchain is primarily a mechanism
to support cryptocurrencies.
For sure, crypto coins and crypto tokens
represent a big proportion of its current use.
It's also important to acknowledge
that it's often these cryptos
that power the new innovation
that blockchain is enabling.
For example, the Ethereum blockchain
uses its own cryptocurrency, Ether,
as a mechanism for user fees that power everything
from games to managing digital assets.
After Bitcoin was launched in 2009,
blockchain technology began to be recognized
as a platform for a wide range of uses
beyond cryptocurrency.
As the technology has matured,
and in order to support new, complex implementations,
a large blockchain ecosystem has emerged.
Until now, I've only discussed blockchains
that are permissionless and public.
These open architectures allow anyone to participate.
Since it's decentralized and without authority,
there's no approval process.
Everyone can join a permissionless blockchain.
For proponents of the technology,
this is a central strength.
That said,
there's now a sizable market for blockchain uses
where approval for participation is required
and access levels and roles are controlled.
These are called permissioned or private blockchains,
and are often used within and between private enterprises.
A popular private blockchain is called Hyperledger.
Sure, it's counter-intuitive,
because the spirit and value of blockchain
represents the opposite of these needs.
However, the value of certain aspects of blockchain,
such as immutability,
where only transactions are written and never deleted,
is being applied in a private blockchain context.
Another example,
such as a document workflow process between enterprises
that must be kept confidential,
might be considered a candidate for a private blockchain.
Blockchain technology has many qualities,
such as processing efficiencies,
lower costs for transactions, transparency,
traceability, that is being able to analyze
the entire history of records,
and a high degree of security and integrity.
These qualities lend themselves to supporting
a wide range of industries and applications.
The financial sector is continuing to see
the steady adoption of blockchain technology
in support of their services and innovation efforts.
But in fairness, while real production solutions do exist,
a large number of financial applications
have existed in an experimental mode.
That's changing now.
And it's anticipated that in the next few years,
many of these experiments will convert
to production systems.
We're also beginning to see the emergence
of an entire financial ecosystem
based solely on blockchain technology,
called decentralized finance, or DeFi.
DeFi startups offer a range of popular services,
from lending to insurance,
and also have the potential to be highly disruptive.
With so many cryptos or altcoins,
an ecosystem of organizations and services
to enable more people to buy and sell cryptos has emerged.
Called exchanges, these services are the equivalent
of a blockchain banking system
that supports capabilities such as the storage of cryptos,
user keys to be specific,
currency conversion from altcoin to altcoin,
and also from crypto to fiat currency and vice versa.
And also market analytics.
Some traditional banks are now beginning
to offer similar services.
Recently, a specific type of crypto token,
a non-fungible token, or NFT,
has been used to support a new ecosystem
for people who want to collect and trade in digital assets.
It has also created a growing platform for digital artists
to market and auction their products.
Similar to the popularity of items
such as physical baseball cards,
collectors can buy and sell digital images,
videos, and other unique digital assets.
Between the years 2017 and 2020,
the NFT market grew over 700%.
And by early 2021, was worth well over $300 million.
Blockchain technology benefits
are also demonstrated in other areas,
such as support for supply chain management,
identity management,
and in the authentication of a wide range of credentials,
such as degrees, certificates, and licenses.
Each of these areas is generating new providers,
and enabling opportunities for existing vendors
to diversify into servicing emerging requirements.
What's clear is that blockchain is now creating opportunity
across the economy in surprising ways.
It's growing maturity and adoption is building credibility
and ensuring that it becomes an important tool
in the array of technologies
ready to support our future needs.