What else?
A second concern is standards. There need to be standards about how blockchains work. Currently, there are more than 25 different consensus methods in blockchain technologies. Each one works differently because of the consensus method. Bitcoin uses Proof of Work. Ethereum used to use Proof of Work but is shifting to a specialized Proof of Stake called Casper. EOS has a specialized Proof of Stake called Delegated Proof-of-Stake. There are other protocols as well, such as Proof of Burn, and it goes on and on. To me, this adds to the confusion around blockchain. The concepts are straightforward, but when you get into some of the details, it gets to be a confusing ball of yarn. This is where some standardization needs to come into play.
How widespread is the use of blockchain in the enterprise now?
In corporate America, everyone is kind of looking at it, but I read a McKinsey article that estimated that 90% of the blockchain projects being undertaken today will never see the light of day. In other words, companies are learning, experimenting, and trying to figure out what the impact will be, and what the process will be.
Obviously, one of the key things coming out of blockchain is an alternative currency like Bitcoin. Having an alternative currency has a greater potential impact than many people realize especially when you understand that more than 70% of the world is unbanked. Bitcoin, particularly, has the potential to bring those people in as participants to the worldwide economy and that is the big buzz around those kinds of currencies.
Where else is there potential?
Today, a company might have an audit once a year, and a statement from a certified public accountant that says it looks like the company has followed rules and everything appears to be in sync. It is still in the conceptual stage now, but there is the notion that in accounting, you could have a continuous audit using blockchain. People are looking at those types of applications which could potentially impact a whole industry.
Are there other areas?
There was an announcement recently by IBM and Maersk about a blockchain shipping solution so that is an example of another area. I think identity management is going to be yet another area. There are companies, such as one called uPort, that are advancing the concept of self-sovereign identity so instead of some big company controlling who looks at an individual’s information and controlling what information is dished out, the individual can control who looks at their information and what information is provided. The notion gets more interesting when you consider attestations of who you are and what you have done.
What do you see on the horizon for 2019?
We are effectively in what I call version 3 of blockchain. Version 1 was basically Bitcoin, a simple blockchain. The concept of smart contracts was not a part of it, and it did one thing—it transferred Bitcoin between parties. Version 2 was Ethereum, which introduced the first smart contract language that enabled business logic or rules to be put into a program and stored in a blockchain.
What is version 3 of blockchain?
This is where additional services over and above smart contracts are becoming part of the blockchain. This will allow corporations to see what security and database components are available. These are things that people have taken for granted in the evolution of information technology over the years, and are now coming to blockchain. Governance over what happens in a blockchain environment is another huge issue that needs to be considered. An additional aspect is the network factor. If a company wants to introduce a shipping application, in a blockchain world, it has to get all the players involved. The dock workers, the loaders, truck drivers—all the companies involved—have to become participants in the blockchain network for it to work effectively. So, to me, this idea of the network effect will be one of the biggest challenges.
This interview was conducted, edited, and condensed by Joyce Wells.