Ten years have passed since the world has seen the first blockchain. Although a decade is not enough for such a fundamental technology, an entire industry emerged in the years since its inception. Each of those years brought something important to the advent of blockchain, as companies, startups, and individuals test the technology and how its real-life applications.
As 2018 has come to a close, it is time to remember the highlights of the blockchain industry, how it managed to succeed, and where it is going. At first glance, it might seem that 2018 was a bad year for the industry, especially amid the problems on the cryptocurrency market. As always, we at Intellectsoft Blockchain Lab emphasize that the most valuable benefit of Bitcoin was that it brought blockchain to the forefront of the tech world’s conversation and beyond the crypto world.
Indeed, when we look at the advances of blockchain technology, its adoption and existing infrastructure, the picture is entirely different.
Let’s explore it below.
1. The World of Public Blockchain
1.1. ICO Projects
Fatigue from blockchain overhype could be felt in the public blockchain sector throughout the entire year. Then, there was a calm <span”>after</span”> the storm on the ICO market: some projects were in development and not yet showing real value, while other were shut down due to undeveloped infrastructure, the current state of the industry, and other factors.
The atmosphere in crypto space of 2017 and early 2018 was over-enthusiastic, with the word “craze” flashing in blockchain-related headlines almost daily. ICO projects raised tens of millions even before what would normally be Series A, slowing down, losing focus and motivation. Shortly, the craze started affecting even the expert teams, pushing them into spending a significant amount of time and money to keep token prices up and satisfy investors.
1.2 Public Blockchain Networks
The public blockchain created in 2017 were aimed at improving performance, which led to chasing vanity metrics like transactions per second and discussions about on-chain governance that seemed to have no end. The solutions we saw in 2018, on the other hand, have put the emphasis back to real developer usability and native use case discovery.
1.3 Ethereum leads the way…
Ethereum has a bright future, and 2018 only supported the fact (<span”>see our article dedicated solely to its huge potential</span”>). The year has seen the Ethereum community grow by no less than 200 000 developers, while 94 percent of all blockchain projects in 2018 were based on integrated on top of Ethereum.
…but has competition
Still, the Ethereum community will not have a monopoly on blockchain solutions. 2018 has seen a number of alternative blockchain protocols emerge to compete with Ethereum, with potential to evolve into leading platforms. For example, the entire blockchain world followed the launch of <span”>EOS</span”><span”> — a blockchain protocol that is often branded as “Ethereum Killer.” EOS’s focus on decentralized applications has already helped the protocol gain significant market value and presence in the global market. </span”>
The other side of Ethereum’s success
<span”>The Ethereum community faced a serious problem in 2018: the number of active users had dropped from 719,093 in January to 232,085 in <span”>December</span”>. Currently, the blockchain community waits for <span”>eight teams</span”> to release the Serenity update with a new PoS protocol and new scaling potential. For all its achievements in 2018, it became clear that Ethereum needs a substantial upgrade — and the sooner, the better.</span”>
2. Enterprise World
<span”>In 2017, the concept of private blockchain was a mysterious uncharted territory. It seemed that many companies attempted not to leverage the technology, but to spoil or rebuild its concept into something unviable and old-fashioned. </span”>
That has changed in 2018. Today, we can clearly see the transforming value of private blockchains and how they fit into the modern enterprise infrastructure, bringing cheaper and faster transactions, secure data sharing worldwide, and a significantly higher level of security.
In a major shift, businesses have gone from testing private/consortium chains to applying them. While this was expected, Deloitte notes another key change: instead of only exploring blockchain as a technology that streamlines or disrupts business processes, companies have started integrating blockchains into their ecosystems.
Embracing private blockchains is more common for highly tech-driven, digital-first enterprises, but the changes indicate that more and more companies accept blockchain as a powerful technologic driver, and with more confidence.
Meanwhile, the first industries to implement consortium blockchains were the Supply Chain and Finance (solutions with blockchain based payments) — no surprises here.
2.1. Blockchain as Basis for Digital Transformation
In my opinion, blockchain drives the second wave of infrastructure upgrade, digitalization, and global collaboration improvement in enterprises. That is, blockchain will be in the driver’s seat of the Digital Transformation of the Enterprise, no less. SMBs have already gone through this phase, and now comes the time for bigger players.
Such full-scale transformations already happened elsewhere and seem inherent to our daily life today. The always accessible, almost lightning-speed internet available right in our pockets or bags is just like blockchain, only for consumers.
There is a low chance of you meeting someone with a bulky Nokia phone from the nineties on a street today, but big airlines, supply chain companies and manufacturers still use mainframes, matrix printers, and Windows 98 on some of their locations.
It was very unlikely they would consider upgrading to anything: the security standards are too high, the scale too big. But 2018 showed clearly that the standards and opportunities of blockchain can meet and even exceed those demands, helping them migrate to new and more secure infrastructures.
2.2. The Segment is Growing
All of this is backed up by statistics. Private blockchain segment has grown from 20% in 2017 to 64% in 2018. This would not have been possible without well-developed enterprise tools and frameworks. And the Hyperledger foundation and their product set are the favorites here.
2.3. Hyperledger Becomes an Industry Standard
The Hyperledger foundation definitely understands the real power and importance of collaboration and decentralization in blockchain space, and that is why they are on top of the competition.
Dedication and constant development are other reasons. In 2018, Hyperledger’s IT has grown significantly and on-boarded many big names, including Alibaba and Citi Group, and the expansion continues. The Hyperledger progressed by new release and adding features to its tool set — as well as helping big enterprises build their first POCs.
We at Intellectsoft Blockchain Lab have used Hyperledger in many efforts this year — choosing Fabric for consortium setups and Sawtooth for supply chain projects.
2.4. Blockchain in Government
The technology got a lot of attention from politics around the world as well. Many countries’ attitude turned from suspicious to positively curious and deeply interested in the technology.
The U.S. government has tripled investments into blockchain analysis firms in 2018, which includes institutions like IRS, FBI, and SEC; the state of Ohio started accepting Bitcoin for tax payments; while West Virginia’s Secretary of State reported that blockchain-based voting in 2018 Midterm Elections was successful.
Across the world, the Australian government has signed a $740 million deal with IBM to upgrade data security systems with blockchain.
European Union also took a big step forward with the technology. Thirty-one country signed a partnership on analysing the potential of blockchain and its applications on national level. This was truly a major move towards large-scale blockchain adoption.
Blockchain is a great opportunity for Europe and Member States to rethink their information systems, to promote user trust and the protection of personal data, to help create new business opportunities and to establish new areas of leadership, benefiting citizens, public services and companies”
Mariya Gabriel, commissioner for the Digital Economy and Society
2.5. Creation of More Consortia
Each successful blockchain implementation counts in the technology’s mass adoption. Still, big-player consortia are the real engines of this advent. And 2018 saw many serious partnerships emerge worldwide and across industries.
We.trade, a blockchain platform that gathers twelve big European banks (including UniCredit, Deutsche Bank, and Nordea), aims at reducing operational friction and simplifying the trading process for participants.
Walmart, Nestle, Dole, Unilever, and four other large retailers have joined forces for a pilot blockchain project that would improve food safety worldwide.
Logistics giants — UPS, FedEx, BNSF Railway, and Schneider Trucking — are one of two hundred companies in a freshly formed BITA partnership, which explores blockchain applications in freight transportation, to be converged in a single framework.
Another prominent example comes from the automotive industry, where long-standing leaders (Ford, BMW, General Motors, Renault) and parts manufacturers (Bosch, ZF, IBM, Accenture) have formed Mobility Open Blockchain Initiative, or MOBI<span”>.</span”>
Final Thoughts: Blockchain Passed an Important Milestone
As cryptocurrency craze died down, the real potential of blockchain finally came to the fore in 2018. Enterprises across industries, governments across the world, and the blockchain community have focused on the technology’s far-reaching transformative power in many operations, in saving costs, and in security — while cooperating with each other on POCs, blockchain implementation, and efforts to fasten large-scale adoption. And all of this in only one year. With more and more companies joining forces on real-life applications in many industries, and with more governmental support, it is safe to assume that 2019 will be less about planning blockchain projects and more about bringing them to life — and putting them to use.
About the Author:
Tim Kozak is the Head of Technology @ Intellectsoft Blockchain Lab, a unit focused on blockchain development and tech consultancy for enterprises and startups.
Find out more about Intellectsoft Blockchain Lab.