Block by blockchain: the future
In the final instalment of his three-part series of articles on blockchain in the insurance claims context, our Head of Research and Development, Karim Derrick, looks at what stands in the way of distributed ledger technology and its enormous potential.
Just as crypto currencies such as bitcoin brought the world’s attention to blockchain during their ascendancy, so the current bear market in crypto currencies has taken away a little bit of the technology’s shine.
The truth, though, as has been argued in this series, is that the applications for blockchain are much broader than just crypto currencies. In the longer term, a more realistic market for crypto currencies and initial coin offerings will allow alternative applications for blockchain to stand on their own.
Analysts continue to be upbeat about the future for blockchain. According to Gartner, the business value-add of blockchain will grow to slightly more than US$176 billion (£134.5 billion) by 2025, and will then exceed US$3.1 trillion (£2.37 trillion) by 2030. According to Venture Scanner, there are currently 1,008 blockchain start-ups that have raised US$6.2 billion (£4.74 billion) venture capital funding, across 333 funds and 75 countries.
Interestingly, one of the biggest threats to blockchain relates to one of the same key problems that the technology presents a solution for: privacy.
In Europe, through the last year, the General Data Protection Regulation (GDPR) has come into effect and has significantly raised the bar of privacy regulation at the same time that the issue has been brought into focus by Facebook and the Cambridge Analytica data breach, as well as the related debates around the influence or distortion that Facebook introduced to the US presidential elections and the UK referendum. However, GDPR creates an interesting challenge for blockchain in the form of the GDPR requirement for citizens to have the right to be forgotten. Blockchain is designed to be immutable. ‘Once on the ledger, on the ledger forever’ is a huge reason why blockchain is attractive in respect of trust. If you can’t hide transactions, you can’t deceive me into double spending currencies, making the same claim twice, or selling the World Cup ticket more than once. But GDPR recognises a right for citizens to be removed from corporate databases if they so wish. So where does that leave blockchain? At this stage, there are no clear-cut answers.
When considering the future of blockchain, I believe that if we look to the current debate around privacy we can glimpse the future for blockchain.
The world wide web was once the dream of the 'techno hippies' of San Francisco as the networked panacea that would bring to life the ideals that their communities aspired to: equality, a level playing field, universal and free access to information, decentralised news, and so on. And, early on, the internet looked like it would achieve just that—until capital woke up to the potential of the internet and the corporations moved in and bent the internet to their own needs. Now we find little evidence in the world wide web of the utopian ideals that drove its birth. However, despite appearances, the idealists didn’t go away. They just turned their attention to the next wave of technologies that would address the issues of the last model and create the foundations for the next. Blockchain is it.
The ultimate measure of the success of blockchain will be when the hype subsides and the technology disappears into the background, is taken for granted and becomes just another essential component in the infrastructure of the internet—just as it did for the traditional SQL database, for HTML, for packet switching. A key part of that journey will be interoperability and standards. At the moment, a number of players and technologies are jostling for position as the different issues and challenges that blockchain brings are addressed. Standards will allow those technologies to begin to interface and for chains of chains to emerge. Railroads took off when nations standardised around specific railway gauges, our use of electricity took off when nations standardised the voltage and plugs that we use, so it will be with blockchain. Just as our uses for consumer electricity exploded once these issues disappeared into the background, so it will be with blockchain.
That will be the point we can genuinely talk about the emergence of Web 3.0, a truly decentralised version of what the web has become with users firmly back in control of their data. Until, of course, the pattern repeats again.
This article was first published by Claims Media on 17 September 2018.