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The year 2019 was pivotal for enterprise blockchain. The technology expanded beyond adoption by innovators and first movers to include a growing number of organizations working together to rapidly turn blockchain’s promised value into tangible business results.
As active blockchain networks bring real transformative change to a number of industries, the IBM Blockchain team conducted interviews across our vast group of technology experts, researchers, and those partnering closely with clients across industries to pull together the following five key themes we expect to materialize over the coming year:
1. Pragmatic governance models will emerge
With greater blockchain adoption on the horizon, governance will become a key factor. Yet, creating a governance model that all participants agree upon can be challenging. In fact, we have found that 41 percent of organizations believe lack of uniform governance standards across partner organizations to be the most significant challenge to progressing their blockchain proof of concept (PoC) or minimal viable ecosystem (MVE).
In 2020, we’ll start to see new governance models that enable large and diverse consortia to approach decision-making, permissioning schemes, and even payments more efficiently. These models will help to standardize information from different sources and capture new and more robust data sets. In the next one to three years, we learned that 68 percent of CTOs and CIOs even expect to see a scalable governance model for interactions across multiple blockchain networks to be an important feature of their organization’s blockchain environment.
To get others to agree with the group — especially those key contributors that single-handedly make the network more valuable — there needs to be a willingness to cooperate and collaborate. Sometimes this is achieved by incenting participation. This year, members of an existing network may encourage strategic industry players to join using monetary incentives. For example, a global supply chain consortium might subsidize members of a government-regulated customs authority agency to join a network, based on the fact that their participation, as well as their data, will allow the network to be exponentially more impactful.
2. Interconnectivity comes one step closer to reality
We have found that success in blockchain relies on collaboration from multiple parties. But, with the potential for tens or hundreds or even thousands of participants on a network, it’s unreasonable to expect that each party within a network will use the same vendor or incorporate a new computing environment for just one application. Even so, there’s an exceptional need for businesses to seamlessly share data.
Though reaching interconnectivity at the maximized level might be years away — and the definition of interoperability can take many forms — we find that 83 percent of organizations today believe assurance of governance and standards that allow interconnectivity and interoperability among permissioned and permissionless blockchain networks to be an important factor to join an industry-wide blockchain network, with more than one-fifth believing it to be essential. Although there’s still work to be done on this front, this year as more emerging networks attain critical mass, we’ll find that more members of a single network will expect (if not demand) guidance on integration between different protocols.
3. Adjacent technologies will combine with blockchain to create a next level advantage
Now that blockchain solutions are capturing millions of data points and making their presence felt in the world, they’re opening the door to new capabilities. Adjacent technologies like IoT, 5G, AI and edge computing — to name a few — will combine with blockchain to drive enhanced value for network participants. For example, blockchain solutions that pair with the Internet of Things and AI, compared to other emerging technologies, are expected to be the top accelerators of blockchain-enabled marketplaces in the future.
Combining adjacent technologies with blockchain will help us to do things that haven’t be done before. More trustworthy data from the blockchain will better inform and strengthen underlying algorithms. Blockchain will help keep that data secure and audit each and every step in the decision-making process, enabling sharper insights driven by data that network participants trust.
4. Validation tools will begin to combat fraudulent data sources
With 88 percent of institutions, according to our research, believing that the assurance of standards to communicate data to and from blockchain networks is an important factor to join an industry-wide blockchain network, there’s no question that trust and transparency is essential. But, in a world where data is being collected and transferred faster than ever, it’s understood that there will be inconsistencies in our data, either from human error or malicious players.
With a need for heightened data protection mechanisms, this year, blockchain solutions will use validation tools along with crypto-anchors, IoT beacons and oracles, mechanisms that link digital assets to the physical world by injecting outside data into networks. This will improve trust and remove the dependency on human data entry, which is often prone to error and fraud.
5. Central banks will expand into wholesale and retail Central Bank Digital Currencies
Tokens, digital currencies and central bank-backed digital currencies (CBDCs) have been a growing topic of interest for capital markets. Tokenizing assets and securities, converting them to digital tokens, and then trading, exchanging and settling custody of such digital assets is transforming the efficiency, security and productivity of capital markets. In fact, 58 percent of organizations we surveyed agree that they can derive new sources of revenue by tokenizing assets exchanged on a blockchain-enabled marketplace. In addition, new organizations and regulations have even been put in place to facilitate the creation, handling, trading and settlement of such tokens and digital currencies.
What changes can we expect to see in this field for 2020? With countries in Asia, the Middle East and the Caribbean beginning to experiment with CBDCs in real time, there is no doubt that they will continue to gain momentum in the new year and redefine payments in several ways. For one, CBDCs will see continued expansion in wholesale CDBCs, with some initial forays in retail CBDCs. Moreover, we find there will be increased interest in tokenization and digitization of other types of assets and securities such as central bond debentures for treasury bonds.
While spending time anticipating the future of this innovative technology is extremely exciting, we recognize new dynamics are continually entering the market that may challenge these trends as we see them today. There are also plenty of promising trends, like the rise of digital identity for blockchain, that we haven’t touched on here. However, one thing is certain, blockchain will continue to disrupt, enhance and improve the world we live in.
All survey data contained in this article was provided by the IBM Institute of Business Value (IBV) through their 2019 Blockchain Economy Study, containing 1001 respondents.