What Is The Future Of The Blockchain? A 2017 Prediction
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of Blockgeeks
Herein lies 17 Future prediction of The blockchain for 2017. Thank you to all of my colleagues for my continued education this year and feedback in writing this piece. Please take these predictions with a grain of holiday salt, in other words, not meant to be construed as professional advice.
What Is The Future Of The Blockchain For Business? A 2017 Prediction
- A disintermediating world
2017 will be the year that the average person begins to understand that blockchains aren’t just an upgrade to our database and Internet, but rather tools to re-architect social, financial and political systems.
The key question asked will be: How much should we pay to trust each other?
Ethereum smart-contract blockchain systems will actuate near frictionless price discovery mechanisms for intermediation. Intermediaries like banks, accountants, notaries, custodians, trustees, agents may have to begin to find higher value propositions for customers as the cost of trust will plummet. The macro net result should be greater value to the counter-parties of a transaction and less value to the intermediary. Moreover, there will be anthropological research and writing on the value (or lack thereof) of the “middleman” in 2017 similar to the way Nobel laureate Ronald Coase explained efficiencies in “The Nature of The Firm”.
2. Moving beyond the Proof-of-Concept
2016 was mostly the year of the blockchain Proof-of-Concept (PoC). Executive boards across the world asked their CTOs, “what is a blockchain?”, “How does blockchain technology affect their respective business models?” and “How can these hypotheses be tested?” 2017 will be the year of early stage or small production blockchain deployments. While the market saw production systems go into production in 2016, the early adopters will begin to go-live in 2017, with critical masses beginning to go-live in 2018. The winners in the blockchain space will understand how to splay certain use cases architected over permissioned, consortia, and public permissionless blockchain environments.
3. DApps roam free on the Ethereum Mainnet
Rome wasn’t built in a day and neither was agile blockchain software engineering.
DApp mania on the Ethereum mainnet will begin and the average user will finally be able to feel and see what Ethereum is and does. It will still be very early days and there will be drastic UX/UI work needed in the space. The Ethereum Genesis block was only created July 30th, 2015 and 2016 was a year where developers wrapped their heads around the new Ethereum coding-language, Solidity. In 2017, we’ll begin to see the fruits of the the community’s labor, which will be in the form of decentralized applications (DApps) on the Ethereum Mainnet. This will educate the mainstream on what Ethereum actually is via examples, and catalyze the use of ether to fuel each computational step and storage operation. Take note from Apple’s historical timeline on the prevalence of traditional apps. Ethereum has just completed the equivalent to year 0.
Looking forward to Balanc3 Triple Entry Accounting Benefactory BoardRoom Blockchain Governance Colony DGX Gold EtherLoan Etherisc FileCoin GnosisGolem OTONOMOS SafeMarket Singular DTV StabL Status Ujo Music Virtue Poker WeiFund and others.
4. uPort solves for self sovereign identity
Many of the aforementioned DAapps going live in 2017 will be anchored by self-sovereign Ethereum-based identity. While uPort may be construed as a DApp itself, I purposely give it an entire section of attention due to it’s foundational importance.
uPort users establish for themselves full control of their digital personal information (expressed as reputational attributes). This encrypted information may be selectively and granularly shared with targeted counterparties when the user deems it to his or her advantage.
uPort will feature tight integration of RepSys, our multifaceted, multi-tiered reputation system, that enables people, organizations and things (devices or software) to attest to the conduct of their counterparties with respect to various kinds of transactions: buying/selling, lending/borrowing/repaying, collaborating on projects, gaming interactions, and data quality and reliability. uPort serves as a container for reputational attributes like email addresses, Facebook URLs or state issued ID. Identity providers like governments, banks and IT companies can cryptographically sign such attributes attesting to their validity using “reputational attestations.” The more than 2 billion people in the world who don’t have state issued ID can have their community members attest to their personal information. Community members can essentially vouch for each other to enable one another to develop and use this bootstrapped persistent and portable reputation to, for example, obtain a microloan on a decentralized lending platform and grow a small livelihood from there. For access to financial services offered by financial institutions in different jurisdictions, institutions and users can make use of a KYC tool built on top of uPort and RepSys.
5. Scalability will remain the holy grail
Today the Bitcoin network is restricted to a sustained rate of 3.3 tps (7 tps theoretical) due to the bitcoin protocol restricting block sizes to 1MB. Scalability will remain the holy grail of blockchain technology. The public blockchain with the most attainable and impactful scalability roadmap is Ethereum. Three simultaneously developing avenues for Ethereum scalability are state channels such as Raiden, Vlad Zamfir’s proof-of-stake solution, Casper, and Sharding. I foresee Raiden integrating with Ethereum and Casper live on Ethereum in 2017.
6. Big pieces of the privacy puzzle come together
Many layers of the privacy onion will be be pulled back and chewed on. In the context of private permissioned blockchain environments, products like BlockApps will continue to lead, so companies can spin up environments to scale their proofs-of-concept into full production cloud environments with a single click. Another important piece to the privacy puzzle is re-architecting Ethereum to optimize for private financial transactions, which is exactly what Jeff Wilcke and his EthLab team collaborating with JP Morgan accomplished with Quorum. In terms of privacy for public Ethereum, there has been much work incorporating zkSnarks used in Zcash into Ethereum.
7. Earnestly tightening security
Everyone who lived through the TheDAO-saster understands the need for smart contract security and there has become a new focus on smart contract best practices and audit. IC3 is conducting world renowned research. Microsoft has developed Kinakuta, a smart contract audit and research working group, and Dr. Christian Reitwiessner has devoted research efforts towards formal verification as well. These efforts will grow in earnest as the ecosystem trends towards production environments.
8. Non-proof-of-work consensus algorithms will be the new black
Casper seems to be the forthcoming direction for the public Ethereum network, while EtherMint, Honey Badger and Hydrachain are examples of Byzantine Fault Tolerant and non-Byzantine consensus mechanisms that are appropriate various use cases in private, permissioned environments.
9. Failures and consolidation will begin to occur
In a short matter of time, stakeholders may see their pay-to-play consortia codebase doesn’t have the network effects they hoped it would, and we may see rapid implosions, especially in the permissioned blockchain infrastructure sectors that don’t have Ethereum Virtual Machine (EVM) support, as any permissioned blockchain that doesn’t support smart contracts that compile to executable EVM bytecodes will be as siloed as systems built on SQL databases. Remember from the intranet days of the early 90’s… Compuserve, AOL, and Prodigy lost.
10. The dawn of a new regulatory environment
Regulatory bodies will interact with first class blockchain citizens like Coinbase, Coin Center, ConsenSys, and Union Square Ventures to understand and work together on the barely trodden next generation tokenized asset world. Retail investors will all learn what the Howey Test is. Gold, Fiat, Stocks, Bonds, Renewable Energy Credits, Loans, Liens, Titles, Life Insurance, Loyalty Points, and Beyoncé tickets are a few items that have the potential for tokenization. Eventually (not in 2017) all of these will be fluidly tradable for one another from a unified user interface. Coinbase is really showing its leadership with respect to the tokenized and decentralized world of tomorrow.
11. Ethereum developer tools will continue to improve, which will make the rate of development of software grow at an exponential pace
Here are my favorites:
Infura is an enterprise-grade Ethereum-based blockchain infrastructure being used in IoT, and in conjunction with the public Ethereum blockchain and Inter Planetary File System (IPFS). Developers interface with Infura via Web3/RPC.
MetaMask is a bridge that allows you to visit the distributed web of tomorrow in your browser today. It allows you to run Ethereum dApps right in your browser without running a full Ethereum node.
MetaMask includes a secure identity vault, providing a user interface to manage your identities on different sites and sign blockchain transactions.
BlockApps is an enterprise-grade Ethereum-based blockchain infrastructure solution used in banking, payments, insurance, supply chain and others. BlockApps is designed to provide a permissioned Ethereum environment which easily operates at scale, allowing applications to handle a high volume of transactions per second. Developers can build interfaces with their permissioned blockchain using a REST API. BlockApps STRATO is available as a single-click deployment in the Microsoft Azure Marketplace and through Red Hat OpenShift, Pivotal Cloud Foundry and others.
Truffle is the market leading tool for developers to build smart contracts and DApps, from scaffolding to debugging to production deployment. It is currently supports standalone workflow and will soon be integrated into development environments. Work is nearly complete to integrate it with Microsoft Visual Studio and there are plans to incorporate it into Atom, and some other editors and IDEs, but that work is yet to be done.
Solidity on Microsoft Visual Studio — Ethereum’s codebase Solidity within Visual Studio.
12. As global energy markets continue to decentralize, their natural neural network will be peer-to-peer blockchains
In 2016 we continued to witness evolution, growth and progress across this interdisciplinary engineering science sector as energy technologies improve and deliver efficient, safe, environmentally friendly and economical extraction, conversion, transmission, storage and use of energy. As technology drivers accelerate we are also seeing the emergence of new business models focused on peer-to-peer interactions across the grid and this is precisely where Ethereum has a tremendous opportunity to add efficiency gains in 2017. As the physical infrastructure of the grid continues to decentralize and more prosumers come online, ConsenSys is working hard to re-imagine and build solutions at the business logic and transactional layers in an attempt to more elegantly describe what is happening in the real world as these changes occur. We are building next generation Ethereum enabled smart grid technologies with our utility and power production friends and partners all over the world.
13. Supply chains will certainly evolve into supply blockchains in pharma, finance, public sector, mining exploration, and retail
Next generation digital assets will be encumbered through digital signatures and hashes allowing data to remain secure while being distributed.
14. Big Brother wants to play too
15. Microsoft will continue its dominance in the blockchain space amongst the current blue chip technology companies
From guys and gals in their garages to the largest enterprises in the world, Azure has been the safe home for companies to create permissioned sandboxes to production environments. This past year, Microsoft added Ethereum’s smart contract programming language, Solidity, into Visual Studio.
Blockchain integration will happen bi-directionally with Microsoft. Project Bletchley will begin to add Microsoft services, such as Active Directory for key maintenance, or PowerBI for Analytics to Ethereum permissioned environments. Moreover, Microsoft may use Ethereum to add blockchain properties to Microsoft Office, or potentially add MetaMask as a pre-installed extension to the Microsoft Edge browser. Microsoft’s blockchain footprint is just getting started.
IBM may want to seriously reconsider the fact they’re building an architecture solely for private environments, and their architecture won’t interoperate with the next generation of the internet.
16. Asia will begin to flex its muscle as India and China roll out skilled blockchain developers, products, and capital
India is known for being the world’s hotbed of technical support and system integration. I foresee thousands of Solidity experts coming from Bangalore, Chennai, Delhi and other places from leading system integrators like Accenture, Synechron, Tech Mahindra, and Wipro.
China will also have deep developer pools, but rather than serving as the backbone to the world, their blockchain technology and brainpower will reside locally on the hundreds of Chinese smart city projects and internal banking applications which are perfect use cases for blockchain.
17. Vitalik and company will continue to move fast and break things… and I like it
Zuckerberg, Gates, and Torvalds all believed in the need to move fast and break things, and we’re seeing the same with Ethereum. 2016 wasn’t pretty, but it hardened our networks and our spirits. Rivalries between Bitcoin and Ethereum will end in 2017 as Ethereum proves it’s sheer dominance in every aspect of these decentralizing technologies with its proof-of-stake implementation. Or maybe, the analogy will more be like, landline and smart-phone. Ethereum has much to thank from Bitcoin, as Bitcoin gave Ethereum its reference point. While we love Bitcoin, it’s not a platform and only does one thing well: the transfer and storage of value. I can send you a bitcoin, you can send it to me. Hence, why the majority of venture capital raised incorrectly for Bitcoin was spent on the creation of Bitcoin wallets (storage of value) and (transfer of value) exchanges.
To understand the difference between Bitcoin and Ethereum, one has to understand their respective computing environments. The Ethereum Virtual Machine holds a Turing-complete programming language and is stateful like the power of a personal computer with CPU, memory and a hard drive at every node, while Bitcoin has an extremely limited scripting language and is stateless — with computationally complexity weaker than a pocket calculator. Hence, in Ethereum one can create any type of application one can dream of, in any industry, and in Bitcoin one can only simply shuffle a token from one person to another, like an abacus. In terms of price, both will go higher and ETH will grow at a multiple of BTC’s growth. The combined market cap of Bitcoin and Ethereum will still be extremely small in 2017, but will begin to drastically grow in 2018.
Bitcoin was the opening act, which we are thankful for, and 2017 we’ll begin to see the rest of what’s possible with blockchain technology, thanks to Ethereum.