Blockchain has been one of the most talked-about tech trends of the last few years. As with many other trends that were important before the pandemic hit, it didn’t make as many headlines in 2021 as it has done previously. But development has been ongoing and the year saw continued adoption of the technology throughout many industries and sectors.
The simplest way to think about blockchain is that it is a database – a storage infrastructure for data – that’s secured by both encryption and by being decentralized. With many copies spread across many locations, all kept up-to-date simultaneously, changes can only be made to the data when there is consensus that it is correct to do so.
This relatively new (established by the protocol for the Bitcoin cryptocurrency in 2008) way of managing and securing data can be used anywhere there is a need for a shared database that can be accessed and used by different people or organizations. One way of looking at it is that the security of the data is ensured by mathematics (cryptography), rather than having to rely on the trustworthiness of whoever the data happens to be in the hands of at any given time.
Blockchain is valuable for any sort of transaction where values and timestamps need to be securely recorded, so it is of particular interest to financial services companies. However, it’s also potentially useful for any process that involves tracking the movement of data between parties, so it has applications across trading, supply chain, logistics, and provenance.
The development of Covid-19 vaccines was hopefully the first step towards defeating the virus, but governments around the world are facing a huge task in distributing it to their populations. With limited supply and the need to be kept in refrigerated conditions, this is a great example of a problem for which blockchain provides a solution.
Over the next year, we are likely to see blockchain used to track vaccines from the point of manufacture to the patient. At every step of the journey, it can be used to create a permanent and non-falsifiable record of where each batch was at any given time. To do this at the speed required for vaccination to be effective across the entire world means processes must be developed for demand forecasting, supply chain management, and authentication.
Currently leading the field in deploying blockchain-based solutions to these problems is IBM, which has a working system and is now in talks with pharmaceutical companies with the aim of launching a pilot project.
The ongoing rise of enterprise blockchain
Enterprise blockchain, also referred to as private blockchain or permissioned blockchain, simply refers to deployments that, unlike the flagship use case of bitcoin and cryptocurrencies, fall under the control of a centralized “owner” – generally the company that has deployed the chain.
Banking and financial services will undoubtedly lead the way, thanks for its obvious suitability for ledgering and accounting, as well as the disruptive influence of cryptocurrencies themselves. Beyond that, applications will increasingly be seen in healthcare, manufacturing, distribution, and professional services. Confidence in the technology is also growing, with a recent Gartner survey finding that 14% of enterprise blockchain projects moved to the production phase in 2020, compared to 5% in 2019.
The rise of NFTs
NFTs are certainly a trending topic at the moment and something we are only going to hear more about throughout the year. It stands for non-fungible tokens, which are essentially digital assets (pictures, music, code, contracts) that live on a blockchain and therefore can be said to have value due to their uniqueness. In the short term, this is creating new ways for some industrious people to make a lot of money – for example, the musician Grimes who sold artwork as an NFT for $6.6 million, and the NBA which has generated $230 million in sales of baseball video clips across its Top Shot marketplace.
The as-a-service model of distribution has been key to the rapid adoption of technology trends, including cloud computing, the internet of things (IoT), and artificial intelligence (AI). Blockchain is likely to be next, with companies including Amazon, IBM, and Microsoft all offering or developing tools and platforms enabling businesses to leverage the technology without making up-front investments in infrastructure and skills.
Beyond operating as a record or store of value, advanced blockchain implementations such as the Ethereum network and Hyperledger Fabric allow the creation of “smart contracts” and other decentralized, trustless architectures that have any number of applications. One example is a contract that automatically executes when conditions are met. This could include the transfer of money from an escrow system to make a payment when a project has been signed off as complete. Cloud-based, as-a-service platforms will bring this technology within reach of organizations that otherwise would not have the resources to do so without spending years planning and developing infrastructure.
Blockchain expertise a highly tradeable skill
Blockchain is not immune to the bottlenecks caused by the shortage of workers skilled in emerging technologies. This means that if you’re set on a career in tech, then developing skills around engineering, deploying, or maintaining blockchain solutions is likely to set you up for a bright future. As with AI, there simply aren’t enough skilled blockchain professionals out there to keep up with the industry’s big plans for rolling it out across all areas of operations. As more and more blockchain projects begin to demonstrate usefulness throughout 2021 and beyond, the number of projects under development will rapidly increase, putting those who have been savvy enough to upskill themselves in control of a sellers’ market.