Blockchain 2020: the hype may be over but the tech is here
Few tech topics captivated our collective conscious quite like blockchain did in the last half of the previous decade. Real adoption of this innovative technology has materialized in banking, finance, law enforcement, energy, insurance, real estate, supply chain management, and practically every other business sector.Looking forward into the next 10 years, several blockchain use cases are likely to be dominated by certain key trends.
AML & the international stage
As the technology underpinning cryptocurrencies, anti-money laundering (AML), and international monetary policy will still be front and center for the coming decade. “We’re going to make sure that bitcoin doesn’t become the equivalent of Swiss-numbered bank accounts,” said U.S. Secretary of the Treasury Steven Mnuchin, characterizing cryptocurrency as a national security threat. Not everyone in the current administration shares that view, however, concerns persist over cryptocurrency roles in monetary policy and international affairs.
In the European Union, member nations were required to comply by in mid-January with the 5th Anti-Money Laundering Directive (AMLD5), extending the EU’s AML and counter-terrorism financial rules to cover virtual currencies as well. Expect more targeted AML statutes targeting those cryptocurrencies that use distributed ledger technology in the U.S, too.
Banks and other financial institutions have learned that by using distributed ledger technology (DLT), their AML or Know Your Customer processes can be more efficiently managed in real time. Not surprisingly, this hasn’t gone unnoticed by criminals. So, in the 2020s, blockchain will likely be used as a weapon against AML efforts, if for no other reason than AML has emerged as the governmental priority for DLT.
Deepfakes & media verification
In 2017, both blockchain and bitcoin were buzzy topics, but neither were as present in American discourse as the term fake news. Now, that has evolved to include deepfake videos and doctored photographs that can deceive even the most discerning mind. With reports already cautioning against such misinformation in advance of the 2020 U.S. presidential election, some expect blockchain to offer solutions to these problems.
Like debunking the fake news and bots in 2016’s election, 2020’s challenge will be verifying images and videos that are truthful and accurate to what they represent. Inserting a watermark into media content indicating it has been verified, then placing that verification on the blockchain — immutable and unable to be counterfeited or tampered with — is an attractive option proposed by attorneys, ethics committees, and state bars.
Startups like Truepic are attracting funding for this purpose, but large media companies have invested in their own blockchains as a way of exploring this technology for verification, aggregation, and other uses. With fake news seemingly here to stay, watch for this technology to do what the law hasn’t and verify the accuracy of the media we’re consuming.
Identity in the 21st century is more than your name, fingerprints, and social security number, or even your birth certificate or passport. It’s your TSA Precheck, Facebook login, and online banking account as well. Your electronic footprint and the data collected from your online behavior are now part of your identity… and are being used by governments and corporations.
The U.S. and other governments are looking at DLT solutions to help people manage their identity and its digital iterations by leveraging encryption technology and tokenization. Some nations are already such protection in practice for of voting, tax collection, and for verifying education credentials and citizenship status. For every positive use case, however, there are surveillance and hackability concerns that may limit how the U.S. deals with citizens’ digital identities. It is a debate that will likely only intensify over the next few years
If anything is debatable, it’s the future role of cryptocurrency. Electronic currency is old news, with Venmo, Zelle, and digital wallets becoming ubiquitous. Indeed, the last five years saw Gold Rush fever for cryptocurrency with the top ten cryptocurrencies each boasting market capitalization in the billions of dollars. There are thousands of Bitcoin ATMs and Coin Kiosks in the United States, and companies like Microsoft, Subway, and Overstock already accept payments in digital currencies.
Day-to-day crypto transactions remain niche, however. Many U.S. states have no cryptocurrency regulation; and for every Ohio that allows paying taxes in bitcoin, there’s a Washington who doesn’t. Despite anticipation for Facebook’s Libra stablecoin (hoped to be a catalyst for crypto adoption), government scrutiny has intensified, and Libra’s usage within Facebook hasn’t materialized. Facebook has introduced a traditional pay service (Facebook Pay), so watch future Libra expectations increasingly turn bearish.
As these cryptocurrencies became an undeniable force in finance, other governments are looking at state cryptocurrencies or digitizing fiat currencies. We can expect cryptocurrency categorization by federal agencies to be clarified, even though currently, the U.S. government does not have consensus on how to categorize or regulate cryptocurrencies. By 2030, anticipate a consensus to be close if not achieved.
Who will lead the charge?
The United States, Russia, China, and most of the G20 countries have devoted resources to blockchain solutions. The United Arab Emirates, led by its tech-hub in Dubai, aims to be the world’s first blockchain powered government; and the Australia National Blockchain aims to move the nation towards blockchain immersion.
Many industry leaders have pooled into consortia — technology-specific, such as R3 and the Ethereum Enterprise Alliance; or business specific, such as the Hyperledger, Bankchain, TradeLens, and MediLedger. The goal for such co-opetition is to bring standards that lifts all boats, such as a Blockchain in Transport Alliance for supply chain management, or a Blockchain Law Consortium for the legal industry.
Like most new technologies, innovators and leaders in blockchain are not limited to major corporations and governments. The innovative bleeding edge often comes from small countries or nations with developing economies. Singapore, Malta, and Estonia have been leading the curve in international regulations, the Blockchain of Things, and digital identity. Development and investment continue to pour into impactful blockchain projects for real estate, agribusiness, and free expression in Latin America, South America, and Africa.
And while many blockchain creators and business leaders have been millennials and young Gen Xers, Gen Z is already filling the ranks of the startup heads and developers that are building platforms and coding the smart contracts behind DLT initiatives.
By 2030, their voice and presence in blockchain will dominate.