Despite Bitcoin's disastrous 2018, don't give up on blockchain yet

Nathan Sykes -

It’s becoming more and more important to separate blockchain technology from the various applications it powers, including cryptocurrencies. The crypto world, including bitcoin, has had a rough go of it lately, with wild swings in value and heaps of bad press. A lot of the outrage and controversy is manufactured, of course. As with any other emerging technology, growing pains and pushback are to be expected.

Nevertheless, blockchain’s potential goes far beyond bitcoin and crypto. No matter what you may have heard about the fate of blockchain technology during its travails in 2018, there are still lots of reasons why it’s here to stay.

Why recent Bitcoin news made some uneasy about blockchain

If you judge blockchain solely on the experience of bitcoin investors over the last couple of years, you’ll likely have a bad taste in your mouth. Here’s a quick rundown of what happened in the world of bitcoin throughout 2018:

  • Some researchers allege that the pricing of cryptocurrencies was artificially manipulated before and during 2018, in efforts to make the markets appear more stable than they actually were.
  • Altogether, 2018 saw bitcoin fall in value by a stunning 70 percent, making for the worst year on record for this still-young currency standard.
  • The attempts at crypto market manipulation appear to have failed anyway. Even before it closed 2018 with a 70 percent drop, bitcoin had already seen a massive boom and bust: a rise and fall of some 1,824 percent of its value in less than a year. Many economists have signaled this degree of volatility makes bitcoin unfit as a fiat currency.

The potential benefits of using blockchain technology in some form as a bona fide currency isn’t done proper justice by these shaky last few years. Underpinning the bad press is a still-sound concept. Blockchain proposes a way to eliminate a lot of the hassle, time, intermediaries and trust mechanisms required to exchange goods, services, monies and even data between two or more parties.

In other words, blockchain is about much more than money changing hands.

Why blockchain is much more than crypto

For blockchain to take off and realize its potential, we need a set of universal standards so a wide variety of consumer and commercial applications can make use of it. What’s required is an HTML for blockchain — an open, accessible and platform-agnostic language that allows blockchain to function across users, companies, developers and software suites. That we haven’t yet built this standard — and seem to be pursuing several competing ones concurrently — is a big part of why blockchain adoption has been slow so far.

Nevertheless, a general roadmap is beginning to emerge when it comes to bringing blockchain into wider industry. So long as blockchain can provide a mutual distributed ledger (MDL) that records financial transactions, it can also provide an MDL that can record any other type of data as well. That means it has enormous implications for every industry on earth.

ISO — the International Organization for Standardization — is one of several consortia actively putting together industrial blockchain standards. It may seem counterproductive to assemble standards for a technology that’s fundamentally open-source. However, the goal is interoperability between industrial systems first and foremost, along with getting ahead of regulatory actions.

Currently, ISO is targeting a 2021 rollout for its blockchain-related industrial standards. Logistics companies, data and analytics companies, manufacturers, freight companies, customs organizations and many others all stand to benefit from a set of best practices and transparency-minded guidelines. Like other ISO standards, they will see regular revisions as the technology, and the culture surrounding it, continues to mature and evolve.

Let’s take a closer look at why blockchain looks all but certain to continue disrupting industrial activity.

Social and industrial applications for blockchain technology

Blockchain is the future because it helps build trust in ordinary transactions and interactions and because it decentralizes data. The latter has far-reaching implications for security, accessibility and much more.

In business as well as everyday life and even civic participation, here are a few things that blockchain can help us do differently, or better:

  • The decentralization of data for security: Blockchain provides a solution to the “attractive nuisance” of high-value data sitting on company data centers and server farms.
  • Accountability and traceability in supply chains: Our food, beverage, electronics and medical device supply chains span the globe. That introduces a host of challenges when it comes to counterfeit parts, tampering, lost shipments and generally maintaining effective communication and operations across multiple partners. Expect freight and manufacturing companies to lean on blockchain to create immutable custody and inspection records in the pursuit of higher standards for quality and greater accountability in product sourcing.
  • Mutual distributed ledgers enforce trust: Using MDLs is a great way to police many of our working relationships. It doesn’t create trust, but it does stand a chance of enforcing it. An MDL dedicated to financial statements or shipment custody, for instance, requires that all parties with access to the MDL approve of any changes made to it.
  • Smart contracts: This is another blockchain-powered trust mechanism. Any time a deal is drawn up between business entities, or between a landlord and a renter, a smart contract acts upon the “if this then that” principle. Things like digital keys, escrow documents and authorizations are held in limbo until certain predetermined actions are taken and entered into the shared contract. It’s a slippery concept to explain, but a fascinating one.
  • Voting: Blockchain-based voting would be orders of magnitude harder to manipulate or hack than the technology our current system uses. The concept would function similarly to smart contracts. It could even facilitate a shift to trustworthy online voting and do away with polling places and tedious identification verification entirely.

For some industries, blockchain represents a timely solution to some very old problems. Manufactured parts destined for the aerospace, automotive, military and pharmaceutical industries face appropriately high regulatory standards, and mutual blockchain ledgers can help all the relevant parties meet them. Clearly, there’s a lot more to blockchain than mining, speculating and window shopping on the deep web.