Peter Loop is associate vice president and principal technology architect at Infosys, a next-generation IT services provider.
In this CoinDesk 2016 in Review special feature, Loop gives his overview of why, despite signs the hype had peaked in 2016, blockchain is poised to be more widely tested, deployed and adopted in 2017.
I can confidently say blockchain will be the most dynamic area in tech in 2017 – already, we're seeing some major players position themselves for a leap forward in the year ahead.
Global banks like Santander and Goldman Sachs, for instance, recently announced they would not renew membership in the blockchain consortium they helped found, R3CEV – an example of increased investment from significant brands in finance, retail and supply chain, to name a few, in developing blockchain technology internally.
Similar announcements are now happening regularly, building momentum for blockchain as a primary focus of tech investment and development in the year ahead.
An increasing number of industries are realizing the need for urgency in being ahead of the curve, and are exploring ways of using blockchain technology.
Here are my top four predictions for the most impactful changes blockchain will cause in 2017:
1. Deployments will come online
Despite misconceptions that blockchain is years away, we'll see full deployments in financial services, insurance and healthcare industries next year.
This will completely disrupt our payment systems on an international scale – revenue models and other processes will become obsolete, and payments will become faster, cheaper and safer.
But because blockchain is becoming mainstream, we can no longer afford to ignore the major hurdles that stand in our way. For example, banks must define a clear path to adoption for blockchain and collaborate on a global standardization.
2. Progress on standardization will be made
With blockchain becoming more widely adopted, a standardized method for interaction will be critically important. There are complicated and political processes preventing this – industry organizations have competing interests and businesses enjoy having a perceived advantage.
As blockchain implementations begin, we'll see a paradigm shift toward standardization and consolidation as organizations which were once in competition realize the benefits of a unified approach, including accelerated trade processes, enhanced detection and better data management.
There may be only a couple of viable blockchain consortiums left standing in 2017, but industry players will have to cooperate and collectively agree on open standards that are flexible and versatile. Governments and regulators also have a key role to play, protecting consumers yet fostering innovation.
The stakeholders pushing the evolution of these standards will need to be imaginative, and envision a future where innovators leverage the standards they made to create new and powerful tools.
3. Blockchain aside, FinTech is only accelerating
FinTech is causing massive change, everything from a single payment to how global finance operates is being disrupted.
Further changes to expect in the year ahead include:
- Blockchain and machine learning will combine to accelerate existing processes and optimize efficiencies
- Emojis as payments will become used more widely as mobile devices become increasingly secure
- Lending networks will become one of the hottest areas of blockchain
- Nations around the world will become very interested in digital currency development.
4. Payments is ripe for disruption
Within the field of payment transactions, the technology could be used to overcome current problems of the correspondent banking system and international money transfers.
The fee-intensive and fragmented processes of cross-border, non-cash transactions could be eliminated by the exclusion of third parties, direct money transfers and efficient interbank settlements. The possibility to create a competitive marketplace of liquidity providers potentially ensures the best exchange rates for international exchange and payment transactions.
Payment systems are based on local laws and practices within existing domestic banking, and the lack of a common standard reduces the ability to seamlessly pass data and back-office information, creating both settlement and non-settlement risks.
A broad implementation and use of the blockchain technology would change and disrupt the financial services industry and payment systems on an international scale.
Blockchain technology has the potential to completely change processes and systems within industries. It could remove trusted third parties, decrease costs and ultimately increase profits for various players within the industry.
However, it is not a one-size-fits-all solution, as potential use cases need to fit to the technology's specific characteristics and requirements, such as security, decentralization, and dependence on the Internet as a basis.
Runner clears hurdles image via Shutterstock