Blockchain: the road ahead
1 June 2018
Distributed technology such as Blockchain is not new – it has been around since the 1970s.
One of the most widely used examples of this type of technology was Napster, which became so popular it began to threaten the music industry and was subsequently shut down. Following the financial crisis in 2008 and a serious loss in confidence in the banking community, a Cryptocurrency called “Bitcoin” was created as a decentralised mechanism to enable one to transfer value anonymously, using military-grade cryptography. Put simply, it became possible to buy and sell securely without knowing who you are dealing with and having any third party – i.e. bank, broker or agent – involved that would take fees as part of the transaction.
It wasn’t until 2016/17 that we saw the popularity of Initial Coin Offerings (ICOs) increase, fuelled largely by FOMO – fear of missing out – and greed – of people wanting to make money having heard about coins and tokens whose value had risen from a few cents to thousands of dollars. In 2017, a Token called Ripple, had appreciated in value by 36,000 per cent in just one year! Why? Ripple, which is backed by 100 of the largest banks globally, is being designed to undercut SWIFT, which is the system used to transfer money between banks that globally handle $5 trillion a day, estimated at $1.25 quadrillion a year.
In its first years of existence, Bitcoin, the original Cryptocurrency, was also used for illegal activities on the “Silk Road” and other websites operating on the darknet. At one point, the FBI was the biggest holder of Bitcoin when it closed Silk Road down, holding over 144,000 Bitcoins, which today would be worth approximately $1.4 billion. Cryptocurrencies were seen as a criminal’s and money launderer’s dream come true, as they could transfer vast amounts of cash outside the banking system with no FX fees or questions asked.
This image of Cryptocurrencies and the way Blockchain has quickly changed resulted in many legitimate business and governments embracing Blockchain in less than a decade, recognising its potential and technological superiority over existing protocols. This has led to global organisations in many industries including shipping, media, banking, food, insurance, logistics and the philanthropic sector all now using Blockchain as part of their day to day way of doing business.