Blockchain and cryptocurrencies are technologies that have disrupted markets and changed how things or systems work. The technologies have caught the world by storm often enterprises beginning to taste the waters. Giant companies like IBM, Microsoft, Oracle, and Amazon Web Services (AWS) begun adopting the technologies. In the financial space, banking giants, as well as payment companies such as Wells Fargo, JP Morgan, Circle, Square, and Skrill, witnessed growth after deciding to offer or provide cryptocurrency services. As the blockchain development continues to advance, businesses are closely watching what is unfolding and how they can reposition themselves to tap the benefits of this technology.
With the prospects seen in 2019, the big question is, will blockchain and cryptocurrencies take the leap in 2020 and become operational for not only enterprises but also people and governments?
That being said, over the last three years, the adoption and use of blockchain and cryptocurrency have yet to be regarded as a solution entirely resolved by the emerging technology. Experts have touted blockchain as a solution that is looking for a problem. And the problem probably is, is the technology going to become usable and operational in 2020? Cryptocurrency, a financial derivative of blockchain has been seen to be wearing off. An article at the Verge written by Adrienne Jeffries and titled ‘Blockchain is Meaningless’ explains that the idea of a blockchain has today been used to describe everything. The cryptographically supported digital ledger that forms the foundation for cryptocurrencies like Bitcoin and Ethereum now describes a wide range of things from Walmart’s supply chain database to inter-bank transactions. The term is so widespread that it has almost lost meaning.
Maybe, one reason why blockchain doesn’t seem to have meaning is that it’s not provided a solution to a particular problem. It’s like it’s a solution that is yet to get a problem it can solve in entirety. Although it’s over 10 years since the inception of blockchain, it is still very young when it comes to operability and usage or adoption and solving problems. The use of blockchain has faced many hurdles including scalability, cost, security, speed, interoperability, and the battle for centralization and decentralization seen among the public and private chains.
Some businesses who have clearly defined a way they can benefit from the technology, they have sought a blockchain development company to help come up with a blockchain product that serves to solve the company’s problems.
Despite the challenges this emerging technology is facing, the year 2020 seems to shade some light and it could be a turning point for the market when it comes to using the blockchain. There are signs indicating that companies are seeking for ways the technology can work for them.
Square, a fintech payment company under the leadership of Jack Dorsey developed an interest in cryptocurrency. The company has included Bitcoin in its platform citing it as something that had a promising future. However, while Square may praise Bitcoin, that doesn’t mean that it’s entirely acceptable to all enterprises and individuals. Bitcoin has proven that it can offer a store of value because its price has been moving upward and people don’t want to part with it.
Again, Bitcoin isn’t so good a payment tool since it not processed instantly and it comes with varying transaction fees. In a bid to improve the Bitcoin, Dorsey said that his payment company would work to enhance the usability of Bitcoin for payments by reworking on the speed of the transaction through Lightning Network. The Lightning Network would help in improving the speed at which the Bitcoin transactions are processed- one of the major setbacks that have engulfed the cryptocurrency.
As a Layer 2 payment protocol, Lightning Network operates atop blockchain-based crypto such as Bitcoin. The payment protocol allows fast transactions within nodes involved in the transactions. Lightning Network has been regarded as a solution to the scalability problem seen in Bitcoin. Enhancing the speed of transactions would help the cryptocurrency be more operational. In addition, the users of Square would have an avenue for using the decentralized global network offered by Bitcoin.
But Lightning Network Isn’t Yet a Solution for Bitcoin
Although Lightning Network may promise to improve the transaction speed of Bitcoin transactions, there is more to be done. Lightning Network is young than Bitcoin and is still going through the refinement and development stage before it can become a polished product. Lightning Network may still need more time before it can be applied in Bitcoin to help increase the operational use of the cryptocurrency. Perhaps, another quick-fix solution may be needed if Bitcoin is to be more operational in 2020.
When it comes to using Bitcoin at Point of Sale (PoS) it has happened. Today, Bitcoin can be spent at different places including Wholefoods, Starbucks, and Nordstrom among other retailers. Flexa has also joined the chain of retailers using the cryptocurrency. While these retailers have Bitcoin in their payment options, there is the problem of having the cryptocurrency a spendable asset. There is a need for people to accept and use Bitcoin. Also, merchants need to widely use it. Bitcoin not only needs to be a spendable asset but also needs to be normalized and legitimized so that companies don’t feel like they are ashamed when they use it. Starbuck, Wholefoods, and those other giant retailers using Bitcoin have a problem in admitting what they are doing. They don’t have the confidence to say that the payment system they are using is the right one.
In Venezuela, Burger King Restaurants are accepting Bitcoin. The restaurant chain plans to put into trial the Bitcoin cryptocurrency in Sambil Caracas shopping mall before it is rolled out to some other forty restaurants across the country in 2020. This may be a positive move, however, it is an isolated case or what may be referred to as a digital island. The isolated cases of use of Bitcoin contributes to another problem that is – interoperability.
Connecting the Dots…
Among the big problems that are making blockchain not become globally operational is interoperability. While blockchain solutions are built, piloted, and launched, they are in silos and isolated. This has been seen in private blockchains like Hyperledger developed for IBM that forms part of major companies’ blockchain solutions. Many other companies use Hyperledger, however, but there is lack of a link that connects different blockchains solutions together.
The World Trade Organization (WTO) has pointed out that interoperability is highly needed if the blockchain technology is to progress. WTO has indicated that developing interoperability solutions is important to avert conflicts arising between disparate approaches. It will also help ensure blockchain networks are able to communicate or talk to each other thus fostering full operational use of the technology. The blockchain community knows the challenges ahead when it comes to the interoperability of blockchain solutions and research is going on to help provide technical solutions.
In the past, it would seem impossible for blockchains to interact with each other, however, today, solutions are being which are helping in linking or connecting the different blockchains. For example, Enterprise Ethereum Alliance has been around since 2018 and it offers an open-source cross-platform designed for a standards-based framework within the Ethereum-based permissioned blockchains. Enterprise Ethereum Alliance could allow interoperability between what’s known as permissioned blockchains that are built based on the Ethereum public blockchain.
In order to have a global blockchain system, it means that interoperability has to be achieved. If interoperability is achieved, it would mean many businesses and organizations begin adopting and using blockchain and many blockchain development services would be sought by these businesses and organizations.
Looking at the position we are now and where blockchain in entirety is, it is unlikely that 2020 will see meaningful interoperability of blockchains unless there are bridges constructed across the blockchains. Among the bridging solutions include Syscoin that connects to links to Ethereum – one of the widely used blockchains in the world.
Syscoin has demonstrated the potential of two chains working or operating together by forming an interoperable bridge that connects to Ethereum. Businesses that choose platforms like Syscoin’s Z-DAG also referred to as Zero-Confirmation Directed Acyclic Graph network help in supporting the interoperability development within blockchains. The businesses can see faster transactions while also enjoying the benefit of smart contracts offered by Ethereum.
Let’s take an example, USDT; a stablecoin pinned on the US dollar and managed by Tether has transactions made up of half of Ethereum’s network transactions. Outsourcing this to another blockchain while at the same time maintaining the features would help make both Ethereum and USDT networks more usable. The concerns about interoperability haven’t been cited now. In 2017, the issue was being addressed. Companies like ICON, Wanchain, and Aion announced the formation of the Blockchain Interoperability Alliance, an advocacy group aimed at devising global standards to promote interoperability and connectivity between the different blockchain networks.
Taking the Risk
While you cannot look down on blockchain and cryptocurrency at this time, the cracks may be showing. The potential for blockchain may be there, however, its application is faced with many challenges. Cisco shut down its blockchain division after it realized that it was not going to see the immediate future of the technology after it did its research. The Blockchain ecosystem is a complex one that needs the right approach and further development. It’s a technology that is evolving and its adoption needs a lot of support from different players and stakeholders. The year 2020 may not see full level adoptions as well as operational use of blockchain; however, it may give hints on where next the technology is going and what needs to be addressed further before it can gain global acceptance and usage. Having said that, a blockchain development India company can offer you scalable, cost-effective, and quality blockchain development services for your organization or business thus helping you tap the benefits of the technology and stay ahead in achieving your business goals.