Blockchain is undoubtedly one of the biggest inventions of the 21st century. More than just a buzzword, this technology has proven to be of practical significance with custom blockchain development taking center stage across various industries.
This distributed ledger technology has the potential to change how we store data, record transactions, build and manage applications. Currently, it is mostly famous as the underlying infrastructure behind the cryptocurrencies like Bitcoin. However, its potential future applications extend far beyond digital currencies.
In this post, we’ll explore some future applications to see why blockchain is the future and how this technology will be used in the future across different industries.
- The concepts and technologies that laid the foundation for the blockchain have been around for a few decades prior to its launch in 2008.
- Blockchain’s initial popularity was due to its use to facilitate cryptocurrency transactions, but its use today extends far beyond this.
- The potential future scope of blockchain technology includes supply chain management, cloud storage, cybersecurity, and smart contracts.
To Predict the Future You Have to Know the Past
Like many advanced technologies today, blockchain technology didn’t begin with a big bang. Instead, it is a culmination of bits and pieces of technology that gradually took shape over the course of several decades. While many associate the birth of blockchain with the launch of Bitcoin in 2008, the concepts that laid the foundation of this technology have been around for many years.
The first pre-blockchain technology that provides a slight hint remotely similar to what we know today as blockchain is the Merkle tree. Ralph Merkle described this approach to digital signatures and public key distribution in a thesis in 1979. This is one of several independently developed technological concepts that provide a glimpse into what could be.
Other notable examples include:
- David Chaum and his digital cash system,
- Stuart Haber’s block-based timestamping technology,
- Cynthia Dwork and Moni Naor’s Proof of Work concept and
- Stefan Konst’s concept of cryptographically secured chains, which is the basis of blockchain models today.
These technologies dotted the tech landscape in the years that preceded the launch of blockchain itself. A close look at each of them reveals their similarities to the blockchain as we know it and their role in determining the future of the blockchain network.
Blockchain itself came to life in 2008 when Satoshi Nakamoto (the pseudonym for an unknown individual or group of individuals) published a white paper explaining the concept of a secure infrastructure that could support P2P financial transactions between individuals without the need for banks, governments or any other third party. This introduced the concept of cryptocurrency, particularly Bitcoin and its supporting blockchain infrastructure in 2009.
While the future of blockchain technology looks promising today, the early days of cryptocurrency weren’t all that glamorous. In 2009, one Bitcoin was worth less than a penny (programmer Laszlo Hanyecz is said to have paid 10,000 Bitcoin for two Papa John’s pizzas worth $40 in 2010). When Nakamoto released Bitcoin v0.1 on the SourceForge web service, only a few developers were interested in it.
Blockchain continued to grow steadily in its early years as cryptocurrency became more popular. This reached its peak in 2014 when Blockchain 2.0 was launched and developers started shifting focus from its use in powering digital money to the development of blockchain technologies and decentralized application platforms.
The Ethereum Frontier Network was launched in 2015 which allowed developers to create smart contracts that could be deployed to live blockchain networks. A similar Hyperledger project was launched the same year as well. These technologies opened the door to new potential applications of blockchain technology especially in the development of decentralized apps for various industries.
Although Bitcoin and other cryptocurrencies have remained in the spotlight, financial institutions and other organizations across various industries have grown to realize the need to explore the potential of blockchain technology.
Future Applications of Blockchain Technology
Blockchain is a disruptive technology with huge future potential. This is clearly demonstrated in how the technology has already facilitated direct peer-to-peer transactions worth trillions of dollars via digital currencies while eliminating middlemen and reducing transaction times.
The potential for transactions like this is only going to grow in the future. While cryptocurrency remains the biggest application of blockchain technology, there are several areas where this new technology is set to boom in the near and distant future. Some of the probable uses of blockchain in the future include:
Supply Chain Management
Logistics or supply chain management is a complex ecosystem with multiple participants. For instance, to get fresh produce to the final consumer, the products have to go from the farmer through the processor, distributor, and retailer. Managing such a complex system with traditional paper-based systems can lead to bottlenecks. It is best managed by a technology that ensures transparency and greater ease of communication between all participating individuals.
Since blockchain data is always available on a secure public ledger visible to all the supply chain partners, it provides greater transparency and easy validation of transactions. Partners within the supply chain will also work together more seamlessly with greater trust since the data they now share is always accurate and up to date.
Secure Cloud Storage
Blockchain technology is currently one of the most secure ways to manage data and verify identity. It is characterized by an advanced system that stores data in blocks with each block of data linked to the one before it. Each data block has a unique signature that cannot be changed or modified once written. This provides a greater sense of security and integrity.
Blockchain data is also stored in a decentralized manner. Unlike conventional storage solutions where data is stored on a centralized server, blockchain stores a copy of the database on multiple nodes spread across thousands of computers in multiple locations. This makes it difficult to break into, delete, or modify all the data on a blockchain network. The distributed nature of this cloud ledger also promotes access, which makes it perfect for use cases where you need to maintain free access while ensuring data security.
Smart Contracts
In the early days of blockchain technology, most people who interacted with the technology did so because it provided a way to trade cryptocurrencies. While cryptocurrency was the driving force for blockchain in its early years, it’s still a long way from mainstream acceptance. If blockchain technology is ever fully adopted by everyone, it’ll likely be due to smart contracts and the decentralized apps you can build with them.
This remains one of the most revolutionary aspects of blockchain technology. As the name suggests, a smart contract is a self-executing contract programmed into a blockchain, designed to execute when specific conditions are met.
This technology can potentially eliminate middlemen and centralized control in many business applications. For example, if a mortgage agreement is written as a smart contract on the blockchain, it can be programmed to automatically trigger funds and ownership to the parties involved in the agreement when all the conditions are met.
Today, hundreds of blockchain apps have been built based on this mechanism and many more are in the works. Decentralized apps are not only faster, but they’re also free from human control, censorship, and errors, which makes them perfect for automating a wide range of processes.
Cybersecurity
Cybersecurity is clearly one of the most promising future applications of blockchain technology. By encrypting data cryptographically, you can prevent tampering and ensure that only verified users have access. Blockchain also records transactions in an immutable way, which makes it easier to verify the authenticity of files.
The decentralized nature of blockchain makes it particularly ideal for organizations in need of highly secure technology to secure their system. With blockchain, all information stored on the network is verified before being encrypted with a cryptographic algorithm. A copy of this data is then stored on multiple nodes. With no single point of entry, executing a large-scale attack to change or alter the blockchain system will be difficult. When such attacks do occur, it’s easier to recognize and eliminate threats on peer-to-peer connections.
Asset Tokenization
Just recently, non-fungible tokens, or NFTs became all the rage in the blockchain universe. It introduced a new era of asset tokenization that may very well become popular in the future. NFTs allowed people to own exclusive rights to art and other digital assets.
Since the technology prevents double data entry, incorporating a cryptographic signature into a piece of digital art and storing it on the blockchain ensures that only one genuine copy of such an art piece exists. It gives each art piece immense value and also makes it easier to transfer and verify ownership when needed.
Currently, digital art is the most popular form of NFTs. However, this technology can have varied applications in the future. One such rapidly growing area is in metaverse game development and blockchain game development where game characters, themes, and other in-game assets are stored as NFTs. This makes them easily transferable and gives them real-world value.
Beyond game avatars and other digital assets, many real-world assets can also be stored or managed as NFTs. This includes property deeds, event tickets, and so on. Pretty much anything unique can be stored as NFTs, opening the door to various potential future applications of this impressive technology.
Blockchain Predictions in Various Industries
Although it is still very much in its infancy, blockchain has the potential to cause a seismic shift across a wide range of sectors. Here are some ways this technology will be applied and its potential use cases across various sectors.
Finance
The finance industry is still the biggest winner in the blockchain race. When the original concept of the blockchain was unveiled, it was heavily focused on facilitating decentralized money transfers via cryptocurrencies. This made financial transactions cheaper and faster especially across borders.
Today, several traditional financial industry players including banks, lenders, and financial exchanges have begun the integration of blockchain platforms and embraced cryptocurrency based transactions because of their speed, security, and greater transparency. In the future, we’re likely to see even greater adoption of blockchain technology in building more secure and transparent financial systems.
Healthcare
Managing people’s health data is a delicate task that involves maintaining a balance between granting access to authorized individuals and keeping private information secure. The unique nature of blockchain allows it to solve this two-pronged problem better than traditional database solutions.
Blockchain eliminates the need for a central server for managing medical records, enabling rapid access to data by key stakeholders in the healthcare delivery process. At the same time, such data is kept secure, especially in closed blockchain systems with permissioned access. Blockchain technology can also be used to manage supply chains for medicines and other medical supplies to confirm their authenticity and ensure efficient delivery systems.
Insurance
The insurance industry as we currently know it has a reputation of being shady and difficult to understand. Using blockchain to handle insurance transactions will boost transparency in the insurance process.
Instead of bogus paperwork, blockchain introduces a transparent system where claims and other vital documentation are recorded securely. Also, the use of smart contracts to manage insurance processes can speed things up and ensure fairness.
Entertainment
In recent years, we have seen the growing use of blockchain technology to manage rights to digital art, music, and video files being distributed over the internet. As this continues to grow, digital rights management in the entertainment industry is set to see significant changes. By ensuring only one true copy of a digital file exists, blockchain prevents piracy, ensuring only the digital rights holder gets paid for their works. Future blockchain-based streaming services will also incorporate smart contracts into their platform to automatically distribute payments to creators.
Challenges for Blockchain Technology
- Scalability: It requires a lot of energy and resources to manage blockchain systems as they grow and scale.
- Regulation: There’s still a lot of uncertainty about how governments will regulate blockchain technology, slowing down adoption.
- Complexity: Blockchain technology can be complex and difficult to understand. Executing and managing blockchain systems require the services of skilled professionals.
- Energy consumption: Some blockchain systems, like Bitcoin, use a lot of energy to maintain their networks.
- Security: The potential monetary benefits of blockchain systems make them an attractive target for hackers and malicious actors.
Opportunities for Blockchain Technology
- Security and transparency: One of blockchain’s core features is secure and transparent data storage which can be valuable across many industries.
- Decentralization: By eliminating the need for third parties and central authority, blockchain minimizes censorship and control, promoting true freedom for users. This is one of the key factors that will drive future uses of blockchain technology.
- New business models: Blockchain can enable the creation of potentially lucrative and innovative business models.
- Efficiency: Blockchain could potentially lower expenses and boost productivity across various real-life processes.
Conclusion
If there’s anything we can learn from blockchain’s past and present, it’s that it’ll have far-reaching impacts across various industries in the future. As blockchain technology continues to grow, investing in blockchain knowledge and learning key concepts like how to create a blockchain network for your organization will be a valuable investment in your future.
