Blockchain Yesterday, Today, and Tomorrow
By Jennifer M. O’Rourke, Deputy Director, Office of Entrepreneurship, Innovation & Technology, Illinois Department of Commerce and Economic Opportunity
Blockchain has matured quite interestingly. Five years ago, the distributed ledger technology marketplace was almost comprehensively characterized and recognized by Bitcoin as a protocol. Further, it presented very little utility beyond the financial transaction of Bitcoins from one party to another. This was primarily because the space was occupied by a relatively tight-knit community. Today, we see an expansion in terms of protocols as well as use cases. Newer protocols like Ethereum, IOTA, Sovereign HERO, and so on, are addressing slightly different, more nuanced challenges and situations.
For instance, IOTA saw the need for management of high throughput transactions, and speed at which such high volumes can be handled. This poses challenges in immediate settlement, or in blockchain lingo, validation of a block. So they built out a solution that would specifically suit their focus on the advent of IoT applications like the connected car experience, or any other scenario where a multitude of sensors communicate with each other and a central hub. This would serve as an example of a macro trend itself—the maturity of distributed ledger technology to solve specific nuanced challenges.
The Illinois Blockchain Initiative (IBI)
The Illinois Department of Commerce has addressed the exploration and diligence of blockchain technology in a strategic manner. There are three key components to the IBI strategy:
• Governance: The route we take to address this area is by educating ourselves to the maximum extent about the technology itself, should there ever be a market event where people are pushing for regulations or some kind of government commitment to reacting to that event. Even otherwise, it is a matter of making informed choices and wrapping it up in terms of light-touch regulation.
• Ecosystem Development: We recognize that the technology does not thrive in a silo. It’s not going to be successful, simply existing in 1s and 0s on a screen. We need to support all of the market participants that are exploring blockchain and at an academic level, those that are building companies through entrepreneurial incubators. We seek to create connections between those entrepreneurs and the corporate ecosystem.
• Integration and Definition of Functional Utility: As much as we recognize the value that market participants see in cryptocurrency, we seek to unravel the value of the underlying technology itself. Our focus at the IBI is to use blockchain to allow government officials to better, faster, and more securely convey the services that are currently provided. To that end, IBI has a roadmap outlined by five key areas.
Firstly, we will take a look at land registries, and the ability to place them in a distributed ledger. We will take a look at what blockchain means to recording and conveying property titles. Secondly, we shall explore the application of blockchain to expedite the validation process of academic transcripts by prospective employers, in order to efficiently connect the talent pipeline to corporate jobs.
"The blockchain is a quintessential gold standard of record-keeping with multiple participants all agreeing upon the same information"
Creating a Trust Economy
What makes blockchain so valuable is its ability to have multiple participants in a singular transaction, each with the knowledge that the information they are working with is accurate and agreed upon by all other participants in the transaction. It is evident how this scenario is applicable in a record-keeping model. Every business wants to know where they lie in the value chain and establish whether they are dealing with the originator of a product or the distributor. The blockchain is a quintessential gold standard of record-keeping with multiple participants all agreeing upon the same information.
As it relates to transactions between two parties, today we have trusted brokers or intermediaries between the process, making the transaction cumbersome, time-consuming, and unaffordable. Moreover, adding a third party into the mix means that the transaction is not as fluid and simple as it should be. The idea of creating a trust economy is essentially how we can leverage blockchain today to be that intermediary. Instead of having a whole other business that you have to spend time and pay potentially large fees to interact with, what if you can leverage technology to play that role of the middleman, transmit information, and allow you to access that information in a secure and transparent manner? Within this idea lies the beauty of blockchain as a distributed ledger technology.
An Opportune Future for Blockchain
We will be seeing a variety of different protocols, chains, and ledgers take different places in addressing needs in different markets. We can also expect a shifting focus toward interoperability, connecting one blockchain to another. Blockchain provides a gold standard for record-keeping and secure transmission. Those transmissions will need to eventually move between one another and between different blockchains depending on the evolving needs.
Apart from these expectations, it would be difficult to predict where the market is headed, since it is moving at such a high sprint. Even today, the adoption has been all-pervasive; almost every organization has begun exploring blockchain, even if it is in small scale or in a discrete way. The genie is out of the bottle, and blockchain is here to stay. Every organization must familiarize itself with the underlying technology, what it can and cannot do for the business, and what it does and does not mean in terms of value. Take the small steps, one at a time. Begin with research and diligence, and move to exploration or small-scale POCs to build out models pertaining to the organization. It is pertinent to start, and start right now. If you haven’t, you’re already behind the curve.