5 Essential Predictions for Blockchain Trends in 2018

The potential for blockchain technology to bring widespread change has been predicted since 2011, with the advent of Bitcoin, but this year the concept really began to gain traction.

Perhaps due to the meteoric rise in the price of Bitcoin (which is the first real example of blockchain technology), hype is spreading around encrypted distributed ledgers in the financial sector.

Blockchain-funded startups raised $240 million in venture capital in the first half of this year. However, its potential has begun to be recognized in other sectors and industries. 2018 is likely to see a continuation of this trend of innovation and disruption. Here are five key ways that could happen.

1. More uses beyond finance

While the impact on the financial sector seems most obvious, any industry or organization that needs to record and oversee transactions could benefit. In healthcare, IDC Health Insights predicts that 20% of organizations will move beyond pilot projects and implement blockchain by 2020, so 2018 will see significant progress in this direction.

Recruitment and HR departments have developed blockchain resumes to streamline the selection process by verifying a candidate’s qualifications and relevant experience.

Legal work that involves tracking transfers of ownership — such as intellectual property law, or real estate deeds — will also be made more efficient by implementing distributed ledgers. In the next year, we should expect to see innovators in the legal field make this a reality.

Meanwhile, in the manufacturing and industrial sector, the Blockchain Research Institute, which includes IBM, PepsiCo and FedEx, said it expects blockchain to become the "second generation" of the digital revolution after the development of the internet. It highlighted the work of electronics manufacturer Foxconn in using blockchain to track supply chain transactions.

2. Blockchain meets IoT

While this may sound like a clash of buzzwords, we are thinking seriously about how these technologies can work together to improve business processes and everyday life.

Security is one reason they are suitable - blockchain's encryption and untraceability make it a viable option for keeping the growing number of connected devices in homes and offices connected. Research envisions that the blockchain computing power used to "mine" bitcoin could be used to protect our smart homes from a new generation of cyber thieves looking to break in and steal our data.

Another suggested use is that cryptocurrencies built on blockchains would be ideal for automated micro-transactions between machines. In addition to recording machine activity for logging and analysis on the machine, machines could “pay” each other when smart machines run by one institution interact and transact with other machines. This is likely still to come, but we will likely see research and breakthroughs in this area in 2018.

3. Smart contracts will form themselves

“Smart contracts” are another possibility brought about by blockchain – the idea is that a contract will automatically execute when the conditions are met, which means payment or shipment, or anything else in business that is usually defined by a contract.

Blockchain makes smart contracts possible due to its consensus-driven nature. Once the conditions are agreed upon, the contract is filled. This could mean paying a bounty when a target is attacked, or sending an order after a payment hits your account.

Insurance company AIG is piloting a blockchain smart contract system to oversee the creation of complex insurance policies that require international cooperation, and we expect more steps to follow next year.

4. State-sanctioned cryptocurrency?

Putin was the first – recently announcing the “cryptoruble” – but it’s inevitable that politicians will start considering the advantages of blockchain-derived currencies at some point. After Bitcoin, it often seems that nation states have shown a lack of enthusiasm for this particular application, and perhaps with good reason. Bitcoin was, after all, envisioned as a way to create a tradable currency that governments couldn’t manipulate. Some, like China, have been downright hostile – refusing to allow exchanges to operate within its borders and issuing warnings about the high risks of investing in cryptocurrencies. 2018 could be the year governments finally get on board with blockchain, as its potential to make financial and public services more efficient becomes more apparent.

5. A large number of blockchain initiatives will fail

Blockchain undoubtedly has revolutionary potential. However, like anything revolutionary there are dangers – in this case, primarily, rushing to achieve something without clear expectations can waste time.

With any hyped technology (and blockchain is certainly hyped) there is a danger that the compulsion to avoid missing out can prompt too hasty or poorly conceived actions. The important thing to remember is that, like AI and Big Data, this is something that will change the world forever, but it will likely be a gradual process. There is no doubt that every aspect of business is being continually impacted and transformed by technology, but there will always be false starts and failures along the way.

Those who avoid this fate will be those who clearly understand what they are trying to achieve, and the strategies to employ to get there.