Jan 24, 2018 | 5 min read

2018: The Year of Blockchain

Alexander Kulitski, CEO at Smart IT

It looks like the globe is on fire trading crypto, but is digital currency the only use case for distributed ledger technology?

In this article we find out what blockchain is and the reasons it became mainstream, as well as the heights it can reach in 2018.

Blockchain for dummies

Distributed ledger technology (DLT) is a pool of peer-to-peer transactions with no authority at its core controlling and monitoring the ecosystem.

Similar to editing a Google document, where two people see the immediate results as either makes edits, DLT provides real-time updates. Also, unlike banks, the participant is not limited to viewing account balances within a short time range, as these are always at hand. Essentially, a shared ledger with equal access for everybody is the idea behind blockchain.

The Pledge of DLT: will it deliver on its promise?

The giant potential of blockchain is mainly seen in pushing out the middleman from monetary transactions that would from now on happen without oversight from any watchdog.

Subject matter experts say that Bitcoin and Ethereum were just tiny baby steps blockchain made to enter the global market, before its grand debut. Before Satoshi Nakamoto came up with his white paper,where he explained nuts and bolts of his idea of a decentralized digital cash system, no one had introduced the concept of a decentralized ecosystem. But with it came the question – what further scenarios will this powerful instrument unfold?

Increased regulatory pressure

While the crypto junkies arena is likely to remain in Eastern Europe, where regulation favors the advent of DLT, in far away Seoul, the government has put concerns on paper introducing rules into digital currency trade. In China, the legal status of crypto remains blurred. EU is on alert too with its amendment of the European Union’s rules. The situation with crypto-related legislation is similar in the US, where the U.S. Department of the Treasury is inspecting unlawful uses of Bitcoin. How strict these rules will get worldwide in the near future is uncertain.

Transformation of Initial Coin Offerings

Since there were too many fraudulent ICOs in 2017, Coindesk predicts a tough life for this funding category. Regulators are considering coming  after trailblazer business that attempted to raise capital through ICOs without legitimate operations and with ambiguous business practices.

Although short-term speculative profits were the reason behind many acquisitions, in 2018 there are likely to be new horizons for ICOs to raise equity for startups and innovate. Security tokens might be on top of charts since they’ll reflect financial assets, such as stocks, bonds, and futures contracts.

Internet of Things pair up

Forbes contributor is sure that when the worlds of blockchain and IoT unite, the security between interconnected machines both as part of our homes and on an enterprise level will strengthen. Blockchain could become the ideal approach for automated micro-transactions between machines. This application case of distributed ledger technology implies recording machine performance for further analysis so that the nodes effectively “pay” one another when belonging to different organizations.

Public records access

Blockchain guarantees a permanent record of transactions. Such an arrangement creates access to public records and secures against cyber attacks because the information is shared across a large network of computers and is updated in real time. Due to such security, governments are considering using blockchain as a means of putting public records on virtual ledgers, which have proven to be more reliable than centralized databases. For example, Dubai and Estonian authorities pioneering the use of blockchain for their citizens to access medical records, thus disrupting the healthcare industry.

Cash-free future

The talk about a cashless society has been going on for some time, but only now it starting to feel like a real thing. Better security, eliminating the necessity of banks, instant payments and lower costs are only a few known benefits blockchain can offer when fully integrated with the financial system. In Sweden, for example, 80% of purchases are made without using fiat currencies. APAC is said to follow suit soon. For instance, during last year’s demonetization in India people were massively using digital wallets to pay for goods and services without using actual paper rupees. A cashless economy in India seems very promising and this is just the beginning of a global shift to cash-free life.

Only time will dot the i-s and cross the t-s, showing us the true potential of blockchain and the chances for the transformation of the world we know today.

24 January 2018

WRITTEN BY

Alexander Kulitski , CEO at Smart IT

Alex is Founder and CEO of Smart IT and is the co-founder and executive CTO at MEDvidi. Being a serial entrepreneur, he is a keen investor in technology startups and runs several successful side projects besides Smart IT and MEDvidi. akulitski@smart-it.io

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