2019 was a big year for blockchain. With the benefit of hindsight, we can observe and note the momentum which blockchain has gained in 2019. As the Investing News Network (INN) puts it in its report titled “The Blockchain Industry and Outlook”, “2019 was a formative year for blockchain”. Let’s recap on some of the milestones of the blockchain industry in 2019. In June 2019, the landscape for stablecoins was fundamentally transformed when social media giant Facebook released the whitepaper for its groundbreaking Project Libra. Four months down the road, the global blockchain industry was injected with a shot of positive vibes when the Chinese President Xi Jinping gave his nod of approval to the technology which prompted the price of Bitcoin to soar by almost 40% in the span of just a few hours following the news. Little wonder therefore why 2019 has been dubbed as the formative year of blockchain.
Following on from its formative year of 2019, blockchain is projected to break the boundaries of its developmental threshold in terms of its general usability and industry adoption in 2020. A lot has been said about the potential of blockchain as the twenty-first century technological wonder. Perhaps 2020 may prove to be the year when blockchain finally comes of age and delivers on its promises. With this in mind, let’s explore the projected developmental path of blockchain in the first chapter of a brand new decade through R3’s 2020 vision of the industry.
In its report titled “Blockchain: 2020 Vision” (hereinafter referred to as “the Report”), enterprise blockchain platform developer R3 predicts that 2020 will be the year when the hard work put in by industry players throughout the course of 2018 and 2019 will come to fruition. In ensuring the realization of the seeds of hard work which have been planted by industry players in the preceding years, the Report highlighted the importance of pragmatic realism whereby blockchain developers and platform operators would strive for simplicity and connectivity in the design of their applications for 2020. With regard to simplicity, the Report pointed out that the business strategy which will be adopted by leading blockchain platforms in 2020 would be to ensure that their applications could be deployed anywhere with the fewest possible clicks with the underlying rationale being to focus on business strategy instead of deployment headaches.
As for connectivity, the key lies in ensuring interoperability for different blockchain applications and frameworks. The Report predicts that although 2020 will see an increase in the creation and movement of digital assets, the demand for cross-chain digital assets will be relatively low in comparison with the demand for other types of interoperability, in particular, those relating to the integration of enterprise-wide information technology (IT) frameworks. Accordingly, the Report projects that blockchain platforms which have taken into account the aspects of business logic and enterprise workflow in coming up with their original designs will be in prime position to capitalize on the demands of the industry in 2020.
From an industry perspective, the Report envisaged the birth of the third wave of consortia i.e. Consortium 3.0 which will learn from the mistakes of past consortiums to come up with a new business model. According to the Report, successful consortia under Consortium 3.0 will be those which operating frameworks warrant clear economic incentives for all participants. Besides that, the standardization of management principles and governance approaches would make it easier for Consortium 3.0 to deliver on its promises in addition to supporting the shift from ideation to production.
On the financial front, the Report predicts that central bank digital currencies (CBDCs) will continue to lead the way in terms of the use of blockchain in this sector. The Report notes that 2019 witnessed an additional 35 central banks from around the world jumping on the CBDC bandwagon which has resulted in there being a total of 50 central banks having taken the deep dive into the CBDC domain. According to the Report, the CBDC projects undertaken by central banks are likely to proceed to the domestic piloting and commercial exploration phase through public-private partnerships in 2020.
Case in point is the successful completion in January this year by the People’s Bank of China (PBoc) which is China’s central bank of the joint testing of the top-layer design for its upcoming CBDC. In line with the progress in the development of CBDCs, the banking and finance industry is set to herald a new wave of decentralized digital identity initiatives as part of governmental efforts to exercise greater regulatory oversight and control over the Know Your Customer (KYC) frameworks of their respective jurisdictions.
In sum, the foundation for the development and coming of age of blockchain in 2020 has already been laid down in 2019. As projected in the Report, 2020 will be the year when blockchain will fulfil its potential and come to the fore as the primary technological driver of economic growth. Given the impending global economic recession due to the Covid-19 pandemic, perhaps blockchain may well prove to be the technological panacea to our economic woes in the months ahead.
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