Blockchain technology has the potential to make many different things more secure and accountable, such as financial transactions, micropayments, IoT applications, health records, corporate audits and many others, observes David Schatsky and Craig Muraskin in an article recently published on Deloitte University Press, title “Beyond Bitcoin: Blockchain is coming to disrupt your industry”.
They write that the technology is young and changing very rapidly – is widespread, but commercialization is still some time off. Nonetheless, they add, to avoid disruptive surprises or missed opportunities, strategists, planners, and decision makers across industries and business functions should pay heed now and begin to investigate applications of the technology.
The signals are here.
- A billion dollars in venture capital has flowed to more than 120 blockchain-related startups, with half that amount invested in the last 12 months.1
- Thirty of the world’s largest banks have joined a consortium to design and build blockchain solutions.2
- Nasdaq is piloting a blockchain-powered private market exchange.3
- Microsoft has launched cloud-based blockchain-as-a-service.4
- Blockchain concepts, prototypes, and investments are emerging in every major industry.
Venture investors, including corporations’ venture arms, have invested a billion dollars in more than 120 blockchain-related startup companies so far, about half of this investment in the last year alone. Most of the startups are based in the United States, but blockchain-related ventures are operating on every continent but Antarctica. Some large companies such as Amazon, Bank of America, IBM, and MasterCard are staking a claim to the blockchain opportunity by filing their own patents related to blockchain.
The vendor ecosystem can be segmented into three broad categories:
- Applications and solutions: This segment includes operators of bitcoin wallets and payment providers. Examples include Circle and Coinbase (wallets), Ribbit.me (loyalty points), ShoCard (identity), and Ripple (cross-currency bank-to-bank payments). This segment has attracted nearly $600 million in venture capital funding to date.37
- Middleware and services: Companies in this segment provide software platforms on which enterprises can build blockchain applications; examples of companies in this segment are BlockCypher, Chain Inc., Colu, and Factom. Venture funders have placed about $80 million with this segment.
- Infrastructure and protocols: This segment looks to use blockchain technology to develop cryptographically secure, distributed consensus mechanisms. Ethereum, a crowdfunded, open-source project, has emerged as an alternative to the bitcoin blockchain. Ripple, mentioned above as a solutions company, also offers its own distributed ledger technology. This segment has taken in just under $300 million in venture funding, two-thirds of that in 2015. In contrast to the other segments, 2015 investment in infrastructure and protocols is up sharply compared to 2014.
Blockchain is an extraordinarily fast-moving phenomenon.40 While it is impossible to know with certainty how this technology will be adopted across industries, the current areas of interest outlined above give a good indication of where innovation is likely to emerge in the near future. The innovation group at Deloitte LLP will continue to track the emergence of new use cases and adoption by major companies and innovative upstarts.
Where else can we look to sense the direction of blockchain? Venture capital investment is one type of signal, and recent patterns indicate shifting focus in the blockchain ecosystem. As noted above, the focus for investment has moved from currency applications (example: payment processing) in 2014 to non-currency applications (example: smart contracts, securities settlement) by the end of Q3 2015.
Read paper in full here.
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