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For IT pros, adding blockchain skills can pad your paycheck – by a lot

Extra pay for tech professionals who’ve attained non-certified skills is nearing a 19-year high, adding an average of 9.4% to their salary. But if you really want to pad your paycheck, blockchain skills may be the way to go, according to a new report from from Foote Partners.

The market value for IT workers with blockchain skills increased by 6.3% in the six months through Oct. 1, 2019 and a whopping 13.3% for the full year – “well above average,” according to the Foote Partners research.

“So, companies are willing to pay a premium above salary – cash money – for Ethereum skills and a market basket of other blockchain skills,” Chief Analyst David Foote said.

The “market value” increase, Foote explained, is different from additional pay offered for blockchain skills. For example, the average pay premium for blockchain skills is actually 17% above base salary, Foote said. So, if a tech employee is earning $100,000 a year, and they can offer their company blockchain development, management or engineering skills, they would, on average, see an additional $17,000 per year.

At a high level, blockchain technology is a way of securely managing access and information on an open, distributed electronic ledger. What makes the distributed ledger technology (DLT) so interesting to businesses and some governments is how it is positioned to improve an almost endless array of transactional activities, according to the report.

Blockchain jobs skills pay Foote Partners

Because it’s in high demand, skills shortages will continue for blockchain developers – especially for the architects, project managers, and quality engineers who can design, build, and test blockchain operating models, according to the report.

Understanding how blockchain integrates with artificial intelligence, machine learning, robotics, and IoT is seen largely as a plus for technologists at the moment. But it will be a requirement in the future as these other technologies mature and adoption rates increase.

Salaries for blockchain developer or “engineer” positions are high, with median salaries in the U.S. hovering around $130,000 a year; that compares to general software developers, whose annual median pay is $105,000, according to Matt Sigelman, CEO of job data analytics firm Burning Glass Technologies.

People with experience with specific blockchain iterations such as Solidity and Hyperledger Composer are in even higher demand – and that demand is increasing steadily, said Eric Piscini, a principal in the technology and banking practices at Deloitte Consulting LLP.

Universities are some of the best places to learn blockchain skills, though there are online courses available from vendors as well.

According to a new Gartner research note, 75% of IoT technology adopters in the U.S. have already adopted blockchain or are planning to adopt it by the end of 2020. That indicates the integration of IoT and blockchain is a sweet spot and accelerating at a faster rate than expected, according to Avivah Litan, a Gartner vice president of research.

IoT sensors can be “oracles” or data input devices to blockchain ledgers, enabling the automated management and recording of data from smart buildings, infrastructure and even healthcare devices. Additionally, IoT sensors combined with blockchain can track and trace cargo location in real time as well as the temperature of and vibration to products being shipped, such as food or pharmaceuticals.

Overall, extra pay awarded by employers to tech professionals for 573 non-certified tech skills – also known as cash pay premiums – increased only slightly in the third calendar quarter of 2019, according to Foote Partners.

Foote’s report follows research from other organizations and job search sites showing blockchain careers are so hot that companies cannot find enough applicants to fill positions. Last year, the position of “blockchain developer” hit the No. 1 spot on LinkedIn. This year, blockchain jobs remained in high demand.

In particular, non-certified skills related to rolling out and administering the Ethereum business blockchain platform are in particularly high demand, according to Foote.

“It’s not like security skills or even AI where skills are needed in every marketplace,” Foote said. “We’re pointing out if [you] want to look under the covers, there are five or six industries driving it. So, it’s not pervasive, but [companies] investing in it are going after it aggressively. If your customers are measuring you up against other vendors and security is important to them, they’re probably going to go in the direction of blockchain at some point.”

Financial services, supply chain tracking, healthcare, government, trust and identity management are among the hottest markets for DLT.

By 2021, at least 25% of the Global 2000 enterprises will use blockchain services as a foundation for digital trust at scale, according to IDC. Large vendors such as IBM, Microsoft, Hewlett Packard Enterprise, Amazon Web Services, Baidu and SAP have made sizable investments and begun rolling out blockchain-as-a-service solutions for partners.

“Aside from North America, we see big blockchain technology investments in the Middle East, Asia, and in Europe where blockchain centers in Berlin, Zurich, Singapore, London, and South Korea are creating buzz,” the Foote report said. “There are hundreds of DLT (distributed ledger technology) start-ups around the world, employing thousands.”

David Foote compared blockchain adoption to that of DevOps, where “everyone knew it was a no brainer it would eventually take off,” but it took a long time to be pervasive because enterprises must retool their architectures to make use of it.

“I can remember as an analyst going to my clients and saying, ‘I can’t believe you’re not doing DevOps,’ and them telling me their environment was not built to handle that yet,” Foote said. “Maybe that’s what’s going to happen with blockchain. It is a fairly major change to the way businesses do things today, but there are certainly advantages to it.”

Blockchain’s greatest attribute is its ability to create a single, immutable version of data (some call it a single version of truth) that can be shared among entities in real time. Because it a peer-to-peer technology, all that’s needed to run it is a bit of software downloaded to a local computer; once authorized, that computer then becomes part of the blockchain network. In enterprise blockchain technology, such as the Linux Foundation’s Hyperledger platform, one business can govern a blockchain network, controlling what business partners are authorized not only to join but what data they can see.

Distributed applications (dApps), such as smart contracts, cryptocurrencies and digital wallets, can also be added on top of blockchain to make it more automated, useful and user friendly.

“Smart contracts help you exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the services of a middleman,” the Foote report said. “They’re the product of the decentralized ledger systems that run the blockchain, and so skills in smart contracts are be catapulted along with Ethereum and others for an almost unlimited number of uses ranging from financial derivatives to insurance premiums, breach contracts, property law, credit enforcement, financial services, legal processes and crowdfunding agreements.”

Copyright © 2019 IDG Communications, Inc.

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HSBC’s plan to move $20B in assets to blockchain could be a watershed moment

Investment bank HSBC Holdings is using a blockchain distributed ledger technology (DLT) to digitize transaction records of private investments, enabling clients globally to access the details of their assets online in near real-time.

The London-based company, the seventh largest bank in the world, plans to move $20 billion in assets that include equity, debt and real estate onto its new Digital Vault blockchain, a shift away from its current use of paper records to respond to client search requests.

“The Digital Vault is live in Asia and will be rolled out in the U.S. and Europe in the first quarter of 2020,” an HSBC spokesperson said via email.

By getting investors to interact with this data on the blockchain through decentralized applications (dApps) supported by friendly user interfaces, HSBC is helping build the on-ramps and infrastructure needed to take blockchain DLT mainstream, according to Avivah Litan, a Gartner vice president of research.

“Presumably, millions of potential investors and users will be on-ramped to blockchain interfaces and they likely won’t even be aware of the backend technology,” Litan said.

Digital Vault, developed by HSBC’s Securities Services unit (HSS), is expected to eventually handle the custody of additional digital asset classes, enabling the bank to move more of the asset transaction lifecycle onto the ledger in the future.

HSBC is hardly going into the blockchain project blind. The bank has been involved with enterprise DLT firm R3 since at least 2015, so it has had time to research and test various blockchain ideas, according to Michela Menting, digital security & blockchain research director at ABI Research.

R3, which began as a financial services consortium and is now governed by more than 70 partner firms, created the Corda open-source DLT platform. R3 claims Corda is not a blockchain platform because it lacks a consensus algorithm that allows participants to validate ledger entries. Like blockchain, Corda is a permissioned or private DLT platform that also enables the creation of dApps for various financial services uses; Corda uses the Java programming language for its dApps.

The use of Blockchain DLT will likely not only speed up HSBC’s processes significantly and cut costs related to “middlemen” who engage in the time-consuming process of paper records research, but it will also boost interest and engagement by the bank’s clients in securities trading, Menting said.

“This is important for a bank that wants to transform into a more nimble and flexible organization, especially with the increased competition from FinTechs,” Menting said.

Stephen Bayly, HSBC’s CIO for Securities Services, said the bank is responding to clients who have been requesting real-time visibility into their private transactions so they know when they will receive the coupon on a private debt transaction or to facilitate a records audit.

“Private assets are prime candidates for digitization and we see this platform as a key step on the journey as the model evolves,” Bayly said in a statement. “We are preparing for the future, in which the full transaction lifecycle could be stored on a ledger, including issuing digital tokens instead of paper certificates.”

This year has seen several high profile projects using blockchain to convert assets into digital tokens, which can then be more easily purchased or traded domestically or across international borders. KPMG recently pointed to a wave of start-ups and established financial services firms, such as Fidelity Investments, launching various crypto products and services for the emerging tokenized economy. The firm suggested that a tokenized economy will likely be one of the more significant innovations enabled by cryptoassets like bitcoin, Litecoin and Ether.

Last month, JP Morgan, IBM, Intel and Microsoft created a consortium to jointly develop a blockchain-based token specification that would enable regulatory-compliant digital currency.

HSBC’s deployment of a blockchain digital custody platform is significant for several reasons, including the amount of assets being entrusted to the electronic ledger, as it joins a quickly growing trend in the financial investment market, according Litan.

“Blockchain DLT provides a shared single version of the truth based on immutable data and audit trails, critical qualities in shared financial recordkeeping. This implementation should also prove that the technology can scale to support global bank performance and data confidentiality requirements,” Litan said.

Even as HSBC and other financial firms are increasing their use of blockchain, Boston-based State Street Bank reportedly slashed more than 100 blockchain-related developer positions in a move away from the technology.

State Street is by no means abandoning blockchain, but it is curtailing in-house development of the technology based on the Hyperledger open source platform. It  now plans to focus more on creating digital assets such as tokenized stocks and bonds through cryptocurrencies, “rather than the heavy lifting work of re-plumbing front to back office with distributed ledger technology (DLT),” blockchain industry publication CoinDesk reported.

Blockchain is not middleware meant to tie into existing legacy systems, but there are methods for automating the flow of data from ERP systems to blockchain networks. Those ERP systems or databases that contain corporate data are known as “oracles.” The flow of data between oracles and blockchain ledgers is automated by smart contracts, a business automation software that runs on top of the distributed ledger.

To create its own blockchain digital ledger, HSBC must have done a lot of “heavy lifting,” given the technology and its supporting middleware components that connect to legacy systems, are still “relatively immature,” Litan said.

Copyright © 2019 IDG Communications, Inc.

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How blockchain will kill fake news (and four other predictions for 2020)

As blockchain’s hype cycle continues to befuddle many about its potential beyond  cryptocurrencies, businesses and governments are moving ahead with projects involving everything from digital identities to voting and supply chain tracking.

Blockchain has slipped into the “Trough of Disillusionment” (see Gartner Hype Cycle), because it got ahead of its technical and operational maturity. As a result, interest has waned as most experiments and implementations failed to provide expected results.

In most cases, the distributed ledger technology (DLT) has not lived up to expectations that it would drive new societal and business models. And with exception of a few shipping-related projects, most enterprise efforts remain stuck in experimentation mode.

The technology, however, is far from a failure; its promise to deliver a single version of data truth over a secure, distributed and immutable ledger remains compelling and as it matures, many see it becoming a ubiquitous platform for financial services, ecommerce and other markets.

By 2023, blockchain is expected to climb out of the hype cycle. And over the next five years industry experts and analysts agree it will expand into a number of pragmatic use cases in payment processing, data sharing, equity trading and contract/document keeping and tracking.

Defeating fake news

One of the more unique future uses for blockhain may be thwarting fake news, according to a recent report from Gartner.

By 2023, up to 30% of world news and video content will be authenticated as real by blockchain ledgers, countering “Deep Fake technology,” according to Avivah Litan, a Gartner vice president of research and co-author of the “Predicts 2020: Blockchain Technology” report.

Fueled by social media news feeds such as Facebook and Google News, fake news is increasingly used by hostile governments to manipulate elections.

Articles and other content based on false information often attracts more viewers than factual news – a benefit to advertisers and ratings, but a problem for public discourse. For example, the top 20 fake news stories about the 2016 U.S. presidential election received more engagement on Facebook than the top 20 election stories from 19 major media outlets, according to one study.

Websites that spread fake news using bot-controlled accounts are usually hosted anonymously, making it extremely difficult to prosecute the perpetraitors.

“AI models that support text writing and video production can be used to rapidly disseminate customized and highly believable fake content that serves as the new breed of cyber weapons,” Litan said in the study. “Tracking assets and proving provenance are two key successful use cases for permissioned blockchain and can be readily applied to tracking the provenance of news content.”

In August, the U.S. Defense Advanced Research Projects Agency (DARPA) began developing software that can discover fake news hidden among more than 500,000 stories, photos, video and audio clips. And in September, Facebook formed an industry group to develop deep fake video detection tools. Facebook’s Partnership on AI includes Microsoft Amazon, Google, DeepMind, and IBM, as well as academics from Oxford, MIT, Cornell Tech, UC Berkeley and other schools.

If successful, the efforts by DARPA, Facebook and others will “blacklist” fake content to block it from reaching target victims and create an algorithm that authenticates and tracks content movement to “whitelists,” ensuring its provenance.

“Blockchain technology is proven to excel at supporting this use case as it enables a ‘shared single version of truth’ across multiple entities based on immutable data and audit trails,” Litan wrote.

The New York Times is one of the first major news publications to test blockchain to authenticate news photographs and video content, according to Gartner. The newspaper’s Research and Development team and IBM have partnered on the News Provenance Project, which uses Hyperledger Fabric’s permissioned blockchain to store “contextual metadata.” That metadata includes when and where a photo or video was shot, who took it and how and when it was edited and published.

Blockchain, the newspaper explained, will act as a “database that is not housed on one set of servers owned and operated by one entity, but by many entities and servers that are kept updated simultaneously” making the records of each change traceable.

“Files are not so much changed as built upon,” former Times editor and independent consultant Sasha Koren said in a blog.

Blockchain for digital securities exchanges

For the same reason cross-border financial transactions are simpler and cheaper than traditional methods run by central banks, digital securities traded across blockchain ledgers are also likely to become popular in the near future.

“So far, the primary use case is money, led by Bitcoin,” said Bruce Fenton, founder and managing director of Atlantic Financial and a board member of the Bitcoin Foundation.

Today, securities settlement is performed by central, private organizations such as Depository Trust and Clearance Corp. (DTCC) in the U.S. and Euroclear in the European Union. The process of moving stocks and bonds between buyers and sellers can take as long as three days, but delays aren’t uncommon and the actual transfer among financial services firms can take 10 days or more, according to Fenton.

“The challenge with securities now is you need a trusted third party to say what’s true,” Fenton said. “It’s not your broker. It’s not Merrill Lynch or Fidelity and it’s not the issuer either; Apple has no clue who their shareholders are either. The function is performed by these large centralized groups because the brokers don’t necessarily trust each other; they’re dealing with their competitors.”

The problem with central settlement organizations is that transactions become bottlenecked through the use of a single ledger. With blockchain, trust becomes moot as digital tokens representing securities or money are inextricably linked to the funds or securities – and transfers can take place in a day or even hours, Fenton said.

Blockchain could also change how corporate public offerings are done. Many private companies forgo a public offering because of the complexity of the process. With blockchain ledgers, securities linked to digital tokens could move more easily between financial institutions by simply bypassing a central clearance organization.

“Just as you can move [Bitcoin] between one crypto account to another, you could move millions of dollars between crypto exchanges in less than a day,” Fenton said. “If that happens, then it’s exciting because you end up in a world where [there are] a lot more companies that are traded and changing hands. You could have a lot of things that are private now be public and be able to trade shares between investors and between borders.”

One potential problem with blockchain-based securities exchanges is performance; the distributed ledger has proven to be slow, and potentially costly. But new consensus algorithms and off-chain processing promise to speed up throughput by orders of magnitude.

China likely to take the blockchain lead, leave the U.S. in the rearview

The Chinese government recently announced a new focus on blockchains for commerce, a move likely to influence global development and spending. President Xi Jinping in October stressed that the country would have a blockchain-focused strategy; the decision affects Chinese government initiatives, regulations and spending by various regional governments.

Conversely, U.S. and European regulators have made no bones about their cautious, if not adversarial, approach to blockchain and the digital tokens moved across distributed ledgers. Additionally, the U.S. and Europe have well “developed and mature” world economies, so any large-scale move to embrace blockchain could be disruptive.

Because the initiatives in China are top down, they affect not only spending by the single largest entity (the government), but also native business interests who want to remain in good graces, Fenton said.

“Private businesses might choose to implement this technology or in some cases will need to, in order to remain competitive,” Fenton said. “When you have the leader of the country saying they’re going to invest in something, I think you’ll see a lot more of the public and private sector leaders in China and, ultimately, around the world reacting to that. 

“Unfortunately, the U.S. is getting left behind in many areas because of its slow regulatory regime.”

As regulators continue to struggle to provide clear guidance to crypto- and blockchain-based industries, collaboration will continue to occur among companies seeking to self-regulate, according to Katherine Johnson, vice president of compliance and general counsel for Storj Labs. Storj Labs is a cloud storage provider whose technology is based on blockchain.

For example, the Crypto Ratings Council hopes to to rank digital assets on the likelihood of being deemed a security versus a utility token, or a service that can represent API keys that unlock a service (essentially, selling a service using the tokens).

“U.S.-based companies will continue to mitigate the risk posed by the uncertain domestic regulatory landscape by branching out into crypto- and blockchain-friendly jurisdictions,” Johnson said in a statement.

Jonathan Johnson, president of CEO of Overstock.com and its investment arm Medici Ventures, agreed, saying via email that “innovation-friendly jurisdictions (i.e., not the U.S.) will begin to see efficiencies, trust, and transparency in government services as blockchain-based products begin to leave the lab and gain wider adoption.”

Blockchain for identity

Enterprises who’ve dipped their toes into the blockchain ecosystem still aren’t ready to dive in. Skepticism remains, hindering adoption in a meaningful way, according to Ken Elefant, managing director of investment firm Sorenson Capital.

Elefant calls blockchain a “phenomenal technology” that will change industries, but its adoption will be slow because it can’t happen in a vacuum; it will require a shared ecosystem among enterprises; one company can’t simply adopt it and expect returns on its investment without others climbing onboard.

Blockchain will more quickly take root in financial services for security and management of identities – first for businesses and later for consumers. “Identity today is really difficult to manage across the entire ecosystem,” Elefant said.

“Where I think blockchain should be used is in areas where there’s a middleman for know your customer [KYC] applications, anti-money laundering [AML] apps or counterpart reconciliation and other areas where traditional rules-based systems are very manual,” Elefant continued. “There’s huge ROI in those areas.”

Enabling full digital ID coverage could unlock economic value worth anywhere from  3% to 13% of GDP in 2030 in seven key countries – if the digital ID program enables multiple high-value use cases and sees widespread adoption, according to a report by consultancy McKinsey & Company. The seven countries are: Brazil, China, Ethiopia, India, Nigeria, the United Kingdom and the U.S.

The online credentials would be akin to identify information a person might have in his or her wallet: a driver’s license, a bank debit card or a company ID. Instead of a physical card, however, the IDs in digital wallets would be encrypted on a blockchain ledger and link back to the institutions that created them, such as a bank, a government agency or even an employer. Through blockchain and a smart contract, the digital information could automatically verify information to a requestor.

“Think of the [blockchain] distributed ledger as a database and only the individuals or companies authorized have access to that data – unlike the internet today where you and I can be marketed to by anybody,” Elefant said. “That’s the beauty of blockchain. It’s pre-certified and the only entity that has control over their ID is that identity itself.”

Additonally, fintech firms, software makers, telecom providers and other businesses have joined forces to develop blockchain-based networks that will enable anyone to exchange digital credentials online without the risk of unintentionally exposing private data. One consortium is the Sovrin Foundation, a nonprofit organization now developing the Sovrin Network, which could enable anyone to globally exchange pre-verified data with any entity also on the network.

When a business wants to transact with a bank or some other business on the network, they’ll be pre-certified to do so, whether for wire transfers between businesses or cross-border exchanges.

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Bitcoin, blockchain jobs remain unfilled as interest drops off

While the number of jobs related to blockchain and cryptocurrencies such as bitcoin has skyrocketed in the past four years, the number of searches for those jobs has  drastically dropped recently, according to job search site Indeed.

Over the past year, the share of cryptocurrency- and blockchain-related job postings per million has slowed on Indeed, increasing 26%. At the same time, the share of searches per million for jobs in the field has decreased by 53%.

Indeed blockchain cryptocurrency bitcoin jobs Indeed

A year ago, Indeed’s data similarly showed interest in blockchain development skills, including the creation of cryptocurrencies, had waned as bitcoin’s value – and the hype around it – fell off.

“We’ve previously covered how bitcoin’s volatility seems to correlate with job seeker interest, and the change in bitcoin price this year might be why job searches have declined,” said Allison Cavin, a writer for Seen, Indeed’s tech hiring platform.

The mismatch between the number of jobs being created and the number of qualified candidates to fill them has always been lopsided. According to Indeed.com, in the four-year period between September 2015 and September 2019, the share of cryptocurrency jobs per million grew by 1,457%. In that same time period, the share of searches per million increased by only 469%.

Bitcoin’s value has been on a roller coaster ride in the past two years. In 2018, the cryptocurrency’s price plummeted from nearly $19,500 in Februrary to around $3,600 by the end of last year. Over the past year, however, bitcoin’s value jumped to more than $12,000 before settling back to about $9,200 today. The volatility seems to be turning potential job seekers off.

bitcoin trends careers jobs Indeed

“For the first time, the number of jobs per million exceeded the number of searches per million,” Cavin wrote. It could be reasonable to assume that if bitcoin drops dramatically again, a candidate looking for a blockchain role would run into less competition than they would after a large increase.”

An April report from a management consulting firm, Janco Associates, showed blockchain positions remained unfilled as a dearth of qualified IT workers persisted –  and those who do have the skills remain in high demand. The shortage of qualified candidates with blockchain and cryptocurrency experience also lead to companies poaching talent from each other.

“With 20,600 new IT jobs created in the first three months of 2019, the market is tight,” Janco Associates CEO Victor Janulaitis said at the time. “There is a skills shortage, some projects are missing key early benchmark dates due to lack of staffing.

Last year, the job of developing blockchain distributed ledgers for businesses was ranked first among the top 20 fastest-growing job skills by freelance employment website Upwork. LinkedIn also ranked blockchain developer as the No. 1 emerging job.

it job market forecast 201903 large 100793118 orig Janco Associates

Job market forecast for blockchain

The most promising jobs include more than just developers and engineers, according to research by BusinessStudent.com — a site that reviews business schools and their courses.

According to a mid-year salary survey from Janco Associates, blockchain development and management positions remain in high demand.

“From coding smart contracts to designing user interfaces for cryptocurrency apps to building decentralized applications (dApps) that communicate with the blockchain, there’s no shortage of work to be done in the bitcoin field—and the tech jobs in our top five prove it,” Cavin wrote.

top 5 bitcoin jobs on indeed Indeed

Top 5 bitcoin jobs on indeed

For a better chance at landing a blockchain-related job, candidates should become familiar with basic cryptography, P2P networks and a language like C++, Java, Python or JavaScript (along with certain crypto soft skills).

“To stand out, learn new blockchain development languages like Hyperledger, Bitcoin Script, Ethereum’s Solidity, the Ripple protocol or even languages currently in development like Rholang to stay ahead of the curve,” Cavin wrote.

Copyright © 2019 IDG Communications, Inc.

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IBM, Intel, J.P. Morgan and Microsoft join others on new blockchain token spec

A new specification to allow businesses to create blockchain-based tokens for international trade and finance has been published – and businesses have already tested digital money based on it for cross border payments and settlement.

The Token Taxonomy Framework v1.0 (TTF) was developed by more than two dozen businesses and overseen by the Enterprise Ethereum Alliance (EEA). Its goal: give  businesses and developers access to a set of reusable, cross-industry components to create usable tokens.

The Token Taxonomy Initiative (TTI) was first announced in April.

The participants sought to create a non-technical, standard definition of what a token is, and to establish a common set of terms and definitions for cross-industry business use without employing industry jargon or coding.

“In practical terms, a business user or consortium can select a base type of token and choose from contributed lists of behaviors and properties and assign them to the token, just as you might drag and drop icons on a screen,” said Marley Gray, Microsoft’s principal architect for Azure blockchain engineering and a member of the EEA’s board of directors. “The framework enables a business person to create a token visually using a design tool without writing any code whatsoever and allows them to tell developers, ‘I want one of these.”

Creators of the specification said the digital currency is different from Facebook’s Libra cryptocurrency, whose launch could be hampered by intense regulatory oversight in the U.S. and Europe. Seven of the founding members of the Libra Association, Facebook’s non-profit governing council for its planned cryptocurrency, have jumped ship amid increasing regulatory scrutiny.

Calibra Facebook blockchain libra Facebook

Images of the Facebook’s Calibra digital wallet app that would store its Libra cryptocurrency.

“Libra, at least as it was started, was not meant to be a regulated asset,” said Julio Faura, TTI member and CEO of London-based tech services company Adhara. “When you’re trying to use a non-regulated asset for regulated processes like banks and central banking, it’s not easy.

“The TTF framework can host all kinds of tokens, both regulated and non-regulated, both financial and non-financial,” said Faura, who prior to 2018 was head of R&D and blockchain at Santander bank.

Creating a single set of definitions and terms will help blockchain platform interoperability – regardless of the distributed ledger platform on which it resides, according to Gray.

The framework’s template approach and the tools to facilitate token workshops make exploration and innovation as easy as possible, the TTI group stated in a release. By using rich metadata, the framework facilitates automation like code generation, verification, and certification that business users don’t need to understand but is extremely valuable to developers. Using the GitHub repository, teams can map business requirements to specific blockchain code or solution implementations allowing for discovery and use increasing

“What we needed to do was put it [the TTF spec] through some exercises to make sure it worked right,” Gray said. “What we’re seeing now are their drafts that are also being used to learn. People can learn about tokens by looking at real-world examples…, concepts that are not grounded in cryptocurrency that are modeled after real-world B2B scenarios.”

A TTF-based token can represent any number of goods, commodities or fiat-currencies, all of which can be defined by the business creating its specific flavor of  token. For example, tokens can represent rewards points at a retail store, real estate, precious gems, artwork or simply government-backed cash – basically whatever value the creator wants to give it.

“Anyone can understand it; you don’t have to be a programmer, but you can follow the links all the way down to the source code as a developer to see how they did it and reuse that code on the front- and back-end,” Gray said.

The Token Taxonomy Initiative has about 25 members, including Accenture, Adhara, Banco Santander, Blockchain Research Institute, Clearmatics, ConsenSys, Digital Asset, Envision Blockchain, EY, Hedera Hashgraph, IBM, Intel, ioBuilders, Itau, J.P. Morgan, Komgo, Microsoft, R3, and Web3 Labs.

Separate from the TTI group, JP Morgan had already launched its own cash-backed token for international clearance purposes between clients.

Several of the TTI members, including IBM, Microsoft, Intel and ConsenSys, have already created more than a dozen of test tokens based on the new spec and piloted them on a blockchain network for usability, after which they published their own draft specifications for their tokens.

crypto currency digital wallet bitcoin blockchain Getty Images

For example, Santander, one of the world’s biggest banks, has tokenized a $20 million bond offering as a pilot to be used on an internal Ethereum-based blockchain network. The bond is made up by 20 million SUSD (Sandander U.S. Dollars) ERC-20 tokens, which are backed by $20 million Sandander received as payment from an unnamed investor through an off-chain, traditional channel.

In September, John Whelan, head of digital investment banking at Santander, tweeted his bank issued 100 units of SUSD tokens with a value of $200,000 per unit. The SUSD tokens were redeemed for the real cash from the custody account.

“SUSD is simply the tokenized cash leg that represents a claim against real cash on deposit in a custody account at our custodian (Santander Securities Services),” Whelan said via email.

The bank was also able to use TTF smart contracts with embedded rules requiring only entities who’d passed the know-your-customer (KYC) regulatory process to be onboarded to the permissioned blockchain.

Those who were whitelisted to be on the blockchain held tokens (bonds or cash) and were part of an exchange contract that acted as the escrow until the issuer accepted the transaction; that acceptance triggered the atomic DvP (delivery versus payment) ownership rights. (DvP is a securities settlement term that represents a guarantee that that securities will be transferred only after payment is received.)

Whelan said he wasn’t sure when a production version of Santander’s SUSD token would launch, only that it will “take time.”

Adhara and ioBuilders created an E-Money token standard that is now a TTF token draft spec and an electronic money standard that enables the use of fiat money on blockchain. The token standard includes multiple extentions commonly used in finance, such as holds (EIP-1996), clearance (EIP-2018), detailed compliance (EIP-2009), funding orders (EIP-2019), and payout orders (EIP-2021).

For example, one version of Adhara and ioBuilders’ token was used for cross border remittances by Union Bank of the Philippines. The money transfers were performed in partnership with Singapore-based OCBC Bank using the Adhara liquidity management and international payments platform.

Adhara’s Faura said tokenized money eventually transform existing financial systems.

“Tokenized money is essentially implementing regulated money in a bank or electronic money transfer industry or a central bank… but doing that on top of smart contracts on a blockchain construct,” he said. “There’s also the possibility to put that money on hold…while you do a financial process such as clearance of payments like paying for securities.

“It’s just a bank using another technology to issue money,” Faura added. “And, we don’t need a new regulatory framework to do that.”

Copyright © 2019 IDG Communications, Inc.

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In 2020, businesses likely to shift blockchain focus to integration, interoperability

After several years of proofs of concept testing, followed by pilot programs, enterprises deploying blockchain should turn their focus toward integrating the distributed ledger technology (DLT) with legacy data systems and making sure they can communicate with other external blockchains.

That advice is part of Forrester Research’s 2020 Predictions, which highlight several upcoming challenges for the nascent electronic ledger technology.

In the world of enterprise blockchain, the shift from irrational exuberance to realistic assessment is almost complete, Forrester said.

“While we still see a lot of excitement around what DLT can or could do, the focus has expanded to include questions about how DLT is going to deliver a particular benefit,” the report said.

Among Forrester’s predictions: the battle between private and public blockchains will heat up and the debate will reach corporate executive teams; 80% of blockchain deployments will be hybrid, multi-cloud or both; and non-technical issues will represent some of the biggest hurdles.

“It really is first agreeing on what data is to be shared among partners, what that process should look like, and then putting everything on an appropriate legal footing,” said Martha Bennett, a Forrester vice president of research. “You need to understand what yours and others’ contractual obligations are. No one has done this to scale.”

For example, when a company rolls out a blockchain ledger, it will not likely integrate with existing corporate single sign-on capabilities. So, for a time – perhaps even permanently – a blockchain project will likely function on an exception basis, which propagates discussions around security and risk management.

“It sounds like a minor thing, but I’ve seen projects grind to a halt over it,” Bennett said.

Governance of a permissioned business blockchain is also a critical non-technical issue that hampers deployments. Most often, determining how a distributed ledger will be managed falls to a single third party in charge of key considerations, such as who has access and who can invite new members onto the ledger.

Additionally, while early governance models have basic rules about onboarding new users, rarely do they address the offboarding process, according to Forrester – especially if rules have been broken and legal issues arise.

Hybrid blockchains, which are expected to dominate ecommerce, also face hurdles  such as scalability and privacy. For example, supply chain partners who enter into a blockchain must be extremely careful about data they place on the electronic ledger and the ledger owner should be aware of throughput issues that could affect costs.

Hybrid blockchains are a combination of a permissioned blockchain (for backend transactions between businesses) and a public blockchain, which enables a public-facing application. That would allow consumers, for instance, to see how produce was grown on a farm and transported to grocery store shelves. Mastercard recently partnered with track-and-trace software provider Envisible to create a blockchain-based supply chain platform to help supermarkets trace the origin of seafood while also enabling consumers to see the history of the catch.

When Facebook launches its Libra cryptocurrency in 2020, it will need a public-facing blockchain network for users who purchase items with the digital currency and a private blockchain network for the banks backing it.

As blockchain ledgers proliferate in the corporate world, enterprises will need to ensure their flavor of distributed ledger can communicate with other platforms deployed by potential business partners. The result: interoperability is expected to take center stage next year.

Businesses should be “extremely” concerned about interoperability and integration, according to Bennett. She said many of her clients building multiple blockchain networks began pinging her four or five months ago with questions about how they could all interoperate.

“The whole public-versus-private blockchain argument is the reason enterprises are becoming interested in the interoperability discussion. If I’m building silos with permissioned blockchains, is there an alternative? If I want to run something hybrid, things would need to be interoperable,” Bennett said.

Interoperability also applies to public and private cloud infrastructures; some enterprises host their own blockchain technology while also outsourcing blockchain services from vendors, such as Amazon AWS and Microsoft Azure.

Some blockchain vendors, such as IBM and Oracle, have developed APIs to pass data from legacy systems or from one blockchain to another, but not necessarily between different platforms. And, once an external data source is added to a blockchain ledger, ensuring messages are secure and data is accurate and not duplicated becomes yet another issue.

For example, if a company has tokenized assets – meaning it created a digital representation of the value of an asset, such as oil or other commodities – the  company must be able to ensure those tokens are deleted from the original ledger once they’ve been traded or transferred to a secondary one. Otherwise, the assets would be duplicated.

It’s already clear that there are several blockchain-based networks covering many of the same functions, such as trade finance, invoice factoring, shipping documentation, and product provenance. There are also networks with adjacent functionality, such as supply chain track-and-trace and financing. To deliver on the promise of frictionless processes, those networks will need to talk to each other somehow.

Much of the debate for 2020 will be around exactly what it means for one blockchain network to talk another and how that happens: simple message passing? transfer of value between chains? interoperability at the state level?

“We’ve already got a plethora of startups and other initiatives promising (sometimes miraculous) solutions; expect the battle to heat up, but don’t expect neat, widely applicable solutions,” Forrester said in its report.

Many businesses risk creating siloed networks if interoperability isn’t baked into a platform or the industry doesn’t settle on standards.

Earlier this month, Gartner released a report predicting that by 2021, 90% of current enterprise blockchain platform implementations will need replacing within 18 months to remain competitive, secure and to avoid obsolescence. Among the issues leading to obsolescence: blockchain interoperability, smart contract integration with legacy corporate data systems, and scaling issues.

Several industry groups are now working to address interoperability and scaling (the ability for a blockchain ledger to handle data traffic generated by hundreds or thousands of users). Earlier this year, the Enterprise Ethereum Alliance (EEA) announced new and updated specifications aimed at helping developers create business-class blockchain networks that are faster, easier to use and capable of interacting with other DLT networks.

And the Linux Foundation is working on developing smart contracts that can be used across industries to create business automation processes via blockchain.

Those efforts are expected continue into the new year as the blockchain industry evolves.

Copyright © 2019 IDG Communications, Inc.

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HTC launches a cheaper blockchain phone

Taiwanese smartphone maker HTC is now selling a less-expensive version of its Exodus 1 blockchain-based smartphone with a built-in digital wallet that allows users to store, buy, sell and trade Bitcoin and other cryptocurrencies.

The Exodus 1s is aimed at users who want to “dip their toes into the crypto world” and costs €219 ($244 in the U.S.) – or the equivalent amount in crypto currency such as Bitcoin, Eth, LTC, BNB or BCH.

exodus1s 6v 19oct1 HTC

HTC’s Exodus 1s blockchain-enabled smart phone

The Exodus 1s will initially roll out in Europe, Taiwan, Saudi Arabia and the UAE, with other country sales to be announced later.

In February, HTC unveiled its Exodus 1 smartphone; it came with a secure partition on which users could store cryptocurrency separate from the Android operating system. The Exodus 1 could also initially only be purchased with cryptocurrency and carried a price tag of $699.

Phil Chen, HTC’s decentralized chief officer, said the original blockchain phone met the company’s sales targets. The Exodus 1s represents the company’s first smartphone that can act as a full Bitcoin node, meaning it becomes part of the peer-to-peer, distributed ledger network.

“The Exodus is about empowering the user. We gave users the ability to own their own [cryptographic] keys, and now we’ve gone one step further to allow users to run their own full Bitcoin node,” Chen said in a statement. “We are providing tools for access to universal basic finance; the tools to have a metaphorical Swiss bank in your pocket.”

Full nodes, Chen said, are the most important ingredient in the resilience of a Bitcoin network and HTC has “lowered the barrier to entry for any person to run a node.” A node is nothing more than a computer that runs software enabling it to become part of a peer-to-peer, distributed Bitcoin monetary network. A full node simply means a mirrored copy of the entire blockchain ledger exists on a user’s smart phone.

Some cryptocurrency ledgers allow users online access to a light client, or a trusted full node copy of a blockchain ledger residing on another computer.

The full Bitcoin ledger being used by HTC represents about 260GB of data, and it is growing by 60GB per year. The full ledger can currently be stored on an Exodus 1 or 1s via an SD card that’s sold separately and has at least 400GB of capacity, HTC stated. With that additional capacity, a user can verify and relay Bitcoin transactions without a centralized third party, such as a central bank.

While HTC was the first to launch a blockchain-enabled smartphone, it’s not alone. Last year, Swiss-based Sirin Labs launched its Finney blockchain smartphone. The $1,000 phone included a number of decentralized apps (Dapps) such as a token conversion center that enabled users to exchange one form of cryptocurrency for another.

Finney Blockchain smartphone Sirin Labs

Sirin Labs’ Finney blockchain-enabled smart phone.

HTC first announced plans to sell a blockchain-based smart phone in 2018; in addition to being able to store cryptocurrency on a separate chip, the phone allowed owners to play CryptoKitties, a Dapp game. Dapps are applications that run across multiple nodes on peer-to-peer (P2P) networks.

Jack Gold, principal analyst for J.Gold Associates, said neither HTC’s nor Sirin’s blockchain-enabled smartphones will appeal to a mainstream audience, as cryptocurrency activity is almost all trading, and remains in the purview of enthusiasts and speculators – “CryptoKitties notwithstanding.”

The cryptocurrency cold-storage wallet built into the newest Exodus smartphone allows users to keep private keys representing cryptocurrency. “Think of it as a micro OS that runs in parallel with Android,” Chen said.

As Bitcoin and blockchain are still relatively nascent technologies in terms of adoption, HTC said its Exodus development team wants feedback from users to help the company improve the experience.

“HTC Exodus believes a full node is the best way to use Bitcoin in a fully private, trustless manner and full nodes are critical to securing the future of Bitcoin,” the company said.

Copyright © 2019 IDG Communications, Inc.

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Utah county moves to expand mobile voting through blockchain

Disabled voters in Utah County will be able to use their smartphones to vote in the November municipal election, an expansion of an earlier pilot test of the blockchain-based technology and anothert step toward allowing all voters to cast ballots with a mobile device.

The county, which has more than a half million residents, is the third in the U.S. to partner with Tusk Philanthropies, a non-profit focused on expanding mobile voting nationally. The latest pilot is a collaboration between the Utah County Elections Division, Tusk Philanthropies, the National Cybersecurity Center and Boston-based voting app developer Voatz.

iPhone iOS voatz blockchain voting Voatz

Voatz iPhone mobile voting application.

“I think it’s a great expansion on the mobile voting project,” Michela Menting, a director with ABI Research, said via email. “I think there is certainly potential to extend such technology to the general public, but it is always contingent on succeeding in smaller focus groups first, and especially those which may often find it more difficult to vote – due to location or disability as in this example.”

Utah County chose to expand the use of mobile voting after the National Cybersecurity Center (NCC) recently completed an audit of an August municipal primary election pilot that used the mobile voting app; the audit found that the results were accurate. Disabled voters will be able to use the app in upcoming municipal elections.

“I made the decision to utilize it for our disabled community after that,” said Amelia Gardner, Utah County Clerk and Auditor. “It was used twice in West Virginia for overseas voters, twice in Denver for overseas voters; so, in addition to my use of it in the municipal primary, that gave us five solid examples of clean audits coming back showing the votes were true.”

Utah County, which has 265,000 active registered voters, used the mobile voting app in a municipal election earlier this year for absentee military service members and their families living overseas. Only 45 voters took advantage of it, but the pilot went smoothly. This time around, Gardner expects there’ll be dozens of disabled registered voters who’ll be able to cast their votes through a smartphone to avoid having to go to a polling station.

“We’re excited about it. It’s made things a lot more simple on our side and increased our confidence in the quality of the overseas votes,” Gardner said. “We have been working closely with the Disability Law Center in the state of Utah to get the word out, but municipal elections are always a smaller election anyway.”

To date, the Voatz mobile voting platform has been used in four public election pilots (and about 40 elections overall): the 2018 West Virginia Primary Elections; the 2018 West Virginia Midterm Elections; the 2019 City/County of Denver Municipal General Elections; and the 2019 City/County of Denver Municipal Runoff Elections.

The NCC also worked with Voatz to develop a web-based tool that displays the voter-verified receipt, the tabulated ballot image and the blockchain-based ledger transaction. The ballot can then be printed out and inserted into a scanner with other paper ballots.

Using the mobile app also simplifies the typically labor-intensive process of dealing with absentee ballots, Gardner said. “Previously, overseas voters cast their ballots with email, but there was no way to verify their ID and no way to know if their email system had been hacked or if they were really the person responding to the email or not,” she said.

“On top of that, we had to have an employee read the email and fill out a paper ballot, and have a second employee verify they read the email correctly. It’s very labor intensive and very manual,” she said. “With this process, once the vote is recorded in the blockchain it generates a paper ballot and we run that through our scanners with all the other ballots and it maintains the secret ballot for that citizen.”

Voatz is among a small community of mobile voting platforms using blockchain as a distributed voting system; other firms include Votem, SecureVote, and Scytl. While only a small number of vendors offer it, mobile voting is gaining the attention of municipal officials for its ease of use and purported privacy and security.

The city of Vineyard, Utah – one of the fastest-growing cities per capita in the U.S. –  has asked Gardner for permission to use the mobile voting app for all residents, something that’s currently not legally possible. The city, which has grown from 5,000 residents to 15,000 in less than four years, has a large millennial population that is tech savvy, Gardner said.

Right now in the state of Utah, marking a ballot electronically is only allowed for citizens who fall under the national Uniformed and Overseas Citizens Voting Act (UOCAVA), which covers overseas absentee voters and disabled voters. If Congress were to enable mobile balloting for all registered voters, Gardner said she’d still require a few more audited pilots before she’d agree to opening the technology up to the general citizenry.

“I’m a fan, and most county clerks you’ll find are also fans, of introducing new technology incrementally. The first was UOCAVA voters in a smaller election and then in a little larger election; the next step I’d like to see would be all absentee ballots, whether you’re in another country or serving an internship in another state or caring for a sick family member in another state,” Gardner said.

The Voatz application uses a permissioned blockchain based on the HyperLedger framework first created by IBM and now supported by the Linux Foundation. In the election, verified validating nodes (servers) are used, split evenly between AWS and Microsoft Azure, each of which are geographically distributed, according to Voatz.

On the Voatz app, authentication is a three-step process that uses the smartphone’s camera and its biometric feature (either fingerprint or facial recognition). First, the voter scans their state driver’s license or passport; then they take a live facial snapshot (a video “selfie”), and finally they touch the fingerprint reader on the smartphone, which ties the device to the specific voter.

Once a voter is authenticated, the app matches the voter’s “selfie” to the facial picture on their passport or driver’s license and confirms eligibility to vote by checking the state’s voter registration database

“The voter photo-IDs and selfies are deleted soon after verification and are not used for any other purpose outside of voter identity verification,” Voatz CEO Nimit Sawhney said in an earlier interview. “Any biometric information never leaves the secure storage on the mobile devices and is not stored on remote servers.”

Not everyone, however, is sold on mobile voting – blockchain-based or otherwise.

Jeremy Epstein, vice chairman of the U.S. Technology Policy Council at the Association for Computing Machinery (ACM), said in a recent report that new technologies, including blockchain, fail to resolve insoluble security issues inherent with online voting.

“These issues include server penetration attacks, client-device malware, denial-of-service attacks and disruption attacks,” Epstein said in the report. “Infecting voters’ computers with malware or infecting the computers in the elections office that handle and count ballots are both effective methods for large-scale corruption.”

Until there is a fundamental breakthrough to internet security, the best method for protecting election integrity is a tried-and-true one: mailed paper ballots, Epstein concluded.

While not tamper-proof, paper ballots “are not vulnerable to the same wholesale fraud or manipulation associated with internet voting,” Epstein said in the report.

ABI Research’s Menting said many have argued against mobile and blockchain voting because it’s not inherently safe and because there are too many “threat vectors, and unknowns, that could put the voting process in jeopardy.

“That is true to an extent, but so is paper-based voting,” Menting said. “I would argue that mobile and blockchain technology notably can provide a number of additional security features that offer robust-enough security to ensure the voting process is as secure (if not more secure) than existing voting mechanisms, especially regarding insecurity of ballot counting machines and systems. So I do believe that blockchain voting is safe.”

Of course, Menting added, any new technology initiatives, whether blockchain, mobile or otherwise, need to be continuously tested and verified to ensure they continue to meet the levels of security required in a voting setting.

“But to date, it looks like the Voatz system works, and well at that, and hopefully it continues to do so,” she added.

Copyright © 2019 IDG Communications, Inc.

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Here’s why there won’t be a quick enterprise blockchain revolution

While billions of dollars are being spent on blockchain, and that spending is expected to grow exponentially over the next five years, the distributed ledger technology will never spark a technology revolution in the enterprise where preference always favors centralized control.

“I don’t think we will ever see a revolution in the enterprise,” said Avivah Litan, a vice president of research at Gartner. “No one wants to give up authority. Think about it. It goes against an enterprise’s ability to control their own destiny. Full, complete blockchain is about no central authority. It’s just peer-to-peer.”

Litan was among analysts discussing tech trends shaping the future of IT and business at Gartner’s IT Symposium/Xpo 2019 this week. Among the hotter topics was blockchain, which currently is sliding into the “Trough of Disillusionment,” from which it won’t begin to emerge for at least another two years.

The 2019 Gartner, Inc. Hype Cycle for Blockchain Business Gartner

The 2019 Gartner Hype Cycle for Blockchain Business

Still, enterprises are eagerly exploring blockchain, according to Gartner, because C-level executives and IT managers see it as something truly innovative. And they’re trying to figure out how to use it, regardless of whether they actually need it.

“We have come across many companies who really want to explore blockchain but don’t have appropriate use cases for it,” she said. “It’s hard to tell people they don’t have a real use case for it. The users don’t really understand what blockchain does or doesn’t do. They just know they want to use it.”

Blockchain Gartner Hype Cycle Gartner

It will likely take another nine or so years before blockchain becomes fully scalable technically and operationally, according to Gartner. “Blockchain technologies have not yet lived up to the hype and most enterprise blockchain projects are stuck in experimentation mode,” Litan said.

By 2021, 90% of current enterprise blockchain platform implementations will require replacement within 18 months to remain competitive, secure and to avoid obsolescence, according to Gartner.

For blockchain to reach its potential as a distributed ledger for global business-to-business transactions, five things need to happen:

  1. Smart contracts must become simple to code and test to ensure they don’t have bugs and can be ported across various blockchain platforms.
  2. Smart contracts must be able to easily integrate with legacy enterprise systems, e.g. data “oracles” or APIs that connect blockchain to external data sources.
  3. Blockchain interoperability must become standardized so various platforms, such as Hyperledger, Ethereum, R3 Corda and others can communicate with each other.
  4. Blockchain must scale to compete with current financial transactional networks  that can handle thousands of operations per minute.
  5. Privacy services based on zero-knowledge proof concepts and private key management must also mature and develop methods that allow users to recover lost pass codes.

Private key management is seen as the Achilles’ heel of blockchain technology, Litan said, referring to the fact once a user loses their private key they no longer have access to the data, cryptocurrency or other assets connected to the latter.

A number of companies and consortiums are currently working to solve the private key problem as well as the scaling issue.

When blockchain’s core-enabling technologies and use cases evolve and mature, the result will be significant benefits for enterprises, including blockchain and IoT integration, decentralized web apps and blockchain user interface technologies and blockchain managed services.

Managed services today include Chainstack, IBM’s blockchain cloud, and Mangrovia’s Blockchain Solutions. The services allow organizations that lack technical expertise and infrastructure to support their own blockchain applications running in the cloud.

Also key to blockchain’s success will be its evolution into a combination of a permissioned or private platform and an open, public ledger. That, Litan said, will enable enterprises to communicate privately and behind the scenes on a permissioned ledger, while also enabling a public-facing application that allows users to securely view transactions.

Hadera Hashgraph is one example of a “hybrid” distributed ledger. The startup is a competitor to both permissioned blockchains such as Hyperledger and public platforms (such as Hyperledger Fabric & Sawtooth, R3 Corda, and others) and their commercial providers, which include AWS, IBM, Microsoft, Oracle.

At its mainnet launch in August, the Hadera Hashgraph claimed it could outperform both public blockchains and traditional financial and business networks.

Hadera Hashgraph is very important. It’s not a blockchain, but a blockchain equivalent with a lot of investment from different parties that want a more scalable architecture.

“There is no direct equivalent to Hedera Hashgraph today,” said Martha Bennett, a principal analyst at Forrester Research. Hedera has garnered support from telecom players and tech vendors, even those that have their own blockchain services. Indian tech giant’s Tata Communications, IBM, Deutsche Telekom, and FIS Global, which acquired WorldPay earlier this year, are among 10 companies on Hedera’s governing council.

Another hurdle for blockchain is regulatory oversight, which has increased over the past year since social networks, such as Facebook, announced plans to create blockchain-based financial networks over which its Libra cryptocurrency can be exchanged or used for online purchases.

Multi-national regulatory pushback against Facebook’s move to create a cryptocurrency payment network is slowing the project and caused supporters such as Visa, Mastercard and PayPal to back away. Last week, PayPal announced it was pulling out of Facebook’s Libra Alliance, the governing counsel for the blockchain initiative.

“These companies are at the mercy of regulators,” Litan said. “They don’t want to annoy them or do anything against them. It just shows you how threatened governments are by cryptocurrency and by Facebook.”

By 2023, blockchain will be scalable technically, and will support trusted private transactions with the data confidentiality required, Gartner’s 2019 Hype Cycle for Blockchain Technologies forecasts.

The developments are being introduced in public blockchains first. Over time, permissioned blockchains will integrate with public blockchains and start to take advantage of those improvements while supporting the membership, governance and operating model requirements of permissioned blockchains.

“When the technology is scalable and easy to use and you just write your application and you don’t care about your backend, then you’ll see a digital transformation for use cases like track and trace… or cross-border payments – where no one’s in control,” Litan said.

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5 industries that will be disrupted by blockchain

How much of an impact will blockchain have on business and society as a whole? At this point, no one really knows because the ledger model and its use are still relatively new and limited. But it’s likely that blockchain technologies will affect a number of industries more than others — at least initially.

Related: What is blockchain? The complete guide

Blockchain has been defined as a “single version of the truth” made possible by an immutable and secure time-stamped ledger. Multiple parties hold copies of the ledger, and blockchain has the potential to deliver trust to many facets of business while decreasing or eliminating fraud and counterfeiting.

In a blockchain model, data is secured through the use of cryptography and new transactions are linked to previous ones, which makes it practically impossible for someone to change older records without first having to change subsequent records.

Given that multiple systems run a blockchain network, users need to gain control of more than half of these systems in order to make changes. That makes it difficult to alter data in transactions or use fake identities.

Related: What blockchain can and can’t do for security

Blockchain can be applied to many use cases and industries. But several stand out as being particularly suitable for its use.

1. Financial services/banking

Blockchain technologies can potentially impact many different types of financial transactions, and even make it possible for people to access their funds without the need for banks.

Banks could adopt blockchain technology to increase the efficiency of transactions, reduce costs and provide more robust security for those transactions.

R3 LLC, a blockchain technology company, is heading up a blockchain ecosystem of more than 300 companies that is working to build distributed applications on top of Corda, an open-source blockchain platform. These applications can be used across industries including financial services, insurance, and others, and would support inter-company transfers.

The consortium was launched several years ago and includes financial companies such as Barclays, Credit Suisse, State Street,

Bank of America, BNY Mellon, Citi, Deutsche Bank, National Australia Band, Wells Fargo and Royal Bank of Canada.

Aside from payments, blockchain could be used for fraud reduction, loan processing, and enhancing customer service.

PNC bank has collaborated with Carnegie Mellon University (CMU) through the PNC center for financial services innovation, to determine which services a bank could provide on a blockchain and what internal banking processes the technology might improve. The initiative involves the CMU Coin initiative, a cryptocurrency test bed at the university.

Even though experts say the impact of blockchain on financial services could be significant, they don’t expect it to replace traditional banking for transactions anytime soon. Among the hurdles to widespread adoption are limitations caused by the tradeoffs between scalability and security. And many firms will wait for standards and regulations to be established before plunging ahead with blockchain initiatives.

2. Government

For government entities and agencies around the world, blockchain can provide an effective way to safeguard transactions, enhance workflows, and build trust among citizens.

One of the capabilities of blockchain technologies is transparency through decentralization, and this enables anyone participating in the blockchain to see and verify data. Agencies could use blockchain in providing some of their services, to provide independent verification of claims, according to consulting firm Booz Allen Hamilton.

Because citizens and government agencies share access to records, the firm says, the potential for distrust decreases. Governments can also use blockchains to protect sensitive data such as individuals’ social security numbers, birth dates, addresses and driver’s license numbers. As the firm notes, government agencies hold digital records for citizens, and are therefore natural targets for hacker attacks.

Related: How data storage will shift to blockchain

Such attacks could be avoided through the deployment of blockchain data structures that harden network security by decreasing single-point-of-failure risk. This can prohibit attempts at a breach and make them more challenging, the firm says.

Efforts are underway. For example, the U.S. Department of Homeland Security Science and Technology Directorate has contracted to develop fit-for-purpose blockchains for identity and access management.

Another potential benefit of blockchain for government is cutting costs and reducing inefficiency. Blockchains could potentially reduce redundancies, streamline processes and ensure data integrity.

Booz Allen Hamilton mentions an example involving the U.S. federal government and its ongoing challenge in reconciling intragovernmental transfers. At any time there are trillions of dollars in unreconciled funds in the federal budget, the firm says, and the process of reconciling the funds is time consuming. Using a payment and accounting system based on blockchain technologies could provide a permanent audit trail and facilitate faster reconciliation.

Other possible uses of blockchain in the public sector include record keeping, cross-entity transactions and reconciliation, social and humanitarian assistance, voting, the provision of energy credits through a digital market and self-sovereign wallets for giving citizens more control over their identities and records.

Blockchain has already been used to enhance voting procedures, and experts see the potential of deploying technologies to boost voter turnout and address election security and integrity issues. For example, blockchain could help secure voting systems against tampering, and guarantee that a citizen could not vote multiple times.

So far, blockchain has not been used for any large-scale elections, but it has been implemented for some voting processes such as shareholder voting and mobile voting in primary elections.

Related: Thinking about blockchain? Do it in the cloud

3. Healthcare

As with other sectors, the use of blockchain in healthcare is still a work in progress. But clearly it can potentially affect many aspects of the way healthcare institutions conduct transactions and processes.

This is especially true because so much of healthcare is going digital, in the form of patient records, payments, requests for information, insurance approvals, communications and collaboration, research, etc. Sensitive information in particular has to be sufficiently protected, and blockchain could provide a solution.

Consulting firm Deloitte Consulting LLP has noted that blockchain systems might some day transform the sector, placing patients at the center of the healthcare ecosystem and bolstering the security and privacy of medical information.

For example, blockchain could underpin health information exchanges by making electronic medical records (EMR) more efficient and secure; reducing friction and costs of current intermediaries; and helping link fragmented systems to better evaluate the quality of care.

Looking into the future, a blockchain network for electronic medical records (EMRs) that spans the nation could increase efficiencies and help support improved outcomes for patients, Deloitte said.

One key challenge within the sector that blockchain can help solve is the sensitivity of healthcare data, and the need to keep this data protected. Blockchain can create a secure means to electronically hold medical data and enable someone to control who is able to view the data at any time. The technology can also facilitate the tracking of health data.

HIMSS, a global not-for-profit organization focused on better health through information and technology, says blockchain and distributed ledger technology have great potential across healthcare to improve patient care and reduce costs.

“These emerging technologies have already started to take hold in healthcare networks, from clearinghouses to drug supply chains to provider-credentialing processes and other critical areas,” the organization notes. 

HIMSS says there are several key considerations for companies when pursuing implementation of blockchain technology for a particular healthcare use case. These include governance of blockchain when used in a consortium; privacy; regulatory compliance; security; data storage; performance, throughput and scalability; interoperability; and deployment architecture.

Several blockchain use case categories have “generated substantial efforts or interest thus far by stakeholders in the healthcare industry,” HIMSS says. These include digital identity management for patients, participants and providers; financials, insurance and records; clinical research and data access; and health supply chain management.

4. Energy

Companies that provide energy, including gas and electric suppliers and utilities, stand to benefit from blockchain in a number of ways.

Related: Why Middle East oil and gas companies are embracing blockchain

Deloitte has noted that blockchain “is a particularly interesting technology for decentralized processes that require large networks and trust relationships between all parties. Therefore, it offers great benefits to the power and utilities market,” with its large networks of power and utilities companies, maintenance subcontractors, local suppliers and end users.

One possible use is with smart grids, which requires a marketplace for supply and demand of power on a local level. “Rather than create a centralized marketplace, smart contracts on the blockchain can be used to balance demand and supply and enable peer-to-peer trade,” the firm says.

A potential challenge of using blockchain for energy industry applications are that devices in the blockchain need to be able to communicate with each other through the internet, Deloitte says. Others are that systems need to be easy to use in order to be widely accepted, and cryptocurrencies such as Bitcoin must be capable of scaling up to the large amounts of transactions needed to roll out smart grids for large numbers of users.

Another use of blockchain is to share data among smart meters in homes in a secure manner. Up to now sharing this data was a threat to the privacy of the owner of the meter, the firm says, and blockchain can provide accurate data to energy suppliers without requiring a direct link to the meters of specific users.

Some energy companies are already making moves in the blockchain arena. For example, in July, Shell Ventures, the corporate venture capital arm of oil company Royal Dutch Shell plc, made a major investment in LO3 Energy, a company that’s building a blockchain-based platform to enable decentralized business models and innovative technologies related to energy, clean technology and utility systems.

LO3 Energy’s technology enables the integration of distributed renewable energy resources (DERs) into local energy networks, and funding will support the company’s drive toward the global commercialization of blockchain-based community energy networks. The system promises to democratize the energy industry, according to LO3 Energy, allowing people to both consume and produce electricity at their home and business.

LO3 Energy’s platform was pioneered with the Brooklyn Microgrid, and the company now runs projects with partners around the world.

Users set preferences on a dedicated mobile app, choosing how and when to use local energy resources available to them and allowing them to select the sources of energy. Electrons flow through the normal grid transmission network, but the private blockchain manages the definition of the energy source and the contract agreement to pay for it.

This enables a range of use cases, including peer-to-peer energy trading, energy hedging for businesses, virtual power plants and dynamic electric vehicle charging.

5. Transportation and logistics

The transportation and logistics sector is poised to deploy blockchain systems to enhance supply chain services to customers and for other use cases. Technologies supporting blockchains can help cut costs and fuel consumption through greater efficiencies.

The Blockchain Council, a group of subject matter experts and enthusiasts who are evangelizing blockchain research and development and use cases for the industry, says there are several ways blockchain can transform the sector by addressing some of the main challenges it is facing.

One is tracking. A key concern in the industry is payment and dispute resolution. Every day about $140 billion is tied up in dispute settlement payments, the council says, which involves a lot of time and a reliance on third parties. A blockchain-based tracking system would enable easier tracking of vehicles and their status, and eliminate the need for third parties to settle disputes.

Another is the transport of temperature-controlled products such as pharmaceutical items. Temperature shifts during longer-than-expected deliveries can adversely affect these products, which can lead to waste. The use of blockchain for data authentication can help ensure that products are delivered on time under the right temperature conditions.

A third use case is for carrier on-boarding. As with the tracking of records, blockchain can help in validating carriers and drivers. For example, when a freight broker is trying to reach capacity for a load at a given location, the broker can use a blockchain ledger to verify a carrier and assign the load. Blockchain would enable a decentralized system holding the records of carriers.

Efforts are underway to create standards for blockchain use in this industry.

For instance, the Blockchain In Transport Alliance (BiTA), which includes freight, transportation, logistics and affiliated companies as members and claims to be one of the largest commercial blockchain alliance in the world, says it is developing a “common framework and standards from which transportation, logistics, supply chain [and] freight marketplace participants can build revolutionary blockchain and distributed ledger technology applications.”

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