Sounds obvious, right? For the last few years we’ve tended to call everything associated we blockchain – blockchain. Yet, while we called it blockchain, the attention has not actually been on blockchain technology but on the sky rocketing value of currencies such as bitcoin and Ethereum Ether. As the early fascination with coins and get rich quickly ICO’s diminish, focus is turning to building major blockchain applications that are opening up new revenue opportunities and delivering significant operational efficiencies.
Recently, I met a man at a blockchain meetup that purchased Bitcoin’s when it got all the way up to a $1. He had been following the currency from the time it was a few cents and though people were crazy to purchase it at all. Never the less, when it got to a dollar, he decided to buy anyway. Then, one thing lead to another and he forgot about the coins. Then, a funny thing happened near the end of 2013, bitcoins almost reached $1,000USD’s. By the end of 2017, the value of each coin had gone passed $17,000 USD’s . For a brief moment, bitcoins had reached $19,000 USD’s. My friend still had all his original coin’s.
By 2017 cryptocurrencies or blockchain’s were in a full out,financial bubble. Just like the internet 20 years earlier when Initial Public Offerings (IPO’s) were having money thrown at them, Initial Coin Offerings (ICO’s) were all the craze. The bubble lasted for less than a year and was quickly burst when the US Securities and Exchange Commission, sent out over 900 subpoena’s to companies that went through an ICO. While prices have come out of the stratosphere, Bitcoin has dropped back to the $3,000 – $4,000 range, the market is still getting a lot of interest.
The truth is that the soaring valuations of cryptocurrencies drove the interest in blockchain. Rightly so, the average increase in the value of Bitcoin rose an average of over 2,100 percent EVERY YEAR from 2010 to the end of 2017. I have no idea whether we well see another cryptocurrency driven bubble nor am I predicting one. The blockchain market is changing from a focus on coins to focusing on the technology behind blockchains.
What some are starting to grasp is the quantum leap in technology that blockchain delivers. Since the introduction of bitcoin, software developers around the world have been poring lots of development time into improving blockchain technology. The new features that are starting to emerge with blockchain is nothing short of staggering.
Bitcoin’s blockchain implementation was considered first generation blockchain. We have now entered third generation blockchain technology with the advent of smart contracts, asset management, and a plethora of API’s for executing transactions. In the spring of 2019 the EOS blockchainis scheduled for release. EOS will bring orders of magnitude in improvements.While the second highest money raised was $250 million in investment capital,EOS raised an astounding $4 billion to fund the development of their blockchain.
Blockchain isn’t just a new way to manage online transactions safely, it is an utterly disruptive technology. It will continue to be the technical backbone for cryptocurrencies, but it will also emerge as anew way to build large scale (enterprise) systems. Most people that are interested in blockchain have already become familiar with some of its components, such as, wallets, blocks, censuses algorithms that include Proof-of-Work and Proof-of-Stake, and tokens.They may even be familiar with its ability to reduce third party involvement and counter party claims, which are dramatically reduces both cost and time.
Yet, unlike the monolithic legacy enterprise systems of the past, blockchains are distributed systems. Distributed meaning they can dispense processing over many servers. For example, credit card companies are among the largest applications needing to process over 25,000 credit card transactions a second. Many credit card companies still use mainframe computers to deliver such a high transaction rate. EOS’s beta blockchain can already process 10,000 transactions a second and theoretically will be capable of processing over 1,000,000 a second, when their blockchain is fully implemented.
The people at bitcoin figured out how to build a distributed system that was secure. Unlike legacy enterprise system that were built on one or a hand-full of servers, or mainframes, blockchains spread their processing over many servers operating in parallel. In fact, these systems have the ability to expand tens of thousands of servers.
Blockchain technology will become a standard component of most major online transaction systems in the future. Blockchain is not Bitcoin, Ether, nor any other cryptocurrency. It is the underlying technology that make bitcoin work. The early interest in blockchain has actually not been in the blockchain technology, but the highly speculative coins. The next phase will focus on the technology that makes blockchain work.