Although blockchain technology is approaching its tenth birthday, it’s still a relatively recent innovation, especially considering the scale at which it’s expected to inundate the tech sector.
First introduced alongside Bitcoin in 2009, the blockchain rose to prominence as digital currencies soared in value last year. Interestingly, although cryptocurrencies continually receive criticism and scrutiny from industry leaders, government officials, and financial titans, the blockchain is frequently touted as the heir apparent to the current internet infrastructure.
For example, financial industry elites like J.P. Morgan Chase CEO, Jamie Dimon, have described the blockchain as “real,” an important assertion from someone who considers its origin partner, Bitcoin, to be a fraud. Moreover, according to The New York Times, “more than 200 government agencies around the world, including the Department of Homeland Security, were exploring the use of blockchain.”
In short, blockchain technology is quickly gaining notoriety, but its future is anything but settled and determined.
All of this attention leads to frequent speculation about where the technology is headed. In some ways, the blockchain’s tremendous hype phase intonates that almost anything is possible, and the deluge of startups entering the sector are parroting that message. They are joined by large corporations that are pursuing blockchain technology by patenting new use cases and ancillary add-ons.
Blockchain startup culture
In 2016, investments in blockchain startups were limited. Data compiled by CoinSchedule shows that only about $95 million was invested in blockchain initiatives using the Initial Coin Offering (ICO) mechanism. The first few months into 2017 would dwarf that amount.
In total, nearly 400 blockchain initiatives participated in an ICO in 2017, netting more than $6 billion.
Of course, nothing compares to this year’s ICO market. Just nine months into the year, almost 800 projects have raised $18.6 billion towards their platforms.
The most prominent form of blockchain startup innovation is directed toward infrastructure, blockchain platforms that facilitate the decentralized economy. For example, EOS, an emerging blockchain technology for decentralized applications, raised the most money of any ICO, bringing in more than twice the amount as the second highest-earning ICO.
Blockchain startups are most prominently pursuing platforms that strive to apply blockchain technology to finance, communications, and investment management. These initiatives intend to use decentralized networks, smart contracts, and tokenized infrastructure to leverage blockchain technology's capabilities in various industries.
The current startup culture is producing a flurry of ideas, some of which will almost certainly succeed, but many others will likely fail. As Ethereum co-founder, Vitalik Buterin, explained at last year’s EthWaterloo, “It is an established fact that ninety percent of startups fail… And it should also be an established fact that ninety-percent of these ERC20s on CoinMarketCap are going to go to zero.”
He later doubled-down on this assertion, claiming that “90% failing is optimistic.”
However, regardless of the eventual success or failure of these new blockchain platforms, it’s evident that they are pursuing prominent components of the digital age.
In addition, these startups are joined by many corporations who will not be left out of this transformational moment.
Don’t count out the corporations
Many corporations are making significant investments in blockchain technology. Unlike blockchain startups that are striving to create new organizations based on the technology, these companies are integrating the blockchain into their existing infrastructure, and they are patenting new developments in the blockchain space.
iPR Daily, a Chinese information provider that evaluates intellectual property, recently released a ranking for patent applications. Chinese retail juggernaut, Alibaba, topped the list with 90 patent applications, followed closely by IBM with 89 patent applications.
Moreover, financial institutions including Mastercard, Visa, Bank of America, and Accenture made the list as well. Perhaps most notably, the People’s Bank of China’s Digital Currency Lab filed many patents, making them the only central bank to make significant inroads in blockchain technology patents.
The blockchain’s origin as the accounting backbone for a digital currency makes it a natural technology for other financial institutions, but the breadth of these patents shows that the technology spreading beyond just the financial industry.
Taken together, the vibrant blockchain startup industry coupled with the proliferation of blockchain technology initiatives among established corporations show that the technology is making real inroads in many different industries.
In other words, despite the blockchain’s relative novelty, it appears poised to stick around for a while.
Picture from Pexels.