Tencent Institute: 7 Trends of Blockchain industry in 2017
In the first quarter of 2016 the total investment to Blockchain sector in reached a staggering $ 1 billion. Investors are showing the enthusiasm seen in the internet age of 1990s. Lile “cloud computing and “big data”, the term Blockchain have been used extensively by people. Then how will Blockchain industry develop in the next stage after the concept has been heated up. Will Blockchain industry make breakthrough as expected or it will encounter bottleneck? 2017 will be an essential year as a test to Blockchain development potential. There are following trends that deserve attention.
1. From concept to application environment
2016 was the year when Blockchain as a concept has been verified continuously. In 2017, Blockchain technology will leap out of labs and enter the real market. Whether Blockchain will succeed in real application environment is key to determine the success of Blockchain industry. In the past 2 years, companies of financial industry have frequently launched labs, sponsored hackathon or join coalitions to try to prove the concept of Blockchain. The amount of investment in Blockchain industry in 2016 has surpassed that of 2015. However, the investment cooled down from the second half of 2016. According the report from KPMG, the investment related to Blockchain and Blockchain in the 3rd quarter decreased to 87 million USD, lower than 1.53 million USD and 119 million USD in the first quarter and second quarter of 2016 respectively. In 2017, potential investors will become more rationale. In 2017, the industry needs to stop the verification of concept. It should identify the level the current Blockchain technology can achieve and thus prepare a better environment for the depth of the Blockchain solution.
2.The active preparation of service line of Banking industry
In banking industries, the front end is trying to set business standard while the back end is actively preparing for Blockchain industry. Banks can record all their clients’ information via Blockchain they recognized t instead of doing so via different software which will become outdated quickly. This will greatly increase banks’ business efficiency; Back end of banks will modify some business procedures to gain data of better quality and transparency. As Accenture predicted, by curtailing the time and agencies needed to reconcile data, the operating cost can decrease by more than 50%.
The reform of business mode not only relies on technological progress but also the maturity of Blockchain network. Only when the network among banks and other financial agencies is connected can Blockchain lower the cost of the flow of financial assets
3. The application from non-financial sectors will increase
Last year has witnessed innovations modes which distinguishes themselves from centralized platforms in the legal, art, music, energy, supply chain, medical and other fields. Due to fewer regulatory constraints, Blockchain application could develop faster in the nonfinancial sector with a potential to be commercialized in 2017. To take music industry as an example. Currently there is no database in the world can track the information of all participant of music industry like t singers, composers and producers. However, through the Blockchain-based distributed database, artists can represent themselves directly rather than agency company sell music to fans, and thus gain more profits. Through the smart contract, the participants of music industry can automatically share the profits. In energy sector, precise and digitalized management can be achieved through Blockchain. the stakeholders in the traditional distributed PV market usually lack of mutual trust. At present, enterprises have been experimenting with point-to-point energy transactions based on Blockchains, effectively solving multiple trusts, multi-party transactions, data friction and other problems. These applications will be the pioneers of Don Tapscott’s “distributed economy”.
4.Blockchain in Public service
The transformative potential of Blockchain has attracted the attention of the global government. In October 2016, the Ministry of Industry and Information of China has issued the “China’s Blockchain Technology and Application Development White Paper”, which is the first official guidance for the industry. At the end of the year, the State Council issued the Information Technology Application plan of “Third Five-Year”, in which Blockchain and big data, artificial intelligence, machine depth learning and other new technologies have been noted as core directions of China’s future development. Blockchain technology may reshape the way the government operates and make it more efficient. In the era the trust to government has been decreasing, information must be stored in a more transparent and accountable manner. The Blockchain provides the government with a variety of possibilities in the areas of governance, security and law. Recently, Delaware of the U.S. launched a project to migrate the national archives to the Blockchain ledger. The government of UK has also tested the use of Blockchains on social welfare issues. For government, building a society of integrity now has a technical tool in addition to legal norms. There will be more government-led projects running in 2017, and the government will rethink the future role of public service
5.Legal frameworks will be formed
For Blockchain projects, accountability issues will be redefined as there is no single agency that can be responsible for the operation of Blockchain ledgers. In order to become a legitimate and unique source of identity, Blockchain needs a relevant legal framework. In the financial sector, Blockchain is subject to regulatory approval is if it wants to platform for defining local financial instruments such as derivatives or bonds. Blockchain, as an autonomous world is still a vacuum zone for national -level laws. The introduction of decentralized platform needs more public participation. The government needs to be a part of regulation-set process at early stages, participate to achieve a sound management between the Blockchain autonomous norms and the existing legal framework, and needs to establish more international cooperation.
6. “Sandbox” Mode
In 2015, the UK first proposed the application of the concept of “sandbox” to the field of financial regulation, providing innovative enterprises with a reduced version of the real environment. In accordance with the requirements of the British Market Conduct Authority and under the specific simplified approval process, UK allows enterprises to launch new products, services, business model for three to six months of trial application. Even when innovative business conflict existing legal rules, companies will not be held accountable. To Take such a regulatory mechanism that narrows the distance between regulators and innovators, the application of innovation will succeed with more speed. Blockchain in the practical application will encounter many problems, the efforts needed to solve these problems may surpass those of technology itself. Therefore, government needs to promote the application of the environment. The establishment of a sandboxing mechanism allows the government to make a variety of innovations within the controllable extent, giving the Blockchain industry more opportunities.
7. Faster approach to sovereign digital currency.
A sovereign digital currency refers to a currency that is capable of substituting banknotes endorsed by central banks. The sovereign digital currency will have a profound impact on both economic and social aspects. It has the following advantages: the issue of sovereign digital currency, circulation and flow will be easily to tracked. It can greatly help combat illegal transactions. Banknote transportation and security is currently in China a 10 billion-level market, the implementation of digital currency will also reduce the cost of banknote minting, transportation and storage. With the development of online payment, mobile payment and other tools, paper money has been used less and less, thus the introduction of sovereign currency already has a better market foundation. Several central banks has proposed to focus blockchain technology as the main research object to promote sovereign digital currency issuance. Earlier this year, PBOC said its trading platform for promissory notes has been tested successfully, which means that China may become the world’s first to issue digital currency. Although there is still a long way to go from testing to large-scale applications, the exploration of digital currency, which is the architecture of a new currency and payment tool, will actively drive the block chain industry.