The Transactions That Blockchain Will Really Transform

John Bates, Director of Product Management, Adobe, discusses, the impact of blockchain as we look to the new year: the tie with bitcoin will be less important, and will ultimately solve non-financial use cases. He gives insights as to how blockchain’s transparency and efficiency is put to use by smart contracts, and how we’ll see those smart contracts being leveraged for automating transactions between connected devices – creating massive opportunity for cultivating consumer experiences

As technology intersects with every facet of our life, and our expectations for the ‘next big thing’ continue to rise, it seems everything is framed as “transformational” in 2018. Each day, advancements in Artificial Intelligence, virtual reality and IoT become the norm, yet still, show us a spectacular vision of the future that was unimaginable only a few years ago. 

In the midst of all this innovation is blockchain – seemingly the buzzword du jour, the technology has the ability to help organizations from non-profits to governments to businesses around the world radically change the way they operate. While blockchain has come a long way from its reliance on cryptocurrency, many are still unaware of its broader future potential.

Blockchain’s ability to transform the daily transactions that impact almost every aspect of our lives – whether by implementing transparency in supply chains or enabling machine to machine exchanges, cutting humans out of the equation – will become evident in 2018, as the technology moves beyond the world of financial services and crypto markets and into truly revolutionary uses that will capitalize on this amazing technology

Blockchain

At present, blockchain is almost exclusively associated with cryptocurrencies, which have dominated headlines and caused a major buzz in the media and markets. However, few outside the tech world are considering future applications for the technology underlying Bitcoin and ether. However, the technology is far more than just an enablement for cryptocurrencies – blockchain represents a new type of protocol, a new way for individuals and companies to connect with each other and have greater control, transparency, and efficiency in all kinds of transactions.

Blockchain, a digitized, decentralized, public ledger, enables trustless transactions, meaning unlike traditional transactions, where an authority or central figure is required to facilitate the exchange, individuals or companies that have never interacted previously can exchange assets without the need for a middleman. Blockchain can facilitate these trustless transactions because of the innate transparency and control the technology provides, which opens the door to a whole new world.

In 2018, we’ll see blockchain move beyond cryptocurrencies designed to serve as new financial instruments into new fields, like data sharing. While companies are collecting troves of valuable data, many could still benefit from augmenting their first-party data with audience data from a similar or related company – blockchain enables transparency in B2B data-set sharing, making it easier for companies to pool their data sets, and glean sharper, better insights . And it’s not limited to B2B transactions – with customer privacy and restrictions around data collection and usage coming ever more into focus with regulations like GDPR, blockchain can provide a solution – giving consumers control and insight into what data they’re sharing with companies. This transparency around data collection will, in turn, help increase trust between consumers and brands.

And blockchain doesn’t only help with increasing trust – it can also be a huge boon in increasing efficiency. For instance, UPS, which recently joined the Blockchain in Transport Alliance (BiTA), an organization that aims to improve the inefficiencies of the shipping industry – which is currently controlled by freight brokers who facilitate transactions of loads from shippers to carriers, and as a result increase costs and inefficiencies – by introducing industry-wide blockchain standards that cut out the middleman, automating processes in the supply chain and getting shipments delivered faster, less expensively and with fewer opportunities for corruption or exploitation of the system.

Machine-to-Machine Transactions with IoT

Blockchain’s transparency and efficiency is amplified by smart contracts – a guaranteed self-executing agreement that is triggered when predetermined terms are met. Smart contracts are a unique aspect of blockchain technology because of their implications for machine to machine interactions. With the proliferating growth of the Internet of Things (IoT) – the annual economic benefits related to IoT are expected to reach as much as $11.1 trillion by 2025 according to McKinsey – the next iteration in the development of this ecosystem is enabling real-world transactions between machines.

In the coming year, I expect to see these smart contracts leveraged for automating transactions between connected devices. This will not only create vast opportunities for what machines can do without human intervention, but will greatly improve consumer experiences. Imagine if your electric car’s battery was running low, and at a stop light, your car could acquire small amounts of additional electricity from another car with a fully charged battery without you facilitating, or even being aware of the transaction. Or imagine that once you park, your car communicates with the parking meter – automatically sending payment for the time it remains parked (perhaps this will be the end of parking tickets!).

This emerging industry of machine to machine interactions is being shaped by upstarts like the IOTA foundation – which has pioneered a newly distributed ledger designed for machine-to-machine interactions. IOTA recently unveiled a data marketplace that aims to give connected devices the ability to transfer, buy and sell datasets securely, as well as providing access to unused data. For instance, smart city sensors could pull data on traffic or road conditions from connected cars. The initiative has support and participation from more than 20 global organizations, including Deutsche Telekom, Bosch, Microsoft, PricewaterhouseCoopers, Accenture, Fujitsi and many research groups.

Ultimately, the increased use of blockchain and IoT transactions will help transform our world in many ways, including through the new opportunities presented for data analytics. The growth of these technologies will not only provide new sources of data – from the data that is shared by individuals or companies to the data around different kinds of transactions (including machine to machine) – it will also provide new opportunities to leverage our robust troves of data to further improve efficiency, transparency and innovation in the world around us.