Ironically for a technology entirely about decentralization, the two biggest institutions of their kind this year made announcements about blockchain initiatives that, between them, caused every boardroom and government policymaking office to take notice.
The first, of course, was Facebook’s launch of the Libra initiative. Libra’s design would not have appeared technically feasible before the rise of both public and permissioned blockchains, which have helped establish both the architectural basics but also corporate acceptance of the DLT concept.
2019 has been a year of growth and maturity in the use of blockchain technology for real business needs. Even the term “blockchain” is mostly out of favor, never fully shaking its association with get-rich-quick schemes and behavioral engineering, and now avoided by anyone trying to get upper-management support for their work, in favor of “distributed ledgers” and “smart contract systems.”
Long gone are the days when an iced tea company could get a stock boost using the B word. Instead, this was a year of more prosaic BUIDLing, with announcements of production systems and value being created, punctuated by headlines showing policymakers and CEOs more broadly understanding and wrestling with the transformative impact the technology is starting to have. And, on the ground, there’s nothing like lean times to sharpen developer attention on common code and common cause and getting things done.
Its major mistake was that Facebook marketed it initially as a Facebook-driven project, rather than as a consortium of companies.
Blockchain is a team sport – the strength of all these projects lie in the community of companies pulling together around a common set of needs. Had Facebook taken a step back, and let the Libra Association establish its leadership of the project and walk the public through its objectives, it might have avoided much of the pushback. All this highlights the importance of governance on blockchain networks as well. I predict we will see Libra come back in 2020, with a running network, perhaps even in production, with the Calibra client from Facebook and maybe others. But it’ll only work if they embrace the crowd as a (large!) peer rather than try to own the crowd. And when they do, they may find a lot of competition for cross-border currencies.
The second big announcement this year was Xi Xinping’s declaration that China should “seize the opportunity” of blockchain technology – and very pointedly, with a digital yuan instead of bitcoin. China has been a hotbed of blockchain activity for the last few years – and not just regarding crypto mining hardware. The People’s Bank of China has grown its blockchain trade finance network to over 40 Chinese banks, processing over a billion RMB of letters of credit daily. Walmart has been active in China too, deploying a blockchain system for food traceability. The Internet Courts in Beijing and Guangzhou use blockchain tech to make evidence submitted electronically tamper-proof via a consortium set up by LegalXChain.
“Xi’s declaration has now made this a matter of national competitiveness.”
While other governments, such as Dubai and Holland, had launched blockchain initiatives, Xi’s declaration has now made this a matter of national competitiveness. This is a huge boost to the blockchain industry in China, everyone from Baidu, Tencent, Alibaba / Ant Financial and Huawei to a long list of startups. It also raised the concern that the China blockchain industry and technologies may diverge from those outside, whether because of US sanctions or China’s Great Firewall. Fortunately, we have not yet seen barriers emerge at Hyperledger; companies and developers in our community who hail from China are active, first-class participants in the community.
In 2020, all these trends – increased adoption by mainstream enterprises, plus the growing and legit startup space around this, with greater attention paid by policymakers and more informed awareness by regulators – will meet up with a technology landscape that is finally coming together. We can see this at the level of ledgers and smart contracts, where the two largest ecosystems (Hyperledger Fabric and the Ethereum ecosystem) are now working more closely.
This is thanks in no small part to the launch of the Hyperledger Besu project, bringing a full Enterprise Ethereum client into the Hyperledger fold. We can also see this in digital identity, where the Decentralized Identifier (DID) specification is now standards-track at the W3C. Meanwhile different identity community efforts (Hyperledger Indy, the DIF, Sovrin, and others) are describing ever more coherently how they plug together and will be bringing better identity management and privacy controls to end users.
From here out, the basic business and technical questions – can this be used for real-world use cases?; can competing vendors cooperate on common code and standards? – will be considered more or less answered, with new questions about governance of blockchain networks and interoperability between them taking center stage. Building out the talent pool for blockchain developers and administrators, professionalizing the service provider space, and sorting out the real ROI from the feel-good cheerleading, will be themes for the coming year. We and our community certainly plan to do our part.