2017 – The Year Blockchain Arrived
The Top 5 Blockchain Developments from 2017
In October 2008, Satoshi Nakamoto published a white-paper called Bitcoin: A Peer to Peer Electronic Cash System. Nakamoto the pseudonym for an as yet unidentified individual or organisation argued that he/they had solved the problem of double spend for digital currency. In doing so they developed Bitcoin a digital currency based on a distributed database that combined cryptography, game theory, and computer science. Blockchain was born.
Ten years on the technology continues to be surrounded by hype and expectations, and although concerns remain over blockchain’s ability to support mass usership, the technology hit some incredibly important milestones last year.
Here are five of the biggest blockchain developments in 2017. . .
1. Bitcoin’s value rockets
Over the past 12 months, bitcoin’s value has increased somewhere in the region of 20 times. At the start of 2017, bitcoin was trading at around $800. By November it had reached more than $10,000 before surging to $19,000, and finally settling at $16,000 at the end of the year. This demonstrates the volatility of bitcoin, but also shows that blockchain based cryptocurrencies are making waves in the consumer market. Despite warnings from prominent financial figures, the world’s largest cryptocurrency continues to attract attention. Now, more than 100,000 global merchants accept bitcoin payments.
2. The rise of the ICO
An Initial Coin Offering (ICO) is a crowdfunding strategy for cryptocurrencies whereby investors can purchase coins in the hope of achieving a return on investment. The first ICO was released in 2013 for Mastercoin, but 2017 experienced a sudden spike in the number of offerings. Concerns over disruption to financial stability led the Chinese government to outlaw ICOs in September, showing exactly how impactful coin offerings can be. Total funding for 2017 exceeded $3.6bn, amounting to 37 times more than in 2016. While 2016 saw the release of 46 ICOs, this number rose to 228 over the following year.
3. Cryptocurrency crashes
It hasn’t all been good news for blockchain technology. In June, Ethereum suffered a flash crash of 99.9 per cent on GDAX, Coinbase’s professional cryptocurrency exchange. The crash was caused by an abnormally large sale order which led to 800 automatic liquidations. Coinbase itself experienced various processing problems throughout the year, struggling to cope with an influx of users. Although Ethereum recovered and Coinbase fixed the issues, it was clear that market development was lagging behind hype. Providing a quality service for more users will remain a priority as cryptocurrencies become widespread.
4. Smart contracts disrupt energy
Early in 2017, a startup called LO3 Energy set up a peer to peer microgrid in Brooklyn. People living within the community could store and exchange excess solar energy, reducing their reliance on the central grid via the use of smart contracts. These digitalised agreements enable the storage, verification and fulfilment of certain contractual rules. Applying blockchain’s smart contracts to energy makes perfect sense – so much sense, in fact, that Shell, BP, and a number of other partners have joined together to create their own blockchain based platform for energy trading. It will be released in late 2018.
5. Benevolent blockchain
2017 saw the use of blockchain to respond to the mass humanitarian crises that characterised international politics. The United Nations World Food Programme, for example, used an Ethereum blockchain to distribute digital food coupons to refugees in need of supplies. The coupons could be redeemed in supermarkets using biometric eye scans. So far the system has been trialled on 10,000 people living in Jordan’s Azraq camp. These difficult situations will continue to challenge governments and aid organisations, but blockchain will be on hand to help. Due to its scalability, blockchain could provide similar services in much bigger camps and even across entire countries. These humanitarian applications will be vital in transforming blockchain’s tarnished image.
Throughout 2017, blockchain evolved from a novelty into a necessity. While not all businesses have adopted blockchain as part of their strategies, they have had to consider its potential impact within their industries. This is especially the case for bitcoin, which has continued to increase in value.
Could 2018 be the year that the bubble bursts, or will the cryptocurrency break into mainstream markets? If blockchain continues to successfully solve real world problems, then investors, companies and consumers will be more willing to look beyond the teething problems and criminal associations that held back adoption. Ironically, the main obstacle for blockchain will be coping with its growing popularity.