Five Ideas on the Future of Blockchain

As many of you know, I have long been a proponent of distributed ledger technologies. My own company, ZorroSign Inc., was built from the ground-up on blockchain architecture—in our case, leveraging Hyperledger Fabric’s private, permissioned blockchain to deliver superior privacy and security for digital signatures, digital workflows, and digital transactions.

After speaking to me about blockchain, many people ask me what’s my bigger picture view on blockchain? What will the world look like in the next few years with blockchain? What’s life after blockchain? To answer all these questions in one sentence: My personal goal is to see blockchain technologies incorporated into more and more aspects of digital life—perhaps supporting every industry vertical in some way, shape, or form as blockchain is the technology of the present and the future.

Why blockchain?

Because I believe it is a way to bring trust back to the users—where users of technology can feel secure and know that history cannot be re-written and events (such as transactions) cannot be distorted to suit the needs of the moment.

I believe blockchain can open people’s eyes that what we’ve been told about technology may not always reflect reality, but the transparency of blockchain technology allows people to see and assess truth on their terms with no filters attached. ?

In that light, it is my hope that blockchain can bring a level of fairness, clarity, and sincerity that may have been lost to transactions and even discussion the past few decades. For example, many of us see where compassion has been compromised by the COVID pandemic and the bitter dialectic of today’s political debates. But something as collaborative as blockchain technology has a chance to restore some community trust.

In the United States, for example, do we really trust the credit bureaus with all of our personal data? Do we trust banks with all our financial data? Do we trust social platforms with all our behavioral data? Do we even know what is private and secure across these huge institutions—hearing all too often how they have been breached, hacked, or compromised and data has been exposed?

The dream of blockchain is to decentralize and so remove control over data from any single arbiter: Decentralizing data as a means of decentralizing and democratizing power.

On one hand, blockchain’s transparency and decentralized approach to information can help ensure the truth of stored and transacted data will prevail—escaping much of the subjectivity to which much truth is perceived today. While on the other, decentralized records can morph as people need them to, unlike controlled records where the evolution of data is under command of a single vision.

While holding this greater ambition aloft, here are five ideas on the near-term future of blockchain...

1.??Not Public Crypto but Private Apps: "The potential of blockchain is so vast that only what is currently happening could just be a scratch on the surface," writes Alessandro Civati , CEO of LutinX. "Blockchain continues to optimize processes and develop new services as its potential and application are widely understood." While cryptocurrencies get all the press, blockchain’s applications for smaller, private networks is far more compelling to me.

In short summary, blockchains can be run publicly (open) or privately (permissioned). Public blockchains allow anyone to run an endpoint node on the network, and users can participate by mining a block or making transactions on the blockchain. All cryptocurrencies—such as Bitcoin, Dogecoin, Ethereum, and Litecoin—are public blockchains. Alternatively, private blockchains restrict the endpoints or peers that can store data, requiring permission to participate. Unlike cryptocurrencies, private blockchains make excellent business applications (distributed apps or dApps) for storing, securing, and sharing data.?

Certain blockchains can also support smart contracts where terms, conditions, and permissions are written into the digital code and require an exact sequence of events to take place to trigger agreements. This "hardwiring" of contract details greatly increases speed (via automation), trust (where accuracy and backup are built into the transaction), and autonomy (as no third parties are required to mediate or control the exchange) of transactions. As such, private blockchain dApps have immense potential to transform real estate transactions, digital rights (for movies or music), elections (authenticating voters, securing and validating their selections), healthcare payments and records, supply chain security and provenance, and so much more.

2.??Healthcare Records: The Blockchain Council recently projected some blockchain technology trends. One prediction that I readily agree with is that the healthcare industry will have blockchain digital identity standards by 2022. It is exciting to imagine everyone’s digital health records stored on blockchains—where the history of change were tracked, symptoms and diagnoses, treatments and outcomes, and where details were immutable across healthcare systems.

“Outdated centralized record-keeping systems keep medical costs high, turn-around times slow, and most painful of all, does NOT allow customers to control their own data,” notes the International Council of E-Commerce Consultants , the world’s largest cyber security technical certification body also known as EC-Council. But “at the very heart of blockchain technology is a belief that people should control their own assets.”

Blockchain can surely do wonders for the healthcare industry and adopting a digital identity standard for the industry is a clear starting point to advance both patient rights and services.

?3.??The Internet of Things: “Cryptocurrencies and nonfungible tokens (NFTs) may be all the rage right now, but they’re overshadowing better uses for blockchain and other distributed-ledger technologies,” writes?Stacey Higginbotham for IEEE Spectrum . “Rather than using them to disrupt financial systems or the art world, distributed ledgers can be used to create trust among Internet of Things devices, which is essential for any successful IoT network.”

IoT networks require massive connectivity and data sharing on endpoint devices with often the meagerest of processing capabilities. As such, both endpoint access and data security are huge risks for IoT. But blockchain provides as ready solution to both obstacles.

“A primary challenge for IoT players is to protect the information in the entire IoT ecosystem,” notes Vipul Parekh in a recent IoT World Today article . The article then explain that with blockchain, however, "no single party has control over the massive amount of data the IoT devices generate. Blockchain encryption makes it virtually impossible for anyone to overwrite existing data records. And using blockchain to store IoT data adds another layer of security to prevent malicious attackers from gaining access to the network."

As more and more organizations look to the automation and scalability of IoT, blockchain technologies offer a clear and valuable path to improving system privacy and security.

4.??Know-Your-Customer:?Another interesting Worldwide Blockchain Predictions from the IDC was that ten percent (10%) of financial institutions will use blockchain solutions for know-your-customer (KYC) compliance by 2025.

Know-Your-Customer (KYC) processes assess customer risk and are legal requirement to comply with anti-money laundering (AML) laws around the world. Business and organizations—especially financial institutions—must effectively establish customer identities, understand customer activities, and asses the money-laundering risks associated with customers. Customer identification programs (CIP), customer due diligence (CDD), and ongoing monitoring can be performed via electronic and/or mobile means, with specific regulatory compliance required by individual countries. For example, FINTRAC in Canada; 4AMLD, 5AMLD and 6AMLD in Europe, PMLA in India, and FINRA Rule 3310 in the United States.

How can blockchain help?

“Because of blockchain technology’s ability to present the ‘truth’ of a transaction to all parties with access, there have been many proposals about how to best adopt blockchain to other uses,” notes Chung-Chia Huang and Asher Trangle in a 2020 Harvard Law School Case Study on Anti-Money Laundering and Blockchain Technology. Huang and Trangle go on to explain, "A recent study published by Barclays Bank posited that a permissioned blockchain would be a groundbreaking innovation in the AML space by having a centralized version of the consensus-based ‘truth’ accessible to all relevant parties. Barclays believes this would create a system starkly different from the current AML regime where ‘every bank, government department and law firm has their own paper copy of the truth.’ Thus, the centralized ledger could eliminate much of the duplicative work and back-and-forth processes between these entities that cause massive inefficiencies in the AML system.”

I enthusiastically agree and can easily imagine a private, permissioned blockchain shared across financial institutions that streamlines AML compliance and elevates digital identity standards—effectively lowering fraud risk and money-laundering losses.

5.??Arizona as Hub for Blockchain Development: This one is probably the closest to my heart, as last year I chose Phoenix as the global headquarters for ZorroSign.

The Valley of the Sun has a long history of supporting new technologies: From Motorola to ON Semiconductor, Axon (Taser) to Blue Yonder (JDA Software), Intel to TSMC, and hundreds more. The state’s regulations are business-friendly and open to innovation, while the great schools at ASU, GCU, NAU, Thunderbird, and UArizona produce talented engineers and entrepreneurs.

Specific to blockchain technology, Arizona passed legislation in 2017 allowing smart contracts in commerce and recognizing the legal validity of signatures and records on blockchain. And in early 2018, Arizona became the first state to establish a FinTech sandbox, supporting the development and testing of innovative technologies. Since then, dozens of blockchain solutions have bloomed in Arizona, including Dash, Nexus, Sky Republic, Sweetbridge, Token IQ, ZorroSign, and many others.

I am proud to make Arizona our global headquarters and believe the Phoenix metro can be the leader in blockchain innovation the next decade! The supportive mix of forward-thinking business legislation, existing technology leaders, young and growing demographic, and inspired new graduates from top schools means blockchain will have new minds developing new ideas, all nurtured by an entrepreneurial ecosystem eager to sponsor them.

For all these reasons and more, I am excited by the promise of blockchain and look forward to where we can take the technology in the years ahead!