The emergence of Bitcoin and other alternative cryptocurrency options has the potential to significantly impact the Global Networked Economy. During the last couple of years, huge amounts of these new currencies have been traded on the dedicated exchange platforms that already launched.
Meanwhile, some merchants accept Bitcoin as a payment method. And, numerous banks are now trialing the technology as a means of reducing settlement costs, while a host of other use cases -- as an example, smart contracts and secure ID verification -- are also seeing their first deployments.
Blockchain Technology Market Development
A new worldwide market study by Juniper Research has found that the total value of Venture Capital (VC) investment into blockchain technologies and Bitcoin companies totaled $290 million in the first 6 months of 2016, with more than thirty startups receiving funding during that time.
More than a third of all VC investment was accounted for by three companies: Circle - the social payment provider; Blockstream - the sidechain developer; and Digital Asset holdings - the distributed ledger solutions provider.
The resulting Juniper research report -- The Future of Blockchain: Bitcoin, Remittance, ID Verification and Smart Contracts 2016-2021 -- highlighted the increasing diversification of nascent blockchain deployments, with applications ranging from identity to asset management.
It pinpointed the banking sector as being particularly proactive, with several banks having already adopted the Ripple blockchain protocol and others piloting competing solutions.
The market research highlighted that in areas such as transaction settlement, the introduction of a blockchain-based system would substantially reduce both the risk of error and the time taken for error checking.
Furthermore, it argued that in cross-border remittance, the technology could allow new entrants to offer financial services at significantly lower costs to consumers.
Outlook for Blockchain Technology Advancement
However, the analyst research findings also cautioned that if smart contracts use blockchain technology, then their contents -- including bugs or flaws -- are visible to all the users of that blockchain.
The Juniper analyst assessment cited the recent case where a flaw on the DAO (Decentralised Autonomous Organisation) network was exploited by a third party, resulting in the misappropriation of crypto-currency worth nearly $80 million.
"While blockchain technology offers the potential for increased speed, transparency and security across an array of verticals, there has to be rigorous and robust testing in each unique use case before any decision is taken," said Dr Windsor Holden, head of forecasting and consultancy at Juniper Research.