It’s not exactly controversial to declare 2018 as a disastrous year for cryptocurrencies.
With last year’s spectacular boom now a fading memory, the ongoing bear market has drained investor interest in tokenized projects, while user adoption of crypto remains largely underwhelming.
The situation has, expectedly, triggered a perverse sense of satisfaction from the perennial doom mongers — those who rarely seek to understand anything of transformative potential. Lacking the capacity to imagine, many have ended up being proven right for the wrong reason. Sad!
Will we see a reversal of crypto’s fortunes? Difficult to say at the moment. But what we can be more upbeat about is that interest in the technology underlying these digital assets remains strong. Indeed, major strides in blockchain development have been taken this year, and not least by some of the world’s biggest tech giants.
At this early stage of blockchain evolution, much remains up in the air over whether the technology can deliver on its promises, especially when it comes to such issues as transaction throughput and cost. But we can at least be reassured by the fact that tech giants continue to make bold moves within the space.
Enterprise solutions, research facilities, acquisitions, and consultancies are just some of the ways these behemoths are boosting their exposure to this nascent industry. IBM and Microsoft are leading the way, partly due to their relative longevity in the space. But other tech giants including Amazon, Oracle, Alibaba, Tencent, and Google are also in the mix.
IBM is arguably the leader in the blockchain sector at present among enterprises. Last year, Juniper Research found that over 40% of company personnel either considering or actually deploying blockchain, ranked IBM as having the strongest credentials in the sector.
Big Blue’s best-known foray into distributed ledger technology (DLT) is through its contribution to the development of Hyperledger Fabric, an open source collaboration hosted by The Linux Foundation. Hyperledger is a strong contender for becoming the industry standard for enterprise blockchain frameworks and is already connecting users, developers, and vendors from various sectors in order to learn about and develop enterprise blockchain solutions.
IBM also offers its own Blockchain-as-a-service (BaaS) platform, IBM Blockchain, a public cloud service based on Hyperledger Fabric. The platform gives enterprise players the opportunity to build their own blockchain networks. For instance, Walmart has been using the Food Trust solution on IBM Blockchain to enable a food safety blockchain solution that aims to boost supply chain traceability and transparency.
In July, IBM partnered with Columbia University to set up a center dedicated to blockchain research and data transparency. The Columbia-IBM Center for Blockchain and Data Transparency aims to work on important issues pertaining to the technology, such as including trust and the use of digital data. And more recently, the Center revealed two new accelerator programs that will provide additional resources to help firms establish blockchain networks.
But perhaps most reassuring of all is the recent research which shows that other than Alibaba, IBM has secured the highest number of patents related to blockchain. And given that it also signed a $740 million deal with the Australian government to use blockchain for data security, IBM may end up taking the lead in terms of blockchain patents secured.
IBM’s biggest competitor in the blockchain space at this stage is Microsoft. Indeed, according to a recent report by ABI Research Microsoft’s beat out IBM in a comprehensive assessment of the leading BaaS platforms.
Microsoft’s BaaS is an Ethereum-based network on Azure, its cloud computing platform, that will help developers to efficiently build applications. Microsoft identifies three main benefits to using Azure’s blockchain platform: simplifying development, quickly validating blockchain scenarios and keeping data secure “on an open, trusted, globally available cloud platform.” Customers as diverse as the Monetary Authority of Singapore and Webjet are now benefiting from Azure Blockchain.
Azure’s most well-known blockchain application is Blockchain Workbench, which helps to simplify app development using its highly automated blockchain infrastructure that integrates many Azure services and tools. Microsoft describes Azure Blockchain Workbench as the “scaffolding for building blockchain applications enabling developers to focus on creating business logic and smart contracts.”
Microsoft is also developing an enterprise-grade blockchain framework called Coco that aims to deliver much higher throughput and latency for transactions,and will be compatible with any blockchain protocol, such as Ethereum and Hyperledger Fabric.
And one of Microsoft’s most significant blockchain partnerships was announced recently, with Nasdaq. Azure will integrate with Nasdaq’s Financial Framework, which offers software for traders, exchanges, and clearinghouses to interact with each other. As such, the blockchain partnership will improve usability for Nasdaq customers by making it easier to match buyers and sellers, and by effectively managing the delivery, payment, and settlement of transactions.
Hot on the heels of IBM and Microsoft is Amazon, which has is now rapidly boosting its blockchain exposure. Indeed, the online retail giant won two more blockchain-related patents in November, related to cryptographic signatures and expandable data grids, which reflects the fervent interest it is showing in the space.
Through its cloud computing service Amazon Web Services (AWS), the company’s most significant blockchain venture to date has been AWS Blockchain Templates, designed for Ethereum and Hyperledger Fabric. Similar to offerings from Microsoft and IBM, AWS Blockchain Templates allows customers to build their blockchain applications without having to set up their own networks. The service “provides a fast and easy way to create and deploy secure blockchain networks using open source frameworks.”
Among Amazon’s most interesting blockchain partnerships is the one it announced in May with the enterprise blockchain start-up Kaleido. It is the first Blockchain SaaS solution available on the AWS Marketplace, and will “help customers move faster and not worry about managing blockchain themselves,” according to AWS. And last December, AWS announced a partnership with blockchain banking consortium R3 to allow its Corda blockchain platform to be used on the AWS marketplace.
Even by its own admission, Google has failed to take a leadership position in blockchain development. Nonetheless, the company announced in July its partnership with BlockApps and Digital Asset, two DLT start-ups to allow customers to “explore ways they might use distributed ledger technology (DLT) frameworks” on the Google Cloud Platform.
Google’s BigQuery data analytics tool has also incorporated more crypto functionality this year. In February, it announced it was making Bitcoin blockchain data available for exploration, on the basis that more transparency within the cryptocurrency ecosystem “makes the contained data becomes more accessible and useful.” And more recently, it has extended this functionality to Ethereum datasets. For example:
In both cases, BigQuery will enable users to analyze and visualize the datasets and, using SQL queries, try to extract meaningful insights from data.
As far as the other tech giants are concerned, Oracle has launched its own highly anticipated blockchain platform for enterprises based on Hyperledger Fabric, and which counts Arab Jordan Investment Bank, CargoSmart and Certified Origins among its clients.
And the Chinese behemoths have also been active lately. Tencent’s blockchain platform TrustSQL is being used by the China Federation of Logistics & Purchasing to develop industrial applications, while the company also recently entered the blockchain-powered supply chain finance space; and Chinese search engine giant Baidu launched its blockchain project, Totem, in April in order to manage the intellectual property rights for images, thus ensuring a more efficient process of image ownership.
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Bank of America estimates that blockchain will be a $7 billion market at some point in the future based on the assumption that 2% of servers will be used to run blockchain, at $5,500 per server per year. The likes of Microsoft and Amazon are expected to be especially well-positioned to capitalize on this trend. Amazon is also touted to benefit “from incremental cloud services demand from blockchain implementation, while improved supply chain tracking should make Amazon’s retail operations more efficient.”
Part of what motivates the big guns to boost their blockchain exposure may also be to prevent the loss of market share by sitting on the sidelines. From a human capital perspective, for instance, a “war for talent” may soon emerge, with some believing that an exodus of developers and other tech talents from the giants to crypto startups are already underway.
The likes of IBMs and Microsofts are well aware of this, of course. Efforts to outmuscle the competition from the startup world will become increasingly apparent. Indeed, the tech giants’ expanding blockchain interest could well threaten the existence of many cryptocurrency startups and should be something to mull over when it comes to investing in the crypto space.
Originally published at www.datadriveninvestor.com on December 14, 2018.