“Blockchain is an extremely complicated infrastructure based around cryptography, game theory, the quantity theory of money and network theory. The technology is extraordinary because, for the first time, it creates something in the digital world (where it is usually possible for products to multiply to overabundance) that is limited and cannot be duplicated.” This is how Emanuele Cisbani, technology evangelist at Intesi Group SpA, described block technology to Morning Future. Discussing the ways in which this tool can be used, Cisbani added that it, “Makes something traceable and transparent out of something that, throughout history, has always been linked to a concrete guarantee – like gold. But the world in which these technologies preside is in its infancy and it’s effervescent.”
Blockchain found its first natural application in predominantly financial cases. But now it is growing.
Until now, its effervescence was confined to a specific area: finance. But that trend is changing. In fact, as Bitcoin fever subsides and the debate over the advantages and risks of cryptocurrency heats up, the first attempts have been made to use Blockchain technology in totally different sectors. Today, every entity involved in business – from banks to insurance, from manufacturers to the media – are taking an interest in Blockchain technology. Since January 2016, 331 known projects have sprung up worldwide (and are either under way or have simply been announced), of which 172 are in test phase or operational. These numbers were collected by the Blockchain and Distributed Ledger Observatory at the Milan Polytechnic School of Management.
Despite the obstacle imposed by a lack both of clear business models and of detailed global standards, Blockchain is rapidly expanding: experiments already begun or in the “Proof of Concept” phase in 2017 were up 73% on the previous year, while announcements – which, often do not lead to concrete results – hit a huge increase of 273%. A large majority of 59% of known projects to date have been developed within the financial sector. Yet, since 2017, there has been an increasingly upward trend in projects within government (9%), logistics (7.2%), utilities (3.9%), agrifood (3%), insurance 2.7%), healthcare and air travel (2.4% each), the media (1.8%) and telecommunications (1.2%). Blockchain is today mostly used for processes within payment systems (94 projects), for traceability and supply chain (67), for document and data management (64) and for the capital market (51).
So what is behind this trend turnaround? Valeria Portale, the Observatory’s director, believes that, “As Blockchain was designed precisely for value transfers, it found its first natural application in predominantly financial cases. Experimentation started in this field, so it is only natural that that is where the most active solutions are today. Equally, the more knowledge we gain about the power a technology possesses, the more its usage will expand. That's normal.”
The Polytechnic’s research has in fact mapped the expansion of Blockchain usage clearly. “After finance, logistics and traceability is the main field studying how this technology can be applied. The most desirable features for this sector are cryptographic signatures and time-stamping, as well as the immutability and transparency so typical of Blockchain,” says Portale. “Even the Public Administration is aligning itself with these features, for identification or for managing the land registry. Finally, the insurance sector is also assessing the benefits of using Blockchain for smart contracts.”
One of the most famous examples of Blockchain is the joint venture between Maersk and IBM. Together, they developed a Blockchain solution to streamline shipping processes. “The project began with Maersk developing it alone,” says Portale. “But today it has become a joint venture, with the target of increasing the platform’s usability within the entire global shipping ecosystem and of making it a standard within the sector.”
After finance, logistics and traceability is the main field studying how this technology can be applied.
Even Italy has its own examples of which to boast. “We have around 15 examples in the finance and the logistics and traceability sectors. Intesa Sanpaolo, for example, has worked with one of our startups, Eternity Wall, on a project for document notarisation. Meanwhile, Unicredit is a member of the WeTrade Consortium. Traceability solutions have also been developed, such as EY’s system for wine, and the coffee roasting company San Domenico’s project for coffee beans,” explains Portale.
But why does Blockchain excite so much interest? The answer lies in its ability to reduce costs and turnaround times for certain operations. “However,” Portale clarifies, “the true innovative weight of this technology is that it allows us to do new things that would be just too complicated to do using existing technology. For example, how else would we manage P2P transactions without trust and without an intermediary providing guarantees? And that is before we consider potential future developments. It is possible that in future we will be able to create a true Internet of Value, where value can be freely exchanged.”
And Blockchain is also lining up to be a vital asset for employment. “Blockchain has already given birth to new jobs. Just think of the growing excitement around it and the consequent ad hoc demand for human capital and those employed specifically in developing it,” concludes Portale.