Originally published on our Forbes blog, “On the Future of Cryptocurrencies, Blockchain and Money”
There can be a lot of hype around how disruptive blockchain technology will be where some trumpet how it will change everything in our world today and every industry is primed for disruption. While I am excited about blockchain technology, I do not believe it’s a cure-all technology.
The most common industries cited as ripe for disruption by blockchain are banking and finance, healthcare, cybersecurity, and any space where a lack of transparency or a lack of tracking and inefficiencies abound, such as creative works and supply chain management.
The potential of blockchain’s disruptive nature across consumer and enterprise markets can seem like a sea captain sailing in the middle of the ocean during a foggy night. You know you are looking into vast and distant waters, but visibility is limited and the future is uncertain.
Enterprise is key
When I consider the potential application of blockchain on consumer-facing products and new companies that can launch from it, I get excited. When I think about the enterprise side, I get a little sleepy-eyed. At its core, blockchain technology is pretty boring. It makes backend processes more efficient, more secure or transparent as a new solution or as a middleware product. Middleware for legacy systems? Bringing large enterprises out of the IT Stone Age to the future of decentralized, distributed systems? Please stick a fork in my leg and pour a gallon of Red Bull down my throat.
But boring is good and highlights a huge potential of blockchain enterprise companies. A good industry benchmark for these up and coming enterprise blockchain startups are companies such as SAP and Oracle, which are traditional enterprise database companies. I see today’s enterprise blockchain startups and those in the coming years as the next generation of enterprise database companies. SAP has a market cap of over $135 billion with over $23 billion in revenues last year, and Oracle has a market cap of over $209 billion with over $37 billion in revenues. Oracle positions itself as the world’s #1 enterprise database company with dozens of core products from middleware solutions to servers to databases.
Eye on Asia
A little-known fact is that the core technology behind SAP’s flagship product, HANA database, came from a South Korea company they acquired in 2005 called Transact In Memory. Transact In Memory was founded by Dr. Sang Cha, who is a Professor of Electrical and Computer Engineering at Seoul National University.
The next generation of global enterprise database companies might not just be based on technologies acquired from the region, but wholly originated from Asia. For example, Blocko, which went through our accelerator in Seoul in 2015, has become the leading enterprise blockchain company in South Korea with over 90% marketshare. Their blockchain-as-a-service platform, Coinstack, has been implemented at Samsung, LG CNS, Hyundai and many other multi-billion corporations. For the Korea Exchange, they created a blockchain-based OTC trading market decreased transaction time from 2–3 days to 1 day. This resulted in cost savings of $73 million this past year.
For one of South Korea’s largest credit card companies, Lotte Card, Blocko set up a blockchain-based biometric log-in and payment authorization system which decreased authentication time from 7–10 minutes to 2–3 minutes. This simple solution reduced Lotte Card’s annual security solution expenditures to 10% of their original operating costs while exponentially increasing its level of security.
Another company in China, SunlightDB (a member of SparkLabs Beijing’s inaugural class this year), is trying to create a whole new database based on blockchain technology. They are building a database that is highly secure where information cannot be tampered with, but also completely open. Contrary to some misconceptions of blockchain technologies, their database queries have been at least 10x faster than traditional databases.
Joining the blockchain
Outside of Asia and the startup world, blockchain implementations are occurring throughout the globe. In Dubai, DNATA (Dubai National Air Transport Association), one of the world’s largest air service providers, is working with IBM to improve the cargo delivery processes through blockchain technology. The potential cost-savings will be in the hundreds of millions.
Many U.S. corporations are piloting blockchain solutions, but I believe this coming year there will be a shift from U.S. companies dipping their toes into the water to more of them jumping into the decentralized waters of blockchain technology. 2018 will be a breakout year for enterprise startups and large companies (i.e. IBM, Accenture, Bank of America) playing in this space, and U.S. companies within the space might quickly catch up to the innovations occurring in Asia.
The weakness of startups in Asia is the inability to become global companies and make a big impact beyond the region. You only have to look at the development of Tencent, Alibaba, Kakao, or Rakuten to question the viability of a true global player coming from Asia, but maybe this new generation of entrepreneurs in Asia will prove us wrong. Whether from Asia, Europe, or the U.S., this coming year could well pave the way for the beginnings of the first $100 billion blockchain company in the world.
Bernard Moon is co-founder and partner at SparkLabs Group, a network of accelerators and venture capital funds.
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