2015 may have been the year that financial institutions embraced blockchain technology, but as we move past the hype and the inevitable slump, it's best to focus on what today's blockchains can actually accomplish.

One of the main appeals of blockchains among enterprises is the notion of a value network, where parties can transfer custody of valued assets in an auditable manner without relying on intermediaries.

The recognition that these assets don’t necessarily have to be currencies, but that they can be any kind of financial instrument, has opened up new possibilities for innovation.

Yet, the technology as it stands today has limitations that are yet to be resolved. Privacy on blockchains is probably the largest hurdle for adoption, because by default every transaction on a blockchain is visible to every user of that chain.

Other problems relating to regulation and legal definitions will also need to be resolved, so it will take time for the full breadth of use cases to develop.

In 2015, most of the use cases we've seen with concrete proofs-of-concept focused on post-trade settlement, trade finance, payments and remittance. The common denominator is that these business processes harness blockchains as a provenance protocol.

Much has been said about the blockchain as an ownership layer. But what exactly does that mean?

It means that blockchains represent ownership of an asset in terms of control over the data relating to that asset. In other words, only the current owner can authenticate a transaction that would cause that asset to be transferred to another owner.

This is provenance expressed in protocol form. The word "provenance" is derived from the French "provenir" which means "to come from", and is used to describe the custodial chronology of an object.

Provenance is one of the backbones of economies, whether it relates to artifacts or real estate. There has always been a need to authenticate that a party actually owns an asset prior to any business dealing involving that asset, to ensure that the asset is "true" rather than stolen or faked.

In the past, trusted third-parties have traditionally played this role.

However, blockchains can streamline this function by serving as the infrastructure for registering and authenticating asset ownership between untrusting parties with common interests.

But that’s not to say that blockchains can make all the intermediaries in the financial system go away. For example, even in an all-blockchain world, some may find themselves issuing tokens representing the assets to be transacted, offering anonymization services or acting as chain administrators.

Time will tell if and how existing financial players can adapt to these roles.

Regardless of how this plays out in the traditional financial sector, the past year has made it clear that tracking of ownership on a blockchain has been one of the most immediately feasible applications.

Even on the bitcoin blockchain, we've seen startups that focus solely on provenance, such as Everledger, Colu, Ascribe and Monegraph, gain significant attention.

The tokens that blockchains track can also be used as digitized representations of the documents that accompany financial transactions.

If we were to deconstruct the business processes of trade finance, we'd see that many relate to the ordering and processing of shared documents between a group of untrusting parties.

The same can be said for post-trade settlement and collateral management. And where 'smart contracts' have been used, they often act as computations that initiate and control these same changes in state.

If we were to look beyond finance, a blockchain can also be used to manage data in a more general sense, providing a full audit trail of that data's origin in both time and place. Thus, a blockchain can act as a provenance protocol for data across disparate semi-trusting organizations.

In the past year, we’ve even seen interest in using blockchains within a single enterprise, because they act as highly robust and resilient distributed databases, with the added bonus of an incontrovertible internal audit trail.

As blockchain technology matures, more properties relating to provenance can be introduced.

Today, we already have permissioned blockchains in which there is an explicit assignment from one party to another of the ability to connect, issue, send and receive assets, confirm transactions and administrate the blockchain.

One can consider this as another type of provenance, in which the 'good' changing hands is a permission relating to the blockchain itself.

In the future, assets on a blockchain will have more properties to authenticate and track, not only regarding their origins, but also how particular entities are permitted to hold and interact with them. Again, these properties will be assigned by particular sources.

It might well be that, as a distributed ledger, blockchain tech's 'killer application' is as a provenance protocol that can accommodate different types of entities as they’re created, shared and used by multiple participants.

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