Blockchain is considered one of the revolutionary technologies of the 21st century that will revolutionize industries and change the way the world shares money and information.
Fifteen years after its debut with the advent of Bitcoin, the blockchain revolution is not yet fully realized.
Instead, blockchain – like most new technologies – advances in spurts. Technology is bringing radical changes, enabling new business models in some sectors, while advancing rapidly in others.
Tech experts, industry analysts and multiple reports have predicted more of the same over the past year. But they also emphasize that there is actually a lot of forward momentum.
What is on the horizon for 2024 and the following years? Blockchain projects will continue to advance in decentralized finance (DeFi), particularly in cryptocurrency, where the technology had its big break and continues to shine. But progress with blockchain is also expected in other areas. The top trends include the following.
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1. Growth of DeFi
According to analysts and industry research, interest and investment in blockchain remains strongest in the financial sector.
“We have definitely seen cryptocurrencies becoming the killer app for blockchain,” said Avivah Litan, an analyst at Gartner.
But Litan said it’s not just the cryptocurrency market that has sprung up since Bitcoin’s launch in 2009 that is using the technology. Established financial institutions also use it and see it as a key component for modernizing their infrastructure.
“They are using blockchain for more transparent movement of assets and fractionalization of assets,” Litan said, adding that blockchain is a great technology for both tracking and real-time settlement.
ReportLinker’s “Blockchain in Banking and Financial Services Global Market Report 2023” detailed It was calculated that the global blockchain banking and financial services market grew from $1.89 billion in 2022 to $3.07 billion in 2023. The report quantified the market based on revenue from companies offering both public and private blockchains and other blockchain services in the banking and financial services sectors.
Such numbers show what lies ahead, said Lata Varghese, managing director and practice leader for digital assets and blockchain at consultancy Protiviti. “The future of assets is digital,” she said.
2. Fraud and corruption dampen interest
Although the financial industry continues to invest in blockchain technology, the sector is also facing increased scrutiny and skepticism following a spate of negative news over the past two years.
In May 2022, Terra, an open source blockchain platform, collapsed.
Then, at the end of 2022, there was the highly publicized collapse of FTX, once the third-largest cryptocurrency exchange. This was followed by the arrest of founder and former CEO Sam Bankman-Fried on various charges, including fraud. In early 2023, crypto lender Genesis Global Capital declared bankruptcy.
The anecdotal evidence is supported by statistics. The FBI’s “2022 Internet Crime Report” found an increase in cryptocurrency investment scams from $907 million in 2021 to $2.57 billion in 2022, an increase of 183%. Then in 2023, the FBI reported an increase in cryptocurrency investment scams, companies falsely claiming they had the ability to recover lost cryptocurrency investments, and fake non-fungible token (NFT) offerings draining people’s cryptocurrency wallets.
Such news has an impact, Litan said.
“Innovations are still happening, but they are slowing adoption,” she added. “It impacts the entire industry. People are no longer excited. It just puts people off.”
3. Legal action
Regulators and lawmakers are responding in response to crime and unrest.
Proof of this is the legal action taken by the U.S. Securities and Exchange Commission last March, charging crypto asset entrepreneur Justin Sun and three of his wholly-owned companies with unregistered offers and sales of crypto -Asset securities. The SEC also accused Sun and his companies of fraudulently manipulating the secondary market for the cryptocurrency token TRON (TRX) and orchestrating a scheme to pay celebrities to sell TRX and another token, BitTorrent (BTT). apply without disclosing their compensation. The SEC also accused eight celebrities of illegally promoting TRX and BTT without disclosing that they received compensation and the amount of that compensation.
In February, the SEC filed charges against Payward Ventures Inc. and Payward Trading Ltd. (both known as Kraken) for failing to register the offering and sale of their crypto asset stake-as-a-service program, a blockchain consensus mechanism. Kraken agreed to pay $30 million to settle the SEC allegations.
This comes just a month after the SEC accused cryptocurrency platform Nexo Capital of failing to register the offering and sale of its retail lending product for crypto assets. Nexo agreed to pay $45 million in penalties.
By the end of 2023, the authority filed several more lawsuits against unregistered cryptocurrency products. However, in January 2024, it approved the sale of spot bitcoin exchange-traded products, a new type of investment vehicle that holds bitcoins and can be traded on exchanges.
The SEC isn’t the only company taking action. US lawmakers at the state and federal levels have proposed or filed legislation targeting not only the cryptocurrency market but also blockchain as a technology.
Those measures include a move by U.S. Rep. Tom Emmer, R-Minn. The co-chair of the Congressional Blockchain Caucus introduced the Blockchain Regulatory Surety Act. The bill, which passed in committee but has not yet been voted on by the full House of Representatives, aims to provide legal clarity for blockchain developers and service providers that do not hold or manage consumer funds, essentially stipulating that they not considered money transmitters should be subject to strict regulation.
Blockchain and cryptocurrency laws are now pending in several US states in 2024.
4. Business investments in blockchain
Despite all the recent turmoil in cryptocurrencies, business leaders are still interested in blockchain, industry analysts say.
They have explored how blockchain can be used to create more effective, efficient, and secure platforms for various business needs, including identity and access management, supply chain management, smart contracts, and document management and verification.
However, most organizations are just exploring ideas or experimenting with blockchain for these purposes.
“I see people are still interested in it, but we’re not seeing adoption take hold yet,” said Seth Robinson, vice president of industry research at CompTIA, an IT industry association.
Robinson said executives in most industries, particularly outside of finance, have not yet seen blockchain-based platforms that justify the cost of replacing the systems they already have in place.
He said he expects the use of blockchain in businesses to accelerate as software providers find ways to use it to significantly improve their products or develop new products and services that significantly help businesses.
“Vendors need to show why the blockchain-based solution is better – and that it is so much better – that it is worth ripping out and replacing.” [companies] be present,” he said.
However, there are some areas where business leaders are more advanced in their blockchain experiments or deployment.
Some organizations are using blockchain for compliance, particularly in the areas of environmental, social and governance, or to bring more transparency to their supply chains. For example, some use blockchain for provenance to ensure that raw materials come from acceptable regions.
5. NFTs for businesses
Although executives may not yet see the utility of blockchain for many business processes, it is increasingly being used as part of the online token-based economy. Specifically, they are creating new revenue streams by selling digital products and assets via NFTs.
“There’s been a lot of innovation there,” Varghese said.
The potential size of the market is staggering. In a 2021 research note, Morgan Stanley estimated that metaverse gaming and NFTs could represent a $56 billion revenue opportunity for the luxury market alone by 2030.
Meanwhile, professional services firm Deloitte addressed the potential of NFTs for businesses in its 2022 report titled “Corporates using NFTs: How NFTs might fit your business and what to watch for,” writing that companies are just beginning to to scratch the surface of the technology.
Deloitte further concluded: “As more companies develop and test new use cases, it becomes clear that NFTs in their many forms – current and future – will change the way we carry out and record the transfer of digital rights and obligations , “can radically change.” , a development that could redefine the nature and boundaries of modern commerce.”
Mary K. Pratt is an award-winning freelance journalist specializing in enterprise IT and cybersecurity management.