Observing the development of blockchain, it is safe to say that this technology is the future. So far, the financial sector remains the main engine of blockchain evolution. However, it is actively integrated into government and business processes. All these stages the blockchain goes through on its evolutionary path give us a chance to see promising and profitable outcomes in the nearest future.
During the last twelve years, technology lived through ups and downs. Over time, the necessity of blockchain integration into different businesses and areas of life was bounced around and challenged. Now, the demand for blockchain technology is indisputable. In 2020, it proved effective in its practical implementation and brought some meaningful insights for its further development. As a result, we can see various business solutions as well as increased investment in the blockchain.
Governments, financial organizations, and industries are now engaged in the debate on the regulations of blockchain use and creating conditions for its proper operationalization. At the moment the technology is more than the enrichment technique but a solution for enhanced security and data protection. In 2019, we faced a variety of new players willing to occupy their niches and contribute to different industries. In the meantime, businesses realized a need to adapt more viable solutions the technology could offer.
What is the blockchain today? Let’s consider the major trends!
Top 5 Blockchain Trends for 2021
- Shifting priorities
The blockchain moved beyond the epoch of hype and passed to more sophisticated adoption where it is necessary. A while back, blockchain technology appeared to be a game-changer. It impacted most industries including manufacturing and agriculture. While the prospects of blockchain were obvious for many, the hype fueled by extensive demand for Bitcoin turned out to be misleading in many ways. Based on this, a lot of companies rushed the integration of this disruptive technology without proper preparation and adaptation for the needs of the niche. Thus, in many cases, industries attempted to find the ways of blockchain practical implementation by guess and by gosh. However, in 2019 this tendency waned bringing us to the development of more viable solutions to accelerate business processes. Herewith, there were many examples of successful blockchain implementation. Today, this technology is often considered a strategic precondition to stay competitive. So, investment in blockchain saw a significant increase.
While we gain experience in how to adopt this technology for business purposes, the barriers to entry became more visible. Thus, before integrating blockchain to any particular niche, companies started to carefully consider its advantages and limitations as well as specific methods of its adoption. In 2021, the question if the technology is viable is not challenged anymore. Instead, businesses focus on how to make it work.
- Developing more pragmatic solutions
In 2021, blockchain solutions providing diverse features and their combinations take the lead in the global market. This is a necessary precondition to satisfy the various needs of different enterprises and businesses. As in 2018 many promising projects faded away, it opened the floodgates to more viable and sophisticated platforms. As a result, in 2019 and 2020 we saw a rise of such high-potential platforms like Ethereum, VeChain, and Hyperledger. Their key advantage was the winning combination of features. It often refers to the so-called “blockchain trilemma” that falls into three major characteristics – scalability, decentralization, and security. They establish the basis of a viable blockchain solution. But if two of them prevail, the third remains insufficient. Thus, blockchain providers will strive to reach the balance between these three elements.
If you need to create a pragmatic blockchain solution meeting the criteria of scalability, decentralization, and security, you can employ a blockchain software development company that provides diverse blockchain development services including smart contracts design and implementation, IoT systems integration, and cryptocurrency wallets and exchange solutions.
- A push towards blockchain blanket distribution
In the last two years, the blockchain investment rate has constantly scaled up across industries. In 2021, we will see the acceleration of wider adoption. The first prerequisite for this phenomenon was an attempt to test blockchain in different niches dated back to 2019. Hence, the technology implementation moved far beyond the financial sector. Currently, we can witness various blockchain projects developed in the interests of the government, media, science, health care, etc. Moreover, such sectors as technology, media, and telecommunication outpace others in terms of investment and adoption. According to the Deloitte Survey, 49% of TMT companies intend to spend about $5 million to develop the blockchain. Apart from that, 32% of representatives claimed that they have already taken steps towards blockchain integration in the past.
Meanwhile, other industries also take action to implement this technology to satisfy their specific needs. The development of appropriate blockchain solutions and ways to integrate them properly takes time. Thus, such sectors as healthcare, life science, and agriculture appear to be promising in terms of further blockchain adoption in 2021. On the other hand, the supply chain and logistics face the necessity to optimize the data flow and financial resources. In this regard, blockchain offers wider prospects to drive these aspects. So, it gives a chance to enhance the supply chain management and overcome some logistical challenges.
The financial sector is inclined to major and minor disruptions over time. Thus, financial services will continue to invest in blockchain technology to eliminate existing problems. While other industries can compete with financial organizations, this domain remains the leader pushing forward the development of various solutions. Though the overall investment from this sector slightly fell while comparing with the previous years, the need for more sophisticated blockchain projects is still sufficient. Besides, the governments make significant efforts to provide proper regulation for the technology.
- The regulation is crucial
In the cryptocurrency world the most popular deposits on crypto saving accounts are in bitcoins and digital dollars. Blockchain development goes together with challenges related to its implementation as well as the involvement of stakeholders. Both sides of the coin matter when it comes to eliminating barriers to make technology work for us. These barriers do not come down to technical nuances but also refer to human psychology. The most beneficial way to cope with them is collaboration and strategic partnership with other companies and stakeholders. Blockchain expertise is distributed inhomogeneously. Thus, the partnership can solve problems with proper blockchain adoption. In this regard, establishing the network and regulation standards is crucial to driving technology development and implementation. At this point, stakeholders should contribute to the elimination of the “cooperation paradox”. In theory, it will make blockchain fully usable and equally available.
The move towards elaborating adequate regulation will be made in the nearest future. The centralized governance model is not viable anymore. It gave large corporations a chance to advance the technology at the expense of consensus, anonymity, and security issues. On the other hand, this model gives rise to new threats regarding the way the technology is managed and controlled. As a result, new governance models were elaborated:
- Working group: this model is based on a consensus, equal contribution, and common objectives. It does not have a legal basis but provides opportunities for better cooperation and strategic partnership.
- Private sector entity: it is a legal entity that operates on the basis of funding by members and stakeholders. This model implies different agendas and projects that can be simultaneously developed according to the needs of members.
- Hybrid: this is a combination of two previous models that implies the involvement of an infrastructure operator. Herewith, stakeholders should follow the directives and jointly achieve shared objectives.
At the moment, the best way to unlock the blockchain potential is to cooperate with other stakeholders as well as to elaborate consortia. On the other hand, the consortium will encourage new members to take part. But any company should not prevail. Moreover, potential participants have to be interested in supporting the initiative. Thus, incentives need to be clearly stated to drive the collaboration. By far not every member will be able to contribute equal resources. This factor should be taken into account while settling down the decision-making process.
- Growing popularity of tokens
The widespread demand for tokens is constantly increasing. Their adoption is a general thing now. And it will tend to grow in scale in the near future. Tokens are the basis for the evolution of digital assets that are something valuable existing in the digital form. We have no exact limitations on what can be represented as a digital asset. There are some examples such as certificates, works of art, currency, etc. The rise of tokens broadens the prospects for a more flexible and faster economy as well as trade opportunities.
There two main types of tokens – fungible and non-fungible. The first type includes assets that can be exchanged for something else such as currency, shares, or other goods. Otherwise speaking, you can estimate the value of a fungible token and sell it. The non-fungible tokens refer to assets that are meant to be unique. You cannot easily find an adequate equivalent for such an asset. During the last two years, we witnessed the growing popularity of non-fungible tokens too. They are often managed within the Ethereum ecosystem. The ERC-721 standard attributed to non-fungible tokens had an increase of 350% during 2019.
The lack of measured regulation of the token economy affects the obstacles for its consistent adoption. However, in 2021 there will be steps towards overcoming the barriers in this direction. The development of digital currency concepts motivates governments to make efforts to elaborate recommendations for tokens’ regulation. Providing the rules of the game will be clearer, it will lead to more extensive use of tokens. At the moment, it is quite obvious that the key precondition for prosperity is the adaptation and implementation of new technologies.
To discover the token economy financial organizations should carefully consider some crucial aspects. First of all, the selection of an appropriate platform is the key to success. Thus, it should correspond to the development strategy providing sufficient services. While choosing the business model, it is recommended to rely on the organizations that can boast expertise in blockchain adoption. Cybersecurity issues should always be a priority to protect data and provide safer interaction between a blockchain platform and the value chain.
In Wrapping Up
The investment in the blockchain is expected to increase throughout the year. The technology is often perceived as completely ready for commercial use. In fact, many platforms are still unadapted for full-scale implementation. Most of them focus on one or two aspects. Some are more confidential, others are decentralized or scalable. On the other hand, there are some viable solutions that can boast a successful combination of features.
Apart from that, the debate on modern blockchain technologies is not without addressing some core issues. First of all, the overall development of blockchain is far from over. So, there is a need for further investment. Secondly, this development should be coupled with the elaboration of methods to adopt it in terms of different industries. Thirdly, the technology itself evolves faster than its regulation. At the moment, it is time to focus on blockchain governance as well as involvement in the strategic partnership to drive the progress.