Being one of the biggest breakthroughs of the past decade, blockchain technology has entered all walks of life: from manufacturing to fintech. It also has been among the most talked-about technologies of recent years with the global market size predicted to expand from $3 billion in 2020 to $39.7 billion in 2025.
Though technology is still in the process of evolving and its possibilities are actively being explored, it undoubtedly has already transformed many areas of business.
Distinguishing between actual blockchain-based applications and the hype surrounding them is one of the biggest challenges around blockchain. In this article, we will discuss real future trends of Blockchain technology to stay aware of. But, first of all, what’s Blockchain?
What is Blockchain Technology?
Blockchain is a powerful technology that enables secure data sharing and access between multiple parties. It’s based on a mix of super-advanced cryptography and built-in incentives to remove the need for a centrally controlling third party and distribute power across all participants within its ecosystem. One of the key benefits of such a system for users and enterprises is gaining much more control and transparency over how their data is used. Now, let’s see what are the new trends in Blockchain.
Trend 1: Tokenization
Tokenization is the process that involves the conversion of physical and non-physical assets on blockchain into digital tokens. Simply put, it's a digital representation of something that has value and contains sensitive information. This concept has gained a lot of popularity lately and many traditional financial enterprises have started leveraging the technology for the protection of confidential data.
For instance, the credit card numbers of users are replaced with a token that represents a string of non-sensitive numbers and letters. If criminals try to hack this information, they can find only a token without any credit card info. Tokenization is not limited to financial data, it’s also widely utilized by hospitals to securely handle patient records, by the government for voter registration, etc.
Blockchain tokenization revolves around assets, involving the creation of cryptocurrency tokens. It brings a high level of liquidity which significantly raises the number of potential customers in a wide range of industries.
Let’s take real estate as an example. A house with a two million tag has a quite limited circle of buyers. Though if it’s tokenized, anyone can buy a share that is affordable for them. There is no need for any intermediaries and paperwork, the transaction is fast, transparent, and secure.
Trend 2: Transparency in the Supply Chain
The supply chain industry is currently facing a number of challenges. Accounting systems lack the capability to handle a large number of transactions, correcting mistakes takes too much time and money, products spoilage in the process of transportation leads to enormous financial losses, transportation costs a lot of time and bureaucratic effort, which in the end results in fraud and causes a lot of errors. Such complexity of tasks and challenges of modern supply chains require a systematic and secure approach offered by blockchain technology. Let’s see the most common applications of it.
- Blockchain allows the creation of a cloud-unified digital management system to track the cargo location in real-time. Walmart already uses this to supply certain products and the largest chain retailer in North America plans to move all food supply chains to the Food Trust blockchain developed by IBM.
- Tracing the origin of goods from a store to a specific location is also possible through leveraging blockchain technology. Each batch of goods is equipped with a tag that continuously monitors the location of items and interactions among participants in the supply chain.
- Blockchain technology also helps automate most of the workflow and business processes through the usage of smart contracts. It will significantly reduce errors, detect fraud, and speed up the delivery of goods. Maersk, for example, partnered with IBM to launch a logistic system based on the Hyperledger Fabric blockchain named TradeLens. The system tracks shipping freight traffic and exchanges customs and financial information between supply chain participants.
You can find out more about blockchain adoption in supply chain management in our article.
Trend 3: Decentralized Finance and Banking
Both banks and their customers already greatly benefit from blockchain technology. First of all, blockchain networks with decentralized and transparent digital ledgers are much safer than traditional ones. Nobody has access to private financial information and the ability to modify it apart from its owner. When identity management is run with blockchain technology, users can choose how to identify themselves and with whom to share their information.
Blockchain in fintech enables users to use a digital fingerprint scanner that can be stored on a distributed ledger and securely used by any bank in the network.
Blockchain as a service also significantly cuts down on transaction fees and eliminates delays in worldwide payments. The transaction doesn’t imply any fees and currency exchange losses so it’s much cheaper than traditional international transactions.
McKinsey states that blockchain solutions for fraud detection, regulatory compliance, and onboarding can also significantly save banks’ costs.
Trend 4: Popularization of Cryptocurrency
Blockchain is the technology that enables the existence of cryptocurrency. Currently, cryptocurrencies are gaining more attention from investors, governments, and regulators. The most widely known representative of a relatively new form of digital currency that is shifting the paradigm of the financial industry, Bitcoin, has already become a global phenomenon.
According to a survey held by Deloitte, 53% of respondents stated that blockchain technology was a critical priority for their organizations while 83% saw compelling use cases of the technology.
What are the characteristics of cryptocurrencies that drive their popularity and exceedingly increase the demand for the technology they are based on?
- Transparent transactions allow users to track any changes that have been made.
- Decentralization eliminates the possibility of tampering with blockchain without the agreement of all participants.
- No need for financial intermediaries in money transactions. Even large sums of money can be transferred across international borders within a few minutes.
Trend 5: Ricardian Contracts
The Ricardian contract was invented in 1996 as a method of recording a document as a contract at law, and securely linking to other systems. It’s capable of placing all data contained in the legal document in a format that can be expressed and executed by software.
The main aim of the Ricardian contract is to make the document format both machine-readable for computational purposes and also readable as a regular text document for contracting parties. The biggest advantage of the Ricardian contracts is that they are built with the help of blockchain technology which makes them completely transparent. The risks of fraudulent actions can be minimized as references to specific data are done through cryptographic hashes.
As a result, Ricardian contracts are predicted to gain greater popularity in the near future and can be definitely listed among the latest trends in blockchain technology.
Trend 6: Central Bank Digital Currency (CBDC)
The emergence and streamlined evolution of cryptocurrency and Blockchain technology has sparked increased interest in cashless societies and digital currencies, prompting governments and central banks around the world to investigate the potential of issuing government-backed digital currencies.
One of the latest trends in Blockchain technology became central bank digital currencies. Many countries are developing their own CBDCs and some have even already implemented them.
CBDC is similar to cryptocurrency but its value is fixed by the country’s central bank and is equivalent to the country’s fiat currency. They aim to reduce the amount of upkeep needed for a complex financial system, lower the costs of international transactions, and offer more affordable alternatives to those who use other money transfer methods.
Central bank digital currencies also could reduce the risks of using highly volatile cryptocurrencies. Backed by the government and controlled by a central bank, CBDCs would provide businesses and consumers with a more stable means of exchanging digital currency.
Trend 7: Blockchain in Healthcare
Secure data sharing and tracking prescription drugs and other medical goods in the supply chain and delivery are among the major challenges in digital healthcare. It’s no surprise that many organizations are trying to improve these processes with the help of Blockchain technology.
First of all, Blockchain-based solutions for healthcare records are based on secure encryption techniques that control the integrity of patients’ information when communicating with different parties. Secondly, tokenization and smart contracts have the potential to massively reduce the pre-authorization process, allowing patients to get the required care more efficiently. Thirdly, the existence of a decentralized platform will make medical records owned by patients, allowing them to use these records anywhere in the world. Here are more examples of Blockchain development trends in healthcare:
Blockchain technology has the potential to complementary transform the healthcare industry, increasing security and placing patients in the center of the healthcare ecosystem. Therefore, active implementation in healthcare is for sure one of the Blockchain trends in 2024.
