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5 Blockchain Trends to Know for 2024 and Beyond
Blockchain has been heralded as one of the game-changing technologies of the 21st century, poised to disrupt industries and transform the way the world shares money and information.
Fifteen years after its debut with the advent of Bitcointhe blockchain revolution has yet to fully materialize.
Instead, blockchain – like most new technologies – is advancing in fits and starts. Technology is bringing radical changes and enabling new business models in some industries, while faltering in others.
Technology experts, industry analysts, and numerous reports over the past year have predicted much the same thing. But they also point out that there is, in fact, a lot of forward momentum.
What’s on the horizon for 2024 and beyond? Blockchain Projects Will Continue to Advance Decentralized Finance (DeFi), especially cryptocurrency, where the technology had its great success and continues to shine. But blockchain progress is also expected in other sectors. Major trends include the following.
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 cryptocurrency emerge as the killer app for blockchain,” said Avivah Litan, an analyst at Gartner.
But Litan said it’s not just the cryptocurrency market, which has emerged since the arrival of Bitcoin in 2009, that is using this technology. Established financial institutions also use it, considering it a key component to modernize their infrastructure.
“They are using blockchain for more transparent movement of assets and fractionation of assets,” Litan said, adding that blockchain is a great technology for both real-time tracking and settlement.
“Global Blockchain in Banking and Financial Services Market Report 2023” by ReportLinker detailed the increase in investments, calculating that the global blockchain banking and financial services market grew from $1.89 billion in 2022 to $3.07 billion in 2023. The report sized the market based on the revenues obtained from entities offering both public and private blockchains and other blockchain services in banking and financial services.
These numbers indicate what lies ahead, said Lata Varghese, managing director and leader of the digital assets and blockchain practice at consultancy Protiviti. “The future of assets is digital,” she said.
Cryptocurrency setbacks could have a long-term positive impact on other blockchain applications.
2. Fraud and corruption dampen interests
While the financial sector continues to invest in blockchain technology, the sector is also facing increasing scrutiny and skepticism following a wave of negative news over the past two years.
There was the collapse of Terra, an open source blockchain platform in May 2022.
Then came the widely publicized collapse of FTX, at one point the third-largest cryptocurrency exchange, in late 2022. It was followed by the arrest of founder and former CEO Sam Bankman-Fried on various charges, including fraud. In early 2023, cryptocurrency lender Genesis Global Capital declared bankruptcy.
Anecdotal evidence is supported by statistics. The FBI’s “2022 Internet Crime Report” found an increase in cryptocurrency investment fraud 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 the ability to recover lost cryptocurrency investments, and fake non-fungible tokens (NFTs) offers that have drained people’s cryptocurrency wallets.
This type of news has an impact, Litan said.
“There is still innovation, but it is stifling adoption,” he added. “It affects the whole industry. People don’t get excited anymore. It just drives them away.”
3. Legal repression
Regulators and lawmakers are reacting in response to crime and disorder.
Evidence in point: the legal actions taken last March by the U.S. Securities and Exchange Commission, which filed charges against cryptocurrency entrepreneur Justin Sun and three of his wholly owned subsidiaries for the unregistered offering and sale of securities of cryptocurrencies. 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 advertise TRX and another token, BitTorrent (BTT) without disclosing the their compensation. The SEC also charged eight celebrities with illegally promoting TRX and BTT without disclosing whether they received compensation for doing so and the amount of their compensation.
In February, the SEC accused Payward Ventures Inc. and Payward Trading Ltd. (both known as Kraken) of failing to register the offer and sale of their crypto asset staking-as-a-service program, a consensus mechanism for blockchain. Kraken agreed to pay $30 million to settle the SEC charges.
This came just a month after the SEC accused cryptocurrency platform Nexo Capital of failing to register the offer and sale of its retail cryptocurrency lending product. Nexo agreed to pay $45 million in penalties.
The agency has initiated numerous other actions against unregistered cryptocurrency products for the remainder of 2023. However, in January 2024, it approved the sale of exchange-traded products with spot bitcoin, a new type of investment vehicle that holds bitcoin and can be traded on the stock market. .
The SEC is not the only entity taking action. U.S. lawmakers at both the state and federal levels have proposed or filed legislation aimed not only at the cryptocurrency market but also blockchain as a technology.
Among those actions is a move made in March by U.S. Rep. Tom Emmer, R-Minn. The co-chair of the Congressional Blockchain Caucus introduced the Blockchain Regulatory Certainty Act. The bill, which passed in committee but still needs to be voted on by the full House, seeks to create legal clarity blockchain developers and service providers that do not hold or manage consumer funds, essentially stipulating that they should not be considered money transmitters subject to stringent regulation.
Meanwhile, several US states have blockchain and cryptocurrency-related legislation pending in 2024.
4. Corporate investments in blockchain
Despite all the recent turmoil in the cryptocurrency industry, business executives are still interested in blockchain, industry analysts said.
They 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 only exploring ideas or experimenting with blockchain for such uses.
“I see people are still interested in this, but we don’t see adoption taking off yet,” said Seth Robinson, vice president of industry research at CompTIA, an IT industry association.
Robinson said executives in most industries, particularly those outside the financial sector, have yet to see any platform built with blockchain that justifies the cost of replacing the systems they already have.
He said he expects it business use of blockchain to accelerate the moment software vendors find ways to use it to dramatically improve their products or to create new products and services that significantly help organizations.
“Vendors will have to demonstrate why the blockchain-based solution is better – and that it is much better – that it is worth eliminating and replacing what [companies] have in place,” he said.
However, there are some areas where business leaders are further along in their experiments or use of blockchain.
Some organizations use blockchain for compliance, particularly in the healthcare industry environmental, social and governanceor 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
While executives may not yet see the value of using blockchain for many business processes, more and more people are embracing it as part of the token-based online economy. Specifically, they are creating new revenue streams by selling digital products and assets via NFTs.
“This is where a lot of the innovation has happened,” Varghese said.
The potential size of the market is staggering. In a 2021 research note, Morgan Stanley estimated this metaverse games and NFTs could represent a $56 billion revenue opportunity by 2030 for the luxury market alone.
Meanwhile, professional services firm Deloitte addressed the potential of NFTs for businesses in its 2022 report, “Companies Using NFTs: How NFTs Could Fit Your Business and What to Look For,” writing that companies are just starting to scratch the surface of the technology.
Deloitte went on to conclude: “The more companies develop and test new use cases, the clearer it seems that NFTs in their many forms – current and future – could fundamentally change the way we engage in and record the transfer of rights and obligations digital”. , a development that could redefine the very nature and boundaries of modern commerce.”
Mary K. Pratt is an award-winning freelance journalist specializing in covering enterprise IT and cybersecurity management.