Blockchain is one of the most talked-about topics in the world right now. It has become prevalent due to the increased adoption of cryptocurrencies like Bitcoin and Ethereum. It is essential to know that blockchain can influence significant changes and create new opportunities in different sectors worldwide – from healthcare to banking.
Today, many industries now seek blockchain skills and proficiencies, and this demand has increased by more than 1000% from 2010 to date.
The Distinguished Research VP at Gartner, David Furlonger, said:
“60% of CIOs in the Gartner 2019 CIO Agenda Survey said that they expected some level of adoption of blockchain technologies in the next three years.”
But not everyone knows the role Blockchain could play in the future. So how does blockchain work, and what role can it play in the future? Let’s take a detailed look at them closely.
How does blockchain work?
Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, a car, cash land) or intangible (intellectual property, patents, copyrights, branding).
Virtually we can track anything of value traded on a blockchain network, reducing risk and cutting costs for all involved,” according to Blockchain dummies.
Blockchain uses cryptography to process and verify any transaction that takes place on its network for transparency purposes.
Blockchain is classified into two: permissionless and permissioned.
Permissionless: Anybody can join, as there is no need for authentication by a person or group managing it.
Permissioned: Every participant needs to get verified by the people managing it.
Industries that are already using blockchain
Bitcoin is a famous example of blockchain technology, and many people are already using this digital asset at the moment. For instance, Goldman Sachs, Google, Deloitte, and Visa are Fintech companies already using crypto-assets and funding projects that blockchain technology boosts. Other companies using blockchain technology include IBM, Spotify, Eastman Kodak, Kroger, Nordea, Plastic Bank, and many more.
Predictions for the future of blockchain technology
New innovations surface almost every day in the blockchain industry, and they promise bigger and better use-cases. But it is still ‘okay’ to look at what the future holds for blockchain technology. As these innovations promise better uses and advantages to different global sectors, here are seven predictions for the future of blockchain technology.
1. China will launch its Central Bank Digital Currency
The Chinese government has been enthusiastic about blockchain technology. The country has some of the biggest crypto-exchanges in the world. It also has enormous mining power globally.
It is crucial to know that when China’s President Xi Jinping said that blockchain would be the future, it led to significant adoption and research on blockchain technology. However, the country has been yearning for its own Central Bank Digital Currency for a while now. The COVID-19 pandemic slowed things down in the country, but its initiative may start in 2021.
China is currently looking for solutions that will help its digital currency. With the arrival of the COVID-19 pandemic, the country is searching for new ways to create blockchain frameworks to assist its healthcare sector and provide more food.
There is no doubt that everything will go digital soon in the country, and it will pave more ways for more innovations in the coming years. China’s digital currency would ensure transactions and payments would be seamless and achieved from anywhere in the world.
2. The need for Blockchain experts will increase
Due to the fact that blockchain is popular globally, the job market might rely on blockchain professionals. Even though blockchain has achieved so many strides in different global sectors, the problem is the scarcity of blockchain experts. If you want to go into blockchain technology and gain so much knowledge, now is the best time to start. There will be high demand for blockchain developers in the future.
3. New governance models will emerge
In years to come, pragmatic governance models will surface to support large companies and businesses in managing decision-making and payments more efficiently. These models will help garner robust information. However, more than 68% of CTOs now expect scalable governance models to make sure blockchain networks become an integral part of companies’ blockchain environment in the next four to five years.
4. Many governments would adopt national digital assets
Many countries are now proposing a new national cryptocurrency. Vladimir Putin, the President of Russia, was the first person to offer “Crypto Rouble,” a national cryptocurrency. Many governments are inevitably beginning to acknowledge the use-cases of cryptocurrencies.
When Bitcoin began to gain popularity, several governments weren’t sure about the positive impacts of cryptocurrencies on businesses and even finance.
They became worried as they couldn’t control Bitcoin. Even though countries like China are against using Bitcoin exchanges, many governments began to accept the blockchain-based currency when they saw numerous advantages. One country that has adopted its national cryptocurrency in Venezuela.
The country’s national cryptocurrency is called Petro, which is backed by mineral and oil reserves in the country. Venezuela is hoping its new digital asset evades sanctions from the United States. Even though many countries such as India fear terrorist funding and money laundering through digital support, several governments will be looking forward to a new dawn in digital assets.
5. Blockchain and IoT
According to the International Data Corporation (IDC), many IoT companies want to integrate blockchain technology into their services. Nevertheless, IDC anticipates that about 20% of IoT projects and solutions use blockchain services in the future.
This is due to the fact that blockchain technology can provide a secure, scalable, and transparent framework for communications between AI-powered devices. Blockchain technology can make sure IoT devices and products are user-friendly.
Also, blockchain technology can scale businesses to new heights. Although it might take a while before IoT companies start to adopt blockchain technology, but will be worth it once they do. Blockchain technology has shown to be secure against cyber-attacks. Besides that, blockchain technology facilitates cheaper and faster transactions. In the future, IoT devices will use smart contracts to enable seamless transactions of information and data.
6. Law integration into Smart Contract
Blockchain technology offers Smart Contract, which is a convenient possibility. The key idea behind Smart Contract is its ability to execute transactions when the conditions are met automatically. Hence, the constraints involved in smart contracts should be regulated. In this regard, law firms such as Insurers AIG are now aiming to create a blockchain framework that permits producing complex insurance policies.
It is essential to know that smart contracts aren’t centralized, i.e., a central body doesn’t own them. But in cases where there are disagreements, what can each party do, especially if they are from different countries? At the moment, it is still unclear how contractual disputes would be settled. Hence, the rule of law would be integrated into smart contracts in the future to make sure conflicts can be resolved automatically between two parties.
7. The adoption of Lightning Network will increase
Lightning Network was introduced as a ‘Layer-2’ payment protocol in 2015. It was created to perform on top of the existing bitcoin blockchain to allow ‘off-chain’ transactions resulting in higher transaction-per-second (TPS).
Lightning Network would be responsible for improving the transaction speed of Bitcoin and also its transaction speed. We can achieve this by leveraging off-chain data to enable low fees and less congestion.
In the future, we will witness a larger number of applications, channels, and frameworks that the Layer-2 network produces. With tools like Exonium, the blockchain will grow more significantly in the future.
A recent forecast from the analyst firm Gartner said that:
- By 2022, only 10% of businesses will achieve a significant transformation by using blockchain.
- The report also stated that at least one enterprise created on blockchain technology would worth more than $10 billion.
- By 2026, the enterprise value achieved through blockchain will be worth more than $2 trillion.
Blockchain is an emerging technology; therefore, there are still significant predictions about its potentials.
According to a TechRepublic study, 70% of blockchain experts who responded said they haven’t used or applied blockchain in any way. But about 64% of these professionals expect that blockchain will become more popular and positively affect the industry.
One of the areas blockchain technology will transform radically is cyber-security. However, cyber-attacks are an ongoing challenge for businesses, and blockchain technology can prevent data tampering and cyber-attacks. Also, blockchain technology can secure business data and allow users to authenticate a file’s validity. For now, the world is adopting a different approach to blockchain technology. The future of blockchain technology looks bright.
John Zanni, the President of the Acronis Foundation, said to Forbes:
“We believe that blockchain technology will be transformative in the tech and IT sector in the coming years, similar to what the internet did for the world back in the 90s and early 2000s. Today, part of our storage and backup software lets users notarize any digital data and put that fingerprint on the blockchain to ensure it can’t be tampered with.”