Blockchain popularity has grown tremendously over the years; it’s not surprising since this tech has great potential. It emerged as the technology that underpins Bitcoin and other cryptocurrencies. Now, blockchain is applied in many more areas to solve problems related to online trust, security, data storage, and accessibility. Interestingly, blockchain is still considered to be in its early stages and is expected to impact more and more industries in the coming years.
Let’s learn about the top trends that are expected to drive blockchain technology in 2022.
1. Investment Raise
This year, blockchain technology will significantly increase in the investment sector. About $11.7 billion is predicted to be spent on blockchain solutions in 2022. Blockchain will expand its adoption to innovative areas like healthcare or green initiatives. One of the initial goals of blockchain is to manage decentralized finance; it’s proving to be capable of changing financial systems dramatically.
Some countries will be adopting Bitcoin as legal tender, letting people purchase and earn salary in Bitcoin instead of national currency. In 2021, El Salvador brilliantly adopted the use of this cryptocurrency and five developing countries are expected to follow its example by the end of this year. It is being used as a way to avoid global inflation and the growing remittance fees from financial “middlemen” organizations.
There are also states choosing the crypto route. Central banks will create and control their own national cryptocurrencies, in contrast to the existing decentralized coins. In these countries, digital currencies will not completely replace traditional ones (at least for now); they will operate alongside and eliminate the need for third-party service providers. The value of such national coins is usually pegged to the value of the country’s traditional currency.
Blockchain’s use in the financial sector will likely hit 22.5 billion U.S. dollars by 2026. Apart from nation-states, the European Union announced plans for a multi-billion euro investment into blockchain infrastructure last year.
2. NFT Reaching New Spheres
Last year, non-fungible tokens (NFTs) being sold at unbelievable prices occupied news headlines and gained popularity worldwide. For example, American digital artist Beeple managed to earn up to $69 million in NFT sales. One of the most valuable NFT collections — CryptoPunks — had pieces that sold for more than $10 million. Last year, the trade volume of NFTs hit $25 billion. This is unprecedented growth when compared to 2020 where trade volume was just $95 million!
These unique digital tokens residing on blockchains imprint ownership and value onto all types of assets. However, its potential uses are far broader than the publicity-grabbing use cases.
The brilliance in the innovation of NFTs is that it creates marketplaces for digital assets that could not be easily traded on typical markets: music, artwork, unique and antique objects, and games and gaming related tools. It can be utilized to prove the provenance of the objects, thus eliminating counterfeits. Blockchain-fueled NFT technology is also reshaping the music world. More and more musicians release tracks in NFT format to get fair royalty payment and prove ownership. The technology is a great solution for branded clothing and footwear; their merchandise could come with unique NFTs.
3. Proof-of-Stake (PoS) to Stop Energy Drain
It’s widely known that cryptomining requires significant computational power, which negatively impacts the environment. There is a constant escalating computational arms race between the computers in the network that consumes more and more energy.
There are several types of blockchains based on different ways to power the network. Let’s discuss two:
- In proof-of-work (PoW), the blockchain’s power in the network is firmly tied to computational power.
- Proof-of-stake (PoS) blockchain networks are powered by every member of the network and regulated by a consortium; the governance model and boundaries are also identified by the participants.
PoS might be a way to stop the negative computational escalation. Blockchain networks based on PoW — Ethereum and Bitcoin, consume about 73.2TWh and 204TWh annually, while Proof of Stake networks use and could use up to 99% less energy.
PoW systems are not the best option when attempting to lift up an entire industry or for businesses trying to set up their own blockchain networks. Such blockchains are not only unsustainable, but they also dramatically affect the environment. Ethereum 2.0 is said to be deployed this June and will be based on the PoS mechanism to combat the negative environmental effects.
4. Blockchain and IoT integration
Blockchain and the Internet of Things (IoT) are a great fit! The market revenue for Internet of Things (IoT) technology is constantly growing and expected to reach around $1.6 trillion by 2025 and $12.6 trillion by the end of the decade. Statista projects the total number of IoT devices will reach the $75 billion mark by 2025. IoT will continue to grow at a rate higher than 30% over the next few years, and that is where Blockchain comes in!
Blockchain technology allows interactions and transactions to be recorded between machines; ledgers and databases are automated, encrypted, and immutable. Considering these factors, blockchain could be a solution for security and scalability problems. Moreover, it enables machine-to-machine transactions — cryptocurrency micropayments when one machine or network procures services from another. Although this is an advanced use case, 2022 may create a more favorable environment for pilot projects and initial use cases in this field.
Even though blockchain technology is still in the early stage of development and has to overcome many challenges before reaching its full potential, it is undeniably changing the world for the better. It is constantly evolving, adjusting to new spheres, and offering new solutions. It’s of great importance to keep abreast of the latest blockchain trends in order to foresee its next move and be ready to adapt to make the most of this technology.
What other blockchain trends do you expect to arise in the near future? We look forward to your opinion in the comments! :)