Table of Contents
Introduction
Blockchain technology has been praised for its revolutionary power, ability to revolutionize several industries, and the way we communicate information and perform transactions. However, the blockchain revolution has yet to materialize fully, even though Bitcoin has existed for over 15 years. It has been making slow but steady progress in many areas.
When we think about 2024 and beyond, blockchain is set to keep growing and coming up with new ideas, building on its original success in cryptocurrency and decentralized finance. In addition to its continued success in the financial sector, blockchain technology is ripe for innovation in other fields, including enterprise applications, NFTs, and the incorporation of state-of-the-art technologies like AI.
This article examines seven blockchain trends that are essential to take note of regarding blockchain technology, which will have a significant impact on the future course of this revolutionary technology in the years to come. The increasing use of central bank digital currency (CBDCs) and the merging of artificial intelligence (AI) with blockchain are just two examples of the many industries and parts of our digital life that will be affected by blockchain technology.
Whether you’re a developer, investor, company leader, or just someone who wants to be one step ahead of the competition, these significant trends will help you grasp the blockchain environment as it changes and how it will drive innovation and disruption in the future.
1. Growth of DeFi
The goal of DeFi is to use blockchain and smart contracts to decentralize classic financial services, including lending, borrowing, trading, and insurance. Allowing for the automatic coding of peer-to-peer financial transactions and agreements does away with the necessity for centralized intermediaries such as banks, brokerages, and exchanges.
The core advantages of DeFi include:
- Increased accessibility: A minimum account balance is no longer a requirement to use DeFi applications and services; all you need is an internet connection.
- Transparency: The blockchain makes all transactions and smart contract codes publicly available, encouraging openness and eliminating the need for trust in interactions.
- Composability:New financial goods and services can be created because of the composability of DeFi apps and protocols, which allow for smooth integration and composition.
- Permissionless innovation: The absence of bureaucratic obstacles allows for the quick adoption of new DeFi protocols, which promotes short innovation in the field.
- Self-custody: Instead of giving their assets and private keys to outside parties, users control them.
The DeFi ecosystem has experienced accelerated expansion, with the total value locked (TVL) in DeFi protocols expected to exceed $100 billion by late 2023, signaling increased capital inflows. Improving user experiences, institutional interest, risk mitigation through insurance, and transaction throughput and fee reduction through layer two scaling drive this expansion.
Asset tokenization, fractionalized ownership, and settlement process optimization are just a few use cases that big financial institutions investigate using blockchain and DeFi. Additionally, DeFi adoption is anticipated to be boosted by more transparent regulations and active involvement from institutions.
In the coming years, improvements should be made to DeFi’s robustness, security, and user-friendliness brought about by technologies such as cross-chain interoperability and advanced risk management powered by AI/ML.
2. Fraud and corruption dampen interest
Even though the financial sector is still investing in blockchain technology because it could be helpful, there is more doubt and scrutiny after several high-profile bad events over the past two years. Still, there has been a lot of negative press about the sector in the last two years, which has made investors wary of the technology. These occurrences have sparked worries regarding the absence of regulatory supervision in the blockchain and cryptocurrency industry and allegations of fraud and corruption.
Terra’s open-source blockchain platform went down in May 2022, which was a big deal and rocked the industry. After this, the fall of FTX, which was once the third-largest cryptocurrency market, got much attention. Sam Bankman-Fried, creator of FTX, was arrested on fraud charges, which added fuel to the fire of anti-industry sentiment. The instability was further exacerbated in early 2023 when cryptocurrency lender Genesis Global Capital declared bankruptcy.
The FBI’s “2022 Internet Crime Report” provides statistical proof to support these anecdotal stories of fraud, mismanagement, and failure. According to the study, fraud involving cryptocurrency investments rose by an impressive 183%, from $907 million in 2021 to $2.57 billion in 2022. Moreover, in 2023, there was an increase in cryptocurrency investment scams, firms claiming they could recover lost crypto investments, and phony non-fungible token (NFT) deals that took money out of people’s Ethereum wallets.
Avivah Litan, an expert at Gartner, says this flood of bad news has dramatically affected how the industry sees and uses technology. Litan claims these developments are “stifling adoption” and exert “influence over the whole industry,” even if blockchain innovation is ongoing. She says these high-profile scandals and fraudulent activities are making people lose faith in and enthusiasm for the technology.
Customers no longer have faith in the blockchain and cryptocurrencies because of the rampant corruption, fraud, and absence of regulatory control. The public and confident institutional investors have lost faith in the industry due to these unfortunate events, even though the technology may have positive applications.
3. Legal crackdown
The finance sector is still investing in blockchain technology because it could be helpful, but there is more doubt and scrutiny after a string of high-profile bad events in the last two years. These occurrences have sparked worries regarding the absence of regulatory supervision in the blockchain and cryptocurrency industry and allegations of fraud and corruption.
The May 2022 collapse of the open-source blockchain platform Terra was one of the significant events that shook the industry. The subsequent collapse of FTX, the third-largest bitcoin exchange, was also heavily covered in the media. Sam Bankman-Fried, creator of FTX, was arrested on fraud charges, which added fuel to the fire of anti-industry sentiment. Furthermore, the chaos was further fueled by the bankruptcy of cryptocurrency lender Genesis Global Capital in early 2023.
The FBI’s “2022 Internet Crime Report” provides statistical proof to support these anecdotal stories of fraud, mismanagement, and failure. The study found that from $907 million in 2021 to $2.57 billion in 2022, there was a startling 183% growth in bitcoin investment fraud. Also, in 2023, the FBI noted a rise in cryptocurrency investment scams, wherein businesses made misleading claims about recovering lost crypto investments and depleted people’s cryptocurrency wallets with fraudulent non-fungible token (NFT) offerings.
Avivah Litan, an expert at Gartner, says this flood of bad news has dramatically affected how the industry sees and uses technology. Litan claims that even if blockchain technology is still developing, these developments are “stifling adoption” and have “influence over the whole industry.” She says these high-profile scandals and fraudulent activities are making people lose faith in and enthusiasm for the technology.
Customers no longer have faith in the blockchain and cryptocurrencies because of the rampant corruption, fraud, and absence of regulatory control. The public and confident institutional investors have lost faith in the industry due to these unfortunate events, even though the technology may have positive applications.
4. CBDCs
The speed with which several countries are adopting Central Bank Digital Currencies (CBDCs) is one of the most noteworthy trends in blockchain and digital money. Several countries, like the Bahamas and the United Arab Emirates, are working hard to create digital currencies. This is a sign that digital forms of paper money are becoming more popular worldwide.
The notable aspect of 2024 is the incorporation of these CBDCs into preexisting monetary systems and infrastructure. With their ability to work with traditional financial institutions, CBDCs open up a world of possibilities that are impossible with earlier generations of digital currencies.
The widespread use of CBDCs is revolutionary since it opens up new applications for digital currencies, such as instantaneous international money transfers and ordinary purchases. New and exciting uses for CBDCs are on the horizon, expanding their innovative scope beyond these conventional functions.
The programmability of CBDCs is an exciting feature that could lead to new applications in smart contract execution, automated payment processing, and the effective distribution of government aid or benefits through digital currencies. These inventive applications could introduce new efficiencies and capacities, which could transform the financial environment.
The Digital Real program in Brazil stands out as a prime illustration of this change; it has even received praise from the IMF. The Digital Real initiative uses blockchain technology to usher in a new age of financial innovation, expanding on the success of Brazil’s Pix fast payment system. Though the Digital Real won’t be available to the general public initially, it will lay the groundwork for innovative financial solutions.
Additionally, regulatory organizations worldwide are beginning to take an interest in CBDCs, with the European Central Bank, for example, considering the possibility of a digital euro. While preserving the relevance and security of conventional fiat currencies, they aim to supply trustworthy digital payment alternatives. The growing use of CBDCs and digital currencies is a sign that traditional and digital financial systems are coming together, with the two areas becoming more connected and working together better.
CBDCs are becoming more popular, a significant change in the blockchain and digital currency worlds. They could change financial systems, open new uses, and connect traditional and digital finance.
5. Enterprise investments in blockchain
Industry analysts observe that firm leaders from various sectors are still interested in investigating the possibilities of blockchain technology for their business requirements despite the present turmoil and unfavorable incidents surrounding cryptocurrencies. Businesses are looking into blockchain’s potential to improve many platforms’ effectiveness, efficiency, and security.
Businesses are looking into blockchain technology for various uses, including supply chain management, smart contracts, document verification and management, and identity and access management. Blockchain is a promising technology for these multiple applications because of its intrinsic qualities, which include immutability, transparency, and decentralization.
However, as Seth Robinson, vice president of industry research at CompTIA, points out, most businesses are still in the early stages of testing and exploring blockchain usage ideas. There has been little to no explosion in businesses’ widespread use of blockchain technology.
Robinson thinks the absence of convincing blockchain-based platforms or solutions is a significant factor contributing to this reluctance, as it fails to justify the expense and effort required to replace current systems and infrastructure. Every executive, especially outside the financial industry, has yet to encounter blockchain solutions that provide enough improvements to justify such a massive rethinking.
Robinson predicts that software and solution providers will see a surge in enterprise blockchain adoption once they show off blockchain-based products and services that greatly benefit organizations through either significant improvements or the introduction of new capabilities. For businesses to justify investing in blockchain technology, these solutions must offer a substantial benefit over current methods.
However, businesses are further along the blockchain path in certain areas. Some companies already use blockchain to make their supply chains more transparent and to ensure compliance with environmental, social, and governance (ESG) efforts. For instance, in line with ethical sourcing policies, businesses use blockchain for provenance monitoring to guarantee that raw materials come from appropriate places.
Enterprises are still very interested in blockchain technology. Still, it will take innovative and compelling solutions built on the blockchain to convince people to replace their current systems and procedures.
6. Blockchain with AI Capability
Blockchain technology and artificial intelligence (AI) together have the potential to completely transform the digital world in 2024 by generating a potent synergy known as “AI-enabled blockchain.” This dynamic mix will introduce more innovative and efficient blockchain transactions, poised to impact numerous sectors.
Improving blockchain network efficiency through AI-driven algorithms significantly propels this development. As blockchain technology grows, these algorithms are making consensus mechanisms—which validate transactions and keep the network secure—more flexible and able to handle more users and transactions.
Incorporating reinforcement learning (RL) into consensus procedures is the primary development in this field. With RL, nodes in the network can continually improve their decisions because it is a dynamic method. Instead of the wealthiest nodes having an advantage in traditional proof-of-stake (PoS) systems, nodes in RL can adjust their strategy depending on factors like transaction volumes, network conditions, and other relevant metrics.
The second development is the application of GAs to reach scalable consensus. GAs are utilized to discover the most effective and scalable consensus procedures, drawing inspiration from the principles of natural selection. Nodes in a proof-of-stake blockchain can modify its consensus strategy by changing its “genes.” Eventually, a blockchain network that is secure and efficient enough to manage rising demand and complexity will have evolved these tactics with the support of GAs.
The third development is the use of fuzzy logic, which helps deal with complex judgments in the real world. Although real-life scenarios are seldom black-and-white, traditional consensus methods frequently need help with binary choices. Nodes can convey their level of certainty on the legitimacy of transactions through fuzzy logic’s degrees of truth. This method improves the network’s stability and integrity by making the system more adaptable and decreasing the likelihood of blockchain forks, which are different chains.
Blockchain technology incorporating AI has many advantages, such as increased decentralization, efficiency, scalability, adaptability, and security. When it comes to community participation, this integration is revolutionary since it allows for the analysis of massive volumes of unstructured data, which in turn leads to protocol updates and modifications that are more data-driven and inclusive.
Integrating AI and blockchain technology is expected to be a significant trend in 2024. It can transform our perception and interaction with digital systems by creating blockchain networks that are smarter, more efficient, and more adaptable. This trend will impact many industries and applications.
7. NFTs for business
Business leaders may still need to fully understand how helpful blockchain technology can be for different tasks. Still, more and more companies are using it as part of the new online token-based market. In particular, companies are looking for new ways to make money by selling digital goods and assets as non-fungible tokens (NFTs).
According to Lata Varghese, “That’s where a lot of the innovation has been happening,” referring to commercial NFT use. Particularly in industries like the luxury market, the potential magnitude of the NFT market is breathtaking. According to a Morgan Stanley research report from 2021, metaverse gaming and NFTs alone could provide the luxury industry with $56 billion in revenue opportunities by 2030. This shows that NFTs have a lot of economic promise for several sectors.
Even top accounting and consulting companies like Deloitte see NFTs’ promise for companies. As Deloitte pointed out in its 2022 research “Corporates using NFTs: How NFTs might fit your business and what to watch for,” businesses are just starting to explore the possibilities of NFT technology.
According to Deloitte, the future of digital tokens like NFTs is uncertain. Still, it’s becoming more apparent that they could significantly alter how we track and engage with the transfer of digital rights and responsibilities as more and more businesses explore and implement new use cases for them. Because NFTs allow for the tokenization and trade of digital assets and rights in new and inventive ways, this breakthrough can potentially rethink modern commerce’s very nature and boundaries.
While widespread implementation of blockchain technology to corporate operations may be in its infancy, NFTs provide a promising new frontier for innovation and potential for businesses of all stripes. With NFTs, companies may quickly transfer and hold digital rights and responsibilities, which opens up new avenues for revenue generation and the monetization of digital assets. This could cause a shakeup in traditional business structures.
The potential for NFTs to revolutionize several parts of contemporary commerce and digitally enabled business models is becoming more evident as technology advances and more organizations try out NFT use cases.
