Trends in Blockchain Industry in 2023
Blockchain was created for Bitcoin and it is used as the underlying technology for all cryptocurrencies, enabling peer-to-peer transactions with their protection against hacking, all transactions are recorded in a distributed ledger. The technology works through a combination of information blocks, algorithms and cryptography, due to which a consensus is achieved.
In 2018, spending on various blockchain solutions was $1.5 billion. For 4 years (until 2022), the growth rate was expected to be 76% on average for each year. As a result, the market volume for 2022 was about $12 billion and by 2023 could increase to $23.3 billion.
The main sources of growth in the future will be:
The main problem that gets in the way of blockchain development is the uncertainty of the regulatory framework as well as the lack of experience, information, and knowledge of employees working with blockchain.
The Reportlinker analytics group identified several countries that use blockchain technology more actively than others.
Among them are:
There is no public data on investments in blockchain development in the Russian Federation. Many people refuse to work with innovation because there is no regulator in the market.
The first development of blockchain as well as DLT was capable of showing the efficiency of programs among them clearing, trading of digital assets and fast calculations. However, along with the effectiveness, there was a shortage of speed and energy intensity and weak scalability.
Initially, there were many protocols and platforms in this sector but there were no standards. For this reason, companies could not achieve compatibility across platforms at the same time. The main challenge was the usual transfer of data from one user to another without the ability to negotiate the terms. An additional problem was the Proof-of-Work consensus mechanism. The computation processes were complex, took a lot of time, energy, and were expensive per transaction. The duration of transactions was on the order of 10 minutes. These are the problems of early blockchains.
By 2022, technology has improved significantly with new standards and delivery models, which has sparked interest from businesses:
The most widespread method of using blockchain is the creation of new digital assets and online payment systems with instant transfers, minimal commissions and protection of transactions from banks and other mediators.
In addition to the familiar cryptocurrencies, this list includes utility tokens, digital shares, natural asset tokens, stabelcoins, etc. At the end of 2020, there were about 1,000 different cryptocurrencies. In 2022 the number is more than 20,000.
This sector falls into the category of rapid development with the help of innovative developments. Decentralized finance can include blockchain-based instruments that work with smart contracts.
Customers have shown trust in such development, investing large sums of money in smart contracts every month which indicates the acceptance of such a financial system by ordinary people.
At the beginning of 2021, more than $11 billion was invested in the development of the innovation and 94% of the investment was coming from the United States.
The biggest blockchain users are banks. In theory, blockchain technology makes it possible for two parties to work without intermediaries. They may not know each other. Banks are the trusted environment, willing to make transactions, to work with agreements without 3 persons. In the future, no one will investigate credit history because the information will be shown by the registry in the blockchain.
Immediately after the decision on the status of digital assets, many banking institutions will switch to blockchain, a measure that will be forced. The prospect of a transition is about 10-15 years away but some global companies are already beginning the process. Today there are many who are testing the use of blockchain for financial transactions and central bank digital assets.
In this industry working with smart contracts makes it possible to simplify the issuance of customs invoices, licenses, certificates and other documents. All this is achieved through the speed of transactions, automation of processes. The development of this trend will reduce overall costs, time for cargo clearance and reduce corruption.
Many companies, countries and states are creating separate alliances by adopting blockchain. The shipping business is already using the developments improving efficiency. Leading companies as well as the maritime industry are successfully trying the electronic bill of lading.
Blockchain gives additional visibility and any transaction can be traced back to the data chains, ensuring reliability. This creates the global value chains of goods. Improvements in technology in the future will lead to transformations from reducing costs to increasing efficiency by using new operating models.
There are two prospective directions:
Financial industry is a leader in the field of blockchain platforms creation and other developments because any transactions are complemented by security and efficiency. This is not the only area where the technology is used, especially in the case of company solutions where several organizations have access to the same data and need to obtain data about the history of transactions.
Among the possible environments for blockchain adoption could be:
The blockchain in trade is gradually being implemented, the main difficulties are related to the legal regulations of different countries. Since the information is stored in a decentralized database and the processing is carried out in different places at once, the biggest legal problem is the regulation and taxation of cryptocurrencies. Malta is the first country that has started to introduce regulations to financial technology.
Corporate adoption of the technology is not yet very common in the world so it is difficult to speak precisely about possible risks. However, cryptography applications will greatly increase efficiency and security in transaction verification and a digital identifier will be responsible for confidentiality.
Blockchain has been around for more than 10 years with new developments and improvements to existing ones appearing every year but many countries perceive it as a curiosity with minimal regulation from the states. Given the functionality and the large number of blockchain-based programs in various sectors, we can expect a regulatory framework and technology that will be used around the world in 2023 and the following years.
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