What’s Next for Blockchain? 7 Emerging Trends
The world of blockchain is an ever-changing one and it’s been like that since its nascent. Companies and platforms rise and fall, difficulties are faced and overcome, solutions are tested, implemented, or discarded. Through it all, new trends emerge, some of them stick around, others fade away, and some are more exciting than others.
In our previous articles series, we’ve discussed the areas where we’ve recently noticed significant growth. But what comes after that? Let’s take a look at just some of the up-and-coming initiatives, platforms, and applications to be excited about.
1. Third-generation platforms
Although first- and second-generation blockchain platforms are remarkable for their innovation, they still experience some growing pains. These mostly concern scalability and interoperability which hinder blockchain’s ability to support mass use, causing problems like sluggish transaction times and closed systems.
Third-generation blockchain projects have been designed and implemented with a goal to address these fundamental flaws. Their technology resolves scaling issues automatically as they arise, reducing waiting times and opening the systems. These projects also feature built-in interoperability functions in their blockchains that allow them to operate with other blockchains smoothly and easily.
There are several notable third-generation platforms, including Cardano, Polkadot, Optimism, Polygon, Avalanche, Solano, and Cosmos.
Decentralized Autonomous Organizations (or DAOs) are fully democratized Internet-based communities collectively owned and managed by their members. They don’t have non-transparent hierarchical authority figures like CEOs and CFOs that can authorize spending or doctor the books as they please.
Boasting built-in treasuries that can only be accessed with the community’s approval, DAOs are governed by voting on proposals, thus giving a voice to everyone in the group. This way, they provide a safe, transparent, and efficient environment for collaborating online with like-minded strangers and directing funds to specific causes.
Notable DAOs include The LAO, MetaCartel Ventures, Moloch DAO, MetaCartel xDai, UberHAUS, and MakerDAO. You can explore the range of DAOs using this handy site.
3. Decentralized identity
Decentralized identity is an innovative approach to identity management that provides a blockchain-based mechanism for expressing personal credentials in a cryptographically secure, private, and machine-verifiable manner.
This mechanism involves a trust network that replaces identifiers (e.g. usernames) with self-owned and independent IDs, facilitating data exchange through blockchain technology that provides security and privacy.
Standardized by W3C and Decentralized Identity foundation, and backed by giants like Microsoft and IBM, decentralized identity grants individuals control over where, when, and with whom they share their credentials. As for organizations, it allows them to verify electronic data, improve transparency and verifiability, and reduce risk in operations. Finally, it enables developers to design user-centric apps and services, as well as to create true serverless apps that store data with users.
4. Enterprise DeFi
Enterprise DeFi is a concept that refers to major global corporations implementing Decentralized Finance (DeFi) technology into their services, products, and operations. It allows institutional investors to seamlessly reach new lending markets that rest upon blockchain-powered financial infrastructure, something they couldn’t easily do in the past.
This has provided them with new ways to generate steady and tangible income streams that are often much greater than what they would get using traditional means. These ways include liquidity mining, staking, harvesting, and more.
Some of the more prominent examples of platforms successfully bringing these two worlds closer together with their products include Grayscale, Aave, Circle, Centrifuge and Yieldly.
The Internet of Things (IoT) is a collective term that refers to a system of billions of physical inter-connected devices around the world collecting and transferring data over the Internet without human intervention. Examples include smartphones, smart refrigerators, smartwatches, fitness trackers, and others.
Unfortunately, IoT faces security and scalability problems that have impeded its large-scale deployment. Security vulnerabilities leave IoT devices powerless against DDoS attacks, while the lack of scalability in the face of a growing number of connected devices may lead to a bottleneck situation.
Blockchain technology has the potential to address these problems in several ways - by providing transparency, stronger encryption, distributed tamper-proof control over data, shorter transaction times, and lower operating costs.
6. Trusted systems of record
Utilizing blockchain provides all permissioned parties in a business ecosystem with a trusted system of record for sharing all sorts of digitized data. In this system, each party agrees to the transaction-guaranteeing network-verified consensus, providing full visibility to parties’ transactions while ensuring security and authenticity.
This is the answer to the historic mistrust between organizations (e.g. fear that information might be passed on to a competitor), allowing secure information sharing without the risk of compromising competitive advantage.
The Baseline Protocol is one of the projects applying this principle. It provides a set of tools that help coordinate confidential workflows between enterprises using blockchain, messaging, and zero-knowledge cryptography, without storing confidential data on the public blockchain. One of its use cases is tokenizing invoices.
7. Wider adoption of privacy technologies
Zero-knowledge cryptography itself has plenty of real-world application potential. It is the main blockchain-based privacy technology that enables businesses to record and authenticate transfers of assets without revealing confidential details about these transfers.
The zero-knowledge proof technology accomplishes this by mathematically preventing certain information (e.g sender, recipient, amount, and so on) from becoming public. At the same time, the protocol guarantees that the transaction is carried out correctly by verifying its authenticity.
To illustrate, imagine you need to prove to someone that you’re older than 18. Zero-knowledge proofs allow you to do so without telling them your actual date of birth. Such an approach takes the security of your online communications and transactions to a whole new level.
The blockchain sphere is far from done when it comes to innovation, as the participants and stakeholders constantly work on addressing issues in all areas of its use. With each new advancement, this sphere becomes more secure, scalable, faster, and more applicable in the mainstream.
Have any questions or comments, or have you noticed other important innovations in the blockchain industry that we missed? Feel free to drop us a comment, we’d love to hear from you! If you’d like to learn more about the amazing world of blockchain and its newest advances, then we invite you to check out our blog or join us on our informative and entertaining Blockchain Innovators podcast.