The evolution of blockchain - trends to watch in 2023
In 2009, the first decentralised blockchain was created by an unknown individual, or group of individuals, called Satoshi Nakamoto. This was the birth of Bitcoin. Since the start of the blockchain revolution, a lot has changed. In 2022, the decentralised finance (DeFi) market reached a staggering $13.61 billion, showcasing the rapid growth and immense potential of this disruptive industry.
Change is constant in the world of blockchain, and recent developments, such as the growing trend of green blockchains and an increase in regulation, show that it's here to stay. These are also the trends that will help shape the future of crypto security. Understandably, due to the fast-paced environment, it can be hard to keep track and stay in the know on the latest developments.
So, what are the blockchain trends of 2023?
Increased adoption by enterprises
Blockchain technology is capturing the attention of businesses worldwide, with nearly 90% already implementing it. There are several reasons why there is an increase in enterprises that use blockchain. Due to the cryptographic nature of blockchains, they provide an enhanced layer of transparency and security for many businesses. This is particularly important in industries such as finance and banking, healthcare technology, insurance, and cybersecurity. Blockchains in banking help provide a traceable record of transactions which can be useful for anti-money laundering (AML) regulations and fraud prevention.
Growth of decentralised finance (DeFi)
Despite the large market size of decentralised finance already in 2022, research predicts that by 2030 it could skyrocket to $232.2 billion. Further research suggests by 2027 there will be around 9.33 million users in this space. Fortunately, with the growth of DeFi comes numerous benefits, many of which could change the way we see finance forever. As this financial landscape continues to grow, it opens doors for increased financial inclusivity, decentralised lending and borrowing, innovative investment opportunities and increased control over your assets.
Development of Web3
Web3 is a new cutting-edge technology that is driven by blockchain computing infrastructure. Web3 gives power to its own users by allowing them to build and operate the platform, creating a transparent environment. However, the treacherous landscape of cybersecurity attacks in 2022, amounting to $3.6 billion worth of losses, serves as a chilling reminder of the need for robust security measures in Web3 ecosystems. A recent report shows that 34% of people are hesitant to join Web3 services due to concerns about hacks, scams and platform security. As a result, companies, recognising the gravity of the situation, are increasingly allocating resources to fortify their defences and ensure the integrity and protection of their digital assets, transactions, and sensitive information from relentless threats.
Growth of non-fungible tokens (NFTs)
Non-fungible tokens are distinctive cryptographic tokens that sit on a blockchain meaning they cannot be replicated. The NFT market size is set to explode to $211.72 billion by 2030.
With great growth comes great responsibility. Security measures must accompany the rapid growth of NFTs to ensure their sustained development and success. For example, private keys should be stored securely and not shared with unauthorised individuals. Implementing robust security measures like multifactor authentication, encryption, and utilising storage solutions such as hardware wallets can effectively bolster protection. Adopting robust security measures for NFTs will help consumers embrace the new world of creativity and enable users to engage in new heights of digital ownership.
Improvements in scalability and interoperability
Significant advancements have been made in the scalability and interoperability of cryptocurrencies, enhancing their overall functionality and utility. 2023 predictions for blockchains shine a spotlight on the unparalleled importance of blockchain interoperability. The concept refers to the seamless communication, data exchange, and harmonious operation of diverse blockchain networks, uniting them into a cohesive and powerful ecosystem.
Within the realm of interoperability lies a key element: the scalability of blockchains. Sharding, a game-changing technique, forms part of scalability due to its ability to speed up how many transactions per second a business can produce. Distributing transactions and data and in turn producing a faster process, reduces congestion and enhances the overall performance of blockchain networks. The fusion of these advancements fuels an unprecedented era of high-performance blockchains that help to empower businesses and individuals to thrive in an ecosystem of seamless transactions.
The blockchain industry is igniting regulatory attention! As we dive into the thrilling world of blockchain trends in 2023, regulatory measures are emerging to secure the long-term sustainability of the crypto space. This development primarily focuses on crypto assets but carries profound implications for the entire blockchain ecosystem.
There have been some recent developments to spark excitement across the industry:
- The European Union’s proposal of a new regulation called Markets in Crypto-Assets (MiCa) is set to revolutionize the way cryptocurrencies are governed in the EU.
- The United States Securities and Exchange Commission (SEC) has taken a focus on classifying certain crypto assets as securities, stirring anticipation and reshaping the landscape.
- Powerful guidance from the Financial Action Task Force (FATF) lights the way for tackling issues such as money laundering and terrorist financing head-on.
Welcoming regulation to the industry is beneficial for the mass adoption of crypto for several reasons; building trust to facilitate mass adoption of crypto, ensuring responsible and sustainable use of blockchain technology, and protecting customers from fraud and other financial crimes.
Growth of green blockchains
An exciting convergence of environmental consciousness and blockchain technology is taking place. The remarkable rise of green blockchains can be attributed to a multitude of thrilling factors: a growing recognition of blockchain’s environmental impact, a surging demand for sustainable solutions, and the emergence of innovative technologies that enhance energy efficiency within blockchain networks.
To put into perspective, the average energy consumption per transaction for Bitcoin is 703.25 kWh compared to 148.63 kWh for 100,000 VISA transactions. High energy usage can be blamed on the proof-of-work (PoW) mechanism that Bitcoin uses. So, it’s no wonder people are favouring the growth of these green blockchains. Chia, a blockchain designed to be sustainable using Proof of Space Time (PoST), employs technology using hard drives and storage. The annual energy usage of Chia is calculated as 0.19 TWh whereas Bitcoin was last calculated as 100.23 TWh.
In the ever-evolving landscape of blockchain technology, the trends to watch in 2023 offer a captivating glimpse into the future of this disruptive industry. Predictions of this industry offer a myriad of possibilities and transformative opportunities. As the industry continues to embrace these trends, we hope to work collectively to ensure a sustainable and secure future for the blockchain space.