Blockchain is one of the most famous and talked-about technologies in today’s businesses. The future of blockchain holds limitless potential for various use-cases that can provide superior values to our businesses and our lives.
This ground-breaking technology has the potential to bring in major changes and to create new possibilities and opportunities in numerous industries- from cybersecurity and healthcare to banking and intellectual property.
So, let’s dive deep into the possibilities of what might the future of blockchain hold in stock for us!
Key Takeaways
- Blockchain is a shared and immutable register that facilitates the process of recording transactions and tracking assets in a business network.
- Blockchain technology will contribute towards pragmatic decision-making and governance through the standardization of information sources.
- Inter-connectivity and interoperability will reach their maximum levels through permissioned and permissionless blockchain networks.
- Coming up with cutting-edge validation tools like crypto-anchors, IoT beacons, and oracles will use blockchain technology to fight off fraudulent data sources.
- Issuance of Central Bank Digital Currencies (CBDCs) by central banks will function on wholesale and retail levels using blockchain technology.
- Blockchain technology will enable smart contracts to oversees all aspects of a contract, right from facilitation to execution.
How does Blockchain work?
A blockchain is a decentralized database which is an electronically distributed register of records that is accessible to numerous users.
Blockchain utilizes cryptography to account, process, and validate every transaction, thus making them secure, permanent, and transparent.
Now, there are two general categories of blockchain. One being a permissionless blockchain, which anyone can join, and the other being permissioned blockchain.
This requires participants to be authorized by the person/group managing the blockchain.
What seems to be the Future of Blockchain?
While looking towards the future of blockchain, it seems extremely exciting as new innovations are constantly entering the market. These innovations promise bigger and bolder use of blockchain technology. Also, Active blockchain networks are bringing real transformative change to a number of industries. The five trends that we can predict in near future are-
1. Emergence of pragmatic governance models
In 2021, we have seen new governance models which enabled large and diverse consortiums to approach decision-making, authorizing schemes, and to make efficient payments.
These models would contribute towards the standardization of information from various sources and capture the latest and robust data sets.
CTOs and CIOs expect to observe a scalable governance model for interaction throughout multiple blockchain networks to be an important feature of the organization’s blockchain environment in the upcoming 1–3 years.
2. Inter-connectivity might soon become a reality
Reaching maximum interconnectivity might be years away and the sole definition of interoperability might be interchangeable too.
Because of this, the majority of the companies today believe that guarantee of governance that allows interconnectivity and interoperability will revolutionize in future.
This is why companies are thinking between permissioned and permissionless blockchain networks to be a crucial factor to join an industry-wide network of blockchain.
But, there is still a lot of progress to be done on this front. This year might see the emergence of networks that might attain critical mass. This will lead to more members of a single network wanting guidance on integration across various protocols.
3. Adjacent technologies in tandem with blockchain to create the next advantage
A combination of adjacent technologies with blockchain might help us to achieve functionalities that weren’t done before.
The provision of trustworthy data from blockchain would strengthen and inform better the underlying algorithms. The data is secure along with auditing every step through the decision-making process.
So, this will enable crisp insights driven by data from trusted network participants will help us with going forward.
4. Blockchain Validation tools would fight fraudulent data sources
Blockchain solutions will provide an insight to come up with a heightened data protection mechanism this year. In conjunction with validation tools, crypto-anchors, IoT beacons, and oracles, Blockchain will be in use.
There will be mechanisms that link digital assets to the physical realm by injecting outside data into the networks.
By doing so, will bolster the trust and would mitigate any dependency on manual data entry which is often susceptible to human error and fraud.
5. Central banks will start to function on wholesale and retail level Central Bank Digital Currencies (CBDCs)
Countries in Asia, Middle East and Caribbean are beginning to experiment with CBDCs in real-time. They are expected to continue gaining momentum in subsequent years to come and to redefine payments in various new ways.
So, the future trend would be towards CBDCs seeing continual expansion in wholesale CBDCs, with initial incursions in retail CBDCs.
And so, this will result in a resurgence in interest in tokenization and digitization of various types of assets and securities like central bond debentures for treasury bonds.
6. Smart Contracts
One of the highly powerful implementations of blockchain technology is smart contracts. So, what are smart contracts? Well, these are contracts are nothing but computer programs that oversee all aspects of a contract, right from facilitation to execution.
Smart contracts are self-executing and self-enforcing as long as the conditions of smart contracts satisfy. These tools provide an even robust and secure and automated alternative to traditional contract law. These are also much faster and cheaper than typical means.
The potential future applications of smart contract technology are pretty much limitless. It has the scope of implementation for just about any field of business in which contract law would be effective. Obviously, smart contracts aren’t the catch-all magical solution for old-fashioned diligence.
As a matter of fact, the case of Decentralized Autonomous Organization (DAO) is one such cautionary tale that warns the investors to not assume that smart contracts are just only as good as the information and organization that a user puts into them.
Nevertheless, smart contracts still remain as one of the most lucrative and future-proof ways of implementing Blockchain technology has extended beyond the typical domain of cryptocurrency and can be seen in its applications in the field of law and business too.
7. Blockchain Cross Border Payments
Typically, the transfer of value has been a matter which is both expensive and is awfully slow, especially when we talk about payments happening across international borders.
One of the major reasons for the same is that, when multiple currencies are in the mix, the transfer process normally requires the involvement of various banks from multiple locations before the intended recipient gets their amount of money.
There are many existing services that facilitate this process in a faster way but it still has a significant delay and is expensive too.
Blockchain technology will come to use here as it has the potential to provide faster and simpler transfers along with cheaper transaction surcharges for cross-border payments.
In traditional cross-border funds transfers, the remittance costs might be as high as 20% of the amount of transfer. That cost will fall to just a small fraction with the implementation of blockchain while guaranteeing super-fast processing speeds.
It will also inherently address the security issues and reduce the hurdles drastically due to the nature of blockchain technology. And it goes without saying that this application is a very crucial and most sought-after functionality to implement in the future.
Conclusion
Blockchain is still in its infancy in terms of realized potential. Companies and individuals alike are looking for ways to leverage this paradigm to create value for both the stakeholders and society.
As its functioning is unique, to utilize the same would require us to be thoroughly familiar with how it works and to internalize its abilities and limitations.
In conclusion, this is precisely why blockchain technology is in the hype and would be the future of various technologies in years to come as well.
And, if you want to know more about how blockchain technology has impacted our world to date, you can read up more upon about cryptocurrencies.
Most cryptocurrencies are based on blockchain technology in some form or the other. And so, this makes knowing about it important to leverage the disruptive nature of blockchain technology in the future.
Also, you can come with your own unique application of blockchain. And eventually, maybe you can make your own cryptocurrency out of it too!
Frequently Asked Questions
What is a Blockchain?
A blockchain is a distributed, without requiring any intermedia cryptographically- secured database structure that allows all of the network participants to establish a trusted and immutable record of transactional data.
What is distributed ledger technology?
Distributed ledger technology is a broad category that accounts for the data through numerous participants in a network to maintain a digital record.
What is a Private Blockchain?
Private blockchains are developed by companies and other administrative bodies after the realization that it is probably the most secure way of managing sensitive transactional data. Since these blockchains are only meant to be used internally, it is termed a private blockchain.
What is a Blockchain Wallet?
A blockchain wallet contains a public key for other members of the blockchain network to transfer cryptocurrency to your address. The private key is used as a password for you to access your own digital assets.
What is Blockchain programming?
Blockchain programming focuses mostly on security and cryptography. Its implications with the paradigm of blockchain combines to come up with blockchain programming.
