Seven key blockchain trends

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Date: 3 November 2021

Visualisation of Blockchain technology

Unless you have been living under a rock over the last decade, you must have heard about blockchain. Originally made famous by Bitcoin, this technology has delivered an alternative to the centralised financial system we are currently using.

That said, blockchain technology is much more than just a simple vessel for cryptocurrency transactions. The decentralised ledger upon which it is based has found numerous applications across dozens of industries. Through decentralisation, blockchain manages to disrupt not only financial systems but also logistics, gaming, and healthcare among many other sectors.

In this article, we take a look at some crucial blockchain trends that are in development. These are guaranteed to make a massive impact on many industries and improve operational processes by decentralising them and making them less prone to human error.

Supply chain optimisation

Logistics and supply chain are the sectors that look likely to gain the most from blockchain technology. This sector is plagued by delays caused by human error as well as fraud and issues around counterfeit goods. The decentralised ledger gives supply chain managers greater end-to-end visibility of the supply chain as every record on the blockchain is permanent and easily verifiable.

Moreover, the supply chain can be optimised by linking blockchain smart contracts to connected devices. This means that the status of each product is automatically updated in the blockchain without human intervention making the supply chain much more manageable and cost-efficient.

Digital money

The most widespread use of blockchain technology is, of course, cryptocurrencies like ether and bitcoin. There are now more than 12,000 different coins and tokens on the open market, each of them with different uses, advantages, and disadvantages.

However, there's another trend that is emerging from the use of blockchain. Various governments are using blockchain to create digital versions of fiat (government issued) currencies. For instance, the Chinese digital yuan is already in testing on a mass scale.

And China is not alone in creating digital money. The US and the eurozone have joined the race to release a digital US dollar as well as a digital euro. Other, smaller countries, are opting to adopt bitcoin and Layer 2 solutions instead to provide a decentralised monetary system, like the one in El Salvador.

Verification of certificates through the blockchain

Another increasingly common use for blockchain is the verification of credentials in the education and business sectors. Verifying certificates is usually a tedious and expensive process that requires a significant number of man-hours. Moreover, education certificates are some of the most falsified documents — meaning academic administrative workers can spend hours verifying certificates.

By registering certificates on the blockchain, credentials can be immediately verified through the network validators. Moreover, each certificate on the blockchain is unique, and falsifying a certificate is impossible.

Decentralised financial transactions

The decentralised financial sector, or De-Fi, is growing by the minute. In 2021 alone, the De-Fi market has seen a growth of almost 300%, with an increasing number of services being offered to individuals around the world by blockchain-based platforms.

Today, you can lend, borrow, trade, and earn passive income by using decentralised financial services. This means that you no longer need to go through a bank. You can access all of these services through smart contracts.

More importantly, this ecosystem brings decentralised financial products to people that are situated in regions where access to investment is limited or non-existent. Consequently, billions of individuals can access investment products and participate in the growing, borderless internet economy.

Distributed ledger system compatibility

One of the most important blockchain trends of 2021 is the interoperability between different decentralised networks. Until recently, many blockchains had been confined to their own ecosystems, and users could transact only within that ecosystem. This is a serious disadvantage if users need to use multiple platforms.

However, solutions that provide cross-chain compatibility are emerging, which increases the ways that tokens can be used in the ecosystem. This allows users to access the best features of blockchains while eliminating the shortcomings of individual ecosystems.

Smart contracts

Smart contracts are the biggest and most important innovation of blockchain technology. They allow us to deploy decentralised applications and automate blockchains so that they execute certain actions without human interaction.

As awareness of blockchain increases and it is used more frequently, so is the use of smart contracts. It's likely we will see increased interest from developers in this programming niche. And as competition between smart contract developers increases, users will benefit from greater security and a more robust blockchain ecosystem.

Tokenisation of securities

One direct application of smart contracts is the tokenisation of assets. Anything of value can be recorded and digitalised on the blockchain including insurance contracts, property, and even securities.

By tokenising securities, companies can access liquidity without having to go through a centralised organisation such as the SEC. They can release their equity on the blockchain, making it available for trade to everyone, rendering the entire process borderless. Investors globally can access equities using De-Fi platforms, where tokenised securities are available for trade.

Conclusion

Thanks to the success of cryptocurrencies like bitcoin and ether, blockchain technology is slowly becoming mainstream. As a consequence, the numerous advantages of the decentralised ledger are being increasingly utilised by various different industries.

Over the coming years, we are bound to see more widespread use of blockchain to provide decentralisation to different operational processes. Blockchain will increase trust between parties and lower costs by eliminating those intermediaries that are often the source problems.

Copyright 2021. Article was made possible by site supporter currency.com.

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