While it may be dealing with growing pains right now, as cryptocurrency brokers and exchanges are struggling to keep up with the turmoil, but the digital assets industry has established itself as a force to be reckoned with. It experienced a massive amount of growth and it is apparent that blockchain technology is progressing in the same manner as the days before the internet. Yes, there are rough patches, flawed designs and their implementation, a great deal of risk and shortage of talent.
But, this does not mean that blockchain technology has nothing to offer. It has grown and continues to evolve, which means there are going to be some major trends that you need to watch for this year and beyond. What are they? Check them out:
- The use of NFTs (non-fungible tokens)
One of the hottest topics since the end of last year have been non-fungible tokens (NFTs), which are one-of-a-kind tokens that are created on the blockchain. It is not possible to replicate them and this has made them very rare. In fact, this has opened blockchain technology to a slew of applications. The art world, along with the music industry has adopted NFTs. They are being used for highlighting digital ownership of different objects and many celebrities and personalities are coming up with their own NFTs.
- Widespread institutional investment
While there were a lot of critics initially, 2021 saw that change and it is expected to continue doing so in terms of institutional investment in blockchain technology and the cryptocurrencies it powers. The most obvious move that showed the interest of institutional investment in this space was the launch of the Bitcoin ETF last year. This investment has surged since last year and the trend is not going to slow down anytime soon.
- The popularity of DAOs (Decentralized Autonomous Organizations)
Bitcoin’s initial objective was adopted by DAOs i.e. elimination of central authorities from a payments system that depended on its members. VitalikButerin, the co-founder of Ethereumcreated DAOs back in 2013. These are hierarchical organizations that create a digital democracy via their blockchain digital currencies. There were hiccups initially, but DAOs have grown significantly and have already become worth millions of dollars.
- The evolution of DeFi
2021 saw the world of decentralized finance (DeFi) grow, as numerous companies polished their technology and implemented scaling strategies to enhance their efficiency. A series of products in the second half of the year resulted in the DeFi 2.0 narrative. This trend is another one that is expected to continue in 2022 and beyond, as developers are able to create more products and offer better liquidity models due to technological advancement.
- The development of CBDCs
There was a time when blockchain solutions and cryptocurrencies were not acceptable anywhere, but if blockchain news is any indication, things have changed significantly. Cryptocurrencies are becoming mainstream, but the growth of blockchain technology can be ascertained from the fact that CBDCs are now being considered by numerous countries.
These central bank digital currencies (CBDCs) are meant to use blockchain technology for conducting financial transactions without requiring third-party providers. Many countries have made significant progress in this regard and others are expected to do the same.
- Blockchain to be more eco-friendly
One of the biggest hurdles forblockchain technology is the massive amount of energy resources it requires. Carbon emissions have increased because of it and this is standing in the way of its widespread adoption. Therefore, 2022 has already seen a lot of talk about making blockchain more eco-friendly and this trend is expected to pick up. Blockchain networks are switching from a Proof-of-work (PoW) consensus algorithm to a Proof-of-Stake (PoS) one. Moreover, those that are using greener models are getting more preference, which means there is a good chance that most will eventually bring changes.
These blockchain trends are already emerging and will pick up pace in 2022 and beyond due to the technology’s vast potential.