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Blockchain is the ultimate disruptor as it is changing the way we think about everything from finance to healthcare.
Blockchain technology is on the fast track with new innovations, applications and use cases implemented around the world every day. It does beg the questionwhat does the future hold for blockchain trends?
As businesses and companies are trying to integrate blockchain into their organization, they need to learn more about emerging new trends in this technology.
Here are some of the latest trends that are making a wave in the blockchain world.
Top blockchain trends of 2023
DeFi 2.0 is the next iteration of the evolution of decentralized finance (DeFi) applications and protocols built on the foundation of first-generation DeFi.
This new decentralized finance application will provide better accessibility, interoperability and scaling.
Just like the early days of DeFi where they provided basic applications like DEXs (decentralized exchange) and leading protocol, DeFi will also introduce new products for businesses to utilize.
One of them is new and innovative yield farming strategies. This will allow investors to earn yield or profit on their cryptocurrency holding in the form of transaction fees or interest.
Apart from that, DeFi 2.0 will also introduce undercollateralized loans and algorithmic stablecoins in the future.
NFT for digital identity and ownership
NFTs (non-fungible tokens) are digital tokens that represent unique items like digital art, music or video. It’s based on blockchain technology, which ensures that all NFTs are unique, verifiable and immutable.
Now, they are going one step ahead, and instead of claiming ownership, they are trying to establish a digital identity through NFTs.
However, there are many hurdles to achieving digital identity through NFTs.
Countries like China are trying to use new technology like NFTs to identify anyone on the internet, which could be considered a breach of privacy.
Nevertheless, NFTs are the future, and soon they could integrate identity verification like driving licenses and voter cards into the internet.
Metaverse is a virtual world entirely created by users where people can interact with each other in real time through avatars.
This much-awaited technological wonder will become a decentralized and secure platform through blockchain technology.
Blockchain will enable interoperability for the metaverse by creating shared protocols and standards. It will enhance decentralized governance by creating community-driven decision-making.
Blockchain can help ensure the ownership and authenticity of digital assets in the metaverse.
A DAO (decentralized autonomous organization) is a type of organization that automates tasks by using smart contracts.
All the decisions are made through a consensus-based voting system where token holders can vote on proposals for the network.
DAO is the future of decision-makingnstead of relying on central authorities like CEOs or boards of directors, every decision is made by all members.
Central bank digital currencies
CBDCs (central bank digital currencies) are the future of digital currency as they represent a digital form of fiat money. It’s different from cryptocurrency as it’s issued and backed by a central authority and operates within a regulated framework.
The rise of CBDC was caused by plummeting usage in countries like Norway, where only three percent of payment transactions are done with cash.
Many countries are already introducing their own CBD currencies like Jamaica’s JAM-DEX, Nigeria’s eNaira and Project Aber by the United Arab Emirates.
Blockchain offers benefits like transparency, security and decentralization to CBDC. We will see more examples of it in the future with integration into the blockchain.
Layer two scaling
Layer two scaling refers to a process to improve transaction processing speed and capacity in the blockchain network.
Blockchain has been struggling with transaction speed for years, and it’s the only reason behind most companies refusing to adopt this approach.
Now, with ZK-rollup (zero-knowledge rollup) and optimistic rollup, we add a second layer on the blockchain to increase efficiency.
ZK-rollup is a layer two scaling solution that moves computation and state into an off-chain network while storing data on the layer one network. It will increase the transaction speed without compromising securityhile optimistic rollup packed in several off-chain transactions in batches before submitting them to the blockchain network.
Both of these solutions will help with layer two scaling of the blockchain network. Ethereum is already using these along with Sidechains and Plasma chains to improve transaction speed.
BaaS (blockchain-as-a-service) is a cloud-based service model that allows businesses to create, host and use their own blockchain application without investing in infrastructure.
It will provide the necessary computing resources, infrastructure and development tools to build their own apps.
In a typical BaaS, they provide services like node management, smart contract development and deployment, transaction processing and more. It will change the way businesses approach blockchain technology as it will be available to them like software-as-a-service (SaaS).
According to Allied Market Research, the current market share of BaaS is over $632 million in 2020, and it will reach $11,519 million by 2026.
Faster transaction with sharding
Sharding allows blockchain to divide into smaller subsets called, ‘shards,’ as each of these shards can process transactions independently.
By splitting the blockchain into a smaller group of nodes that only need to process a subset of transactions, it will allow blockchain to process a higher volume of transactions in parallel, which will increase the throughput.
Ethereum will introduce sharding into their new version of Ethereum 2.0. It will upgrade their scalability and efficiency by providing better transaction speed. It will work alongside the layer two rollups to divide a load of the transaction into a shard validator to increase the speed.
Green and eco-friendly blockchain solution
For years, blockchain was dubbed as a carbon-emitting and non-eco-friendly solution. It uses a large amount of energy to operate and mine, which is not suitable for any business.
However, blockchain is going green with many new sustainable solutions to decrease power consumption or try a new way with renewable energy.
The first step is to use renewable energy sources like solar power or wind power to replace and reduce the reliance on fossil fuels.
Blockchain companies can invest in carbon credit or trading or incentivize blockchain users. They can also use consensuses like proof of stake, proof of authority or Federated Byzantine Agreement, which uses less energy for computation.
Blockchain can revolutionize every industry with its ironclad security and transparency. Possibilities are endless with blockchain technology, from secure transactions to creating new models of digital identity.
In this article, we have shared some of the blockchain trends that will change the world in the upcoming yearsrom DeFi 2.0, BaaS to CBDCs and NFTs as digital identity.
With more companies and businesses implementing blockchain and introducing their own blockchain-based apps, the future of blockchain has never been so bright.
Kinjal Patel is the CMO of Vrinsoft Technology, a leading blockchain development company in India. With over a decade of experience in the industry, she has played a crucial role in the company’s success in the market.
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