Top Blockchain Trends In 2022
As we are entering into the web3 era, blockchain technology is emerging with new trends, innovations as well as new challenges regarding security concerns. This technology is gaining momentum steadily and with a vast number of use cases, the potential of this technology is endless. The technology is growing with a CARG rate of 69% from 2019 to 2025, and it's no longer limited only to cryptocurrencies but also used now in various other industries. Blockchain-based applications are under development for supporting decentralized data storage and information accessibility.
Blockchain can truly be a differentiator with the potential to change business processes. In 2021, we saw the DeFi industry maturing, the NFT boom, and layer 2 expansions of blockchain technology. Now in 2022, IT enthusiasts want to know the top blockchain technology developments, so here we are, sharing some interesting trends that highlight the growth of this promising technology in the near future.
Eco-Friendly Blockchain
Many of today's most popular apps, from online banking to online shopping and cryptocurrency trading, are powered by blockchain technology. But while blockchain is perceived as a decentralized technology, it still relies on many centralized services and data sources to function. This centralization is the primary environmental impact of this technology, which requires massive amounts of energy and data centers to operate. It also creates a disproportionate amount of waste and pollution, negatively impacting the environment and our health.
Tesla revealed in 2021 that it had purchased $1.5 billion (£1.1 billion) in bitcoin. The electric vehicle manufacturer accepted cryptocurrencies in the first half of 2021 before discontinuing acceptance due to environmental concerns. Elon Musk, the founder of Tesla, later stated that he would not sell his stake in the world's largest cryptocurrency and instead wait for a more sustainable mining process to be discovered.
The energy usage and the environmental impact of blockchain technology are very high, which drives the need for the eco-friendliness of blockchain.
Recently, the biggest blockchain network, Ethereum, announced that it will adopt a Proof-of-Stake (PoS) consensus model in 2022 and then migrate off the Proof-of-Work (PoW) model in 2023. The switch to PoS will align Ethereum to a more sustainable consensus model that will reduce the energy and environmental impact of the network.
Central Bank's Digital Currencies
Over the past few years, central banks have emerged as significant players in the digital currency economy. They've created digital currencies, set up centers to research the space, train their employees in blockchain technology, and even invested in early-stage companies like Coinbase and Ripple.
They have also been investing heavily in digital currencies hoping their investments will help them gain a competitive edge in the rapidly evolving financial technology. Many of the world's largest banks have already made significant investments in digital currencies, including Goldman Sachs, Barclays, and JP Morgan.
Digital currencies are becoming the new way to pay for goods and services, and central banks are looking to join the trend. By issuing their own digital currencies, central banks can provide faster, cheaper, and more convenient ways for people to pay their bills and transfer money. Digital currencies are backed by the government and will have the same value as fiat currency.
Central Bank Digital Currencies (CBDCs) have been at the center of a new global financial ecosystem; nine countries have already launched their digital currencies, and more than 80 countries, including Australia, Canada, China, Hong Kong, India, Japan, Mexico, New Zealand, South Korea, the United Kingdom, the United States, and most recently, the European Union, have passed regulations or are about to do so on their CBDCs or are rolling them out in the near future.
Check out the Atlantic Council's Central Bank Digital Currency Tracker to see how digital currencies are becoming more mainstream.
NFTs And Metaverse
NFTs and metaverse trends 2022 provide people with new ways to interact with virtual worlds and new social opportunities. NFTs became the talk of the town when one NFT was sold for $69000 in Feb 2021. At the same time, we heard NFT heist stories in the recent past; both news is overwhelming, creating curiosity and also doubt about this new digital asset. NFT technology is in its initial phase, and its use cases are explored only for the tokenization of art, music, collectibles, gaming, and real estate. The NFT technology will be used for various business tokenization and we will see a variety of new use cases. Next is Metaverse, which is a hypothetical future internet where users can interact with each other in virtual environments. The Metaverse is similar to the internet today, but it is a much richer virtual internet experience and has many more capabilities. The Metaverse has many potential applications, such as social networking, gaming, and commerce, and many people and companies are adopting it. One of the most exciting applications for the Metaverse is the creation of NFTs or digital assets that can be represented, transferred, and traded between users.
Evolution Of DeFi
Decentralized finance (DeFi) will occupy an increasingly important role in the financial market, especially as consumers become increasingly comfortable with crypto and digital assets. The DeFi sector is growing exponentially, with billions of dollars already being invested by investors. The market rose rapidly from 72 billion dollars in February 2021 to over 170 billion dollars in November 2021. As of February 23, 2022, it has crossed the 106 billion mark, with a 47 percent increase in the previous year. Through the introduction of DeFi products on the blockchain, the DeFi sector has the potential to open up the economy to broader adoption of the technology, providing a more comprehensive range of financial services to the population.
Regulatory And Security Uncertainties
The uncertainty of regulatory framework and security issues associated with blockchain technology made it averse to adoption. The rapidly growing hype around the technology and the sudden price surge have also fomented fears of the technology being used for illicit purposes. There is currently no significant and well-defined regulatory framework for blockchain and cryptocurrency. In March 2022, the US president signed an Executive Order on ensuring defined guidelines for supervising digital assets.
While many researchers and government authorities are constantly working on the regulatory framework, numerous Blockchain security audit organizations are available to ensure blockchain security.
Final Thoughts
Blockchain technology will continue to be an essential innovation in the coming years. The role of blockchain in government and society is significant. It connects disparate events and processes and thus provides the necessary security for trust. It also makes possible the transparent process of tracking transactions and, ultimately, a traceable and verifiable system. These are exciting qualities essential for the society we want to live in. But what the future will be like without these technologies is another big topic to be debated, and it's always best to follow the trends.