The Top 10 Blockchain Trends of 2020
19 October, 2020
Keeping yourself up-to-date with the latest blockchain trends is a must both for investors and developers as blockchain and distributed ledger technology are constantly growing to occupy new market niches. Don’t let yourself fall behind and keep pace with the innovation.
Blockchain technology emerged as a revolutionary innovation, potentially affecting and disrupting every industry, from banks and financial institutions to healthcare. Just two years ago blockchain startups were mushrooming and attracting a lot of public attention. Back then, many companies showed an interest in the technology. However, most of them soon abandoned it as it seemed overhyped.
But fast forward to 2020, and blockchain is no longer a bold experiment — it has become much more serious, grounded, and mature. Now, the DLT seeks to provide practical solutions for established businesses and also private individuals, at the same time inventing new use-cases, such as blockchain-as-a-service, and tokenization of assets. Read on to find out about the current trends in blockchain technology that are likely to continue into the future.
Blockchain key stats for 2020
Before we deal with each trend in more detail, let’s look at some facts and numbers that demonstrate how blockchain is rapidly becoming a part of our lives.
- There are over 50M crypto wallets used for payments around the world.
- The total market cap of all cryptocurrencies is constantly changing and at the time of writing was over $360B.
- 75% of Internet-of-Things (IoT) businesses plan to start using blockchain tools by the end of 2020.
- According to Accenture, financial companies can save as much as $12B a year thanks to DLT solutions.
Blockchain adoption is accelerating
Blockchain started as the technology behind Bitcoin: at first, many people used these b-words interchangeably. These days, the tech offers dozens of non-financial use-cases. For example, blockchain can contribute to healthcare, environmental protection, real estate transfer, insurance, voting, identity management, supply chain, and many other sectors. Among the big players who are investing hugely in blockchain solutions are Amazon, NVIDIA, Mastercard, and IBM. Over 50% of the global financial institutions are doing (or planning to do) likewise.
Smaller companies are also looking to apply the technology to streamline their business processes. This global enthusiasm is understandable: most industries need a distributed ledger storing verified data that nobody can change or delete. Another useful tool is smart contracts — irreversible self-executing agreements that run automatically when a trigger event happens. These agreements can save the parties a lot of paperwork and reduce legal friction between them.
In 2020 blockchain has become a universal tool that you can use to fix a growing number of business issues. Though DLT adoption rates across industries vary, the overall popularity of the technology is steadily expanding.
Federated blockchains take central stage
In 2020, experts predict an increased demand for Federated Blockchain (aka Consortium Blockchain) which is an updated version of the traditional private blockchain.
Under the private blockchain model, the network is ruled by a single organization and new entrants need permission to view, edit, or otherwise manage the data. There are different levels of access, depending on your status in the system.
The federated blockchain applies the same invitation-only principle, but it is managed by multiple consortium members. Therefore, it’s more centralized than a public network but more decentralized than a private one. This makes FB a perfect choice for organizations and business groups in which power is distributed across several decision-makers.
This combined model features higher scalability and is a better fit for collaboration. Also, it’s more secure as all the nodes constantly keep an eye on each other. Some skeptics argue that private blockchains, FB included, go against the very idea of decentralization. However, such systems remain perfect solutions for associations seeking to effectively manage their commercial information between themselves.
Today, more and more organizations want to solve the problems traditional databases cause, and the distributed ledger technology has an equally useful role to play here. Therefore, federated blockchain is one of the hottest tech trends. It has great potential in banking, healthcare, supply chain, and other sectors where both trust and privacy are vitally important.
BaaS makes blockchain affordable
Blockchain-as-a-Service (not to be confused with Banking-as-a-Service, which uses the same BaaS abbreviation) is another trend to keep a watchful eye on. The term applies to a cloud service that makes it easier for clients to develop and run their blockchain apps.
The benefits are clear. Any business or individual can outsource complicated tech tasks to a BaaS provider. You don’t have to create digital products from scratch, set them up, and control their work. It’s enough to simply pay a fee to a BaaS company, which will then manage the computing part for you. Thanks to this impressive blockchain trend, you can focus on your business tasks.
A lot of startups are now relying on this model. They connect with the established blockchain networks and use their resources. Some top blockchain-as-a-Service providers active in 2020 are IBM Blockchain Platform, Oracle Blockchain Cloud, DragonGlass, and Azure Blockchain Service.
Stablecoins show amazing growth
Stablecoin is a hybrid of crypto and fiat currencies. It’s a blockchain-based coin with its value pegged to US dollars, euros, or another traditional currency in a 1:1 ratio. Some stablecoins can be backed by a commodity like gold or oil. The idea behind the stablecoin was to combine the advantages of both digital and normal assets. Like typical crypto, stablecoin is fast and easy to transfer. But on the other hand, its price doesn’t bounce up and down crazily. At present, the biggest stablecoins by market cap are Tether (over $15.5B), Binance USD (over $4B), USD Coin (over $2.5B), True USD (over $400K), and Paxos Standard (around $300K). In total, there are about 200 stablecoins, including those running on the major blockchain platforms. The leader is Ethereum.
There are three main reasons why digital dollars and euros have grown wildly popular in the past few months, their collective market cap reaching $16,8B in September 2020:
- Big institutional players like JP Morgan are entering the blockchain space. They need digital money that is instant, cheap to transfer, secure, and stable.
- The FinTech and De-Fi sectors are booming. As a result, the demand for stable cryptos is growing exponentially.
- Due to the COVID-19 pandemic and the resulting economic downturn, many people in developing countries are losing trust in their national currencies, preferring to convert their savings to dollars or euros. As their governments restrict operations with foreign currencies, stablecoins like Tether become an attractive alternative.
Blockchain meets social networks
Another big trend we should mention is “Blockchain for social networking”. According to Statista, over 3.6B people worldwide enjoy using social media networks. Although platforms like Facebook or Instagram are free to use and packed with exciting features, they are centralized systems that store, censor, and share their users’ data.
We often have little or no control over our personal information and the content we publish. The same applies to the content we see in our news feed. If there are any security breaches, our accounts may be compromised.
This is when decentralized solutions come to the rescue. Blockchain has the potential to address pressing social media problems such as:
- Lack of user control over their content and personal data. Blockchain social media (BSM) networks implement a “human-centric approach”. They enable you to control your data and track where it goes and how it’s used.
- Lack of personal data security. Blockchain platforms are almost immune to hacks, as there’s no central point of failure. Therefore, your sensitive details are safe with them. Gone are the days of scandalous data leaks that famously hit Facebook.
- “User-as-a-product” approach. Traditional social media “commodify” our data, using it for their marketing purposes. By contrast, a BSM allows users to capitalize on their texts, videos, and pics. If a large number of people read and share the content you create, you could get rewarded for it.
- Irrelevant newsfeed filled with ads. The advantage of a BSM network is that no central platform owner decides what you will see and when. Users can form communities and decide on the ways to share updates and posts within their groups. This means no more irritating ads that have nothing to do with your interests.
An interesting example of a blockchain-powered social network is Steemit which is essentially a decentralized blogging platform. Another promising blockchain social media project, Minds offers a decentralized social media platform that rewards users with tokens for creating and sharing quality content, as well as actively participating in various activities. Some similar upcoming projects based on Ethereum, IOTA, and other blockchains also have been announced.
Finance sector remains in the lead for blockchain adoption
Today, the financial and banking sectors are the main blockchain beneficiaries, and we expect this to become a strengthening trend. It’s no surprise as blockchain was originally meant for cryptocurrency, a novel financial tool.
Many major banks are exploring the opportunities to incorporate blockchain into their systems. Among them are JP Morgan, Goldman Sachs, Bank of America, Bank of England, Barclays, HSBC, and other big names. This trend will persist as banks look for simpler ways to move funds across borders. And blockchain makes such transfers speedy, direct, and incredibly cheap.
Some prominent projects are the digital Yuan, issued and backed by the Chinese Central Bank, and JP Morgan’s upcoming stablecoin. Interestingly, Jamie Dimon, JP Morgan’s CEO, was among the prominent Bitcoin skeptics who warned people against investing in cryptos.
Governments are testing blockchain solutions
Government agencies are approaching blockchain to see if it could help them regain people’s trust, protect sensitive data, detect and prevent corruption, and reduce expenses. Institutions around the world are currently testing blockchain applications for voting, identity management, welfare distribution, taxation, and more.
The results show that DLT tech might eliminate unnecessary paperwork and bureaucracy, improving the quality of public services. In the future, blockchain can become a transformative rather than disruptive innovation that can change the way citizens elect and interact with authorities.
There are several public sector projects worth mentioning. For instance, the United Arab Emirates (UAE) plans to put 50% of government transactions on blockchain by 2021. The ultimate goal is to make everything paper-free. Georgia is working on a blockchain-based land registry. Estonia applies the tech for taxation, voting, and business registration. Many other countries are launching promising blockchain test projects to find out how well these systems fit into their infrastructure.
Blockchain and the IoT bring out the best of each other
Blockchain’s benefits such as security, transparency, and immutability can be the answer to the most pressing digital economy issues. Meanwhile, the technology is often viewed in the context of the Internet-of-Things (IoT). Which is a network of billions of objects and devices connected to the internet.
This distributed network of smart things is a perfect environment for blockchain applications. For instance, the DLT technology can improve the way IoT devices communicate with each other. What’s more, it can track their status, location, and condition, and store maintenance history.
This DLT/IoT pairing is still young, but some tech giants like IBM are already starting to apply smart contracts to optimize their logistics and supply chains where goods are marked with RFID tags and tracked from the supplier to the manufacturer.
Blockchain is transforming supply chain
When we are talking about blockchain use cases in 2020, the supply chain is one of the first things that comes to mind. In the global economy, the route from a supplier to a retailer has become too complicated, opening the door to thefts, counterfeiting, and ‘human factor’ mistakes.
So many people take part in the process: buyers, product designers, marketing specialists, factory workers, warehouse workers, delivery guys, distributors, and more. It’s very hard to make their interaction seamless using traditional management tools.
Besides poor management, supply chains suffer from a lack of transparency and safety. Today’s customers want to be sure the product they buy is safe, fresh, and authentic, at the very least. What’s more, many people follow the ‘conscious consumption’ trend. They look for fairly or locally made products and want proof of origin.
Blockchain seems a perfect way to kill all these birds with one stone, as it promises to make supply chains 100% transparent and traceable. On the one hand, every authorized member can follow the path of the product using the updated database. On the other hand, no one can tamper with this data for their benefit.
So it becomes extremely difficult to steal a product with an intention of selling it outside the supply chain. Also, transparency helps to expose defective or counterfeit products. Healthcare, consumer electronics, and food industries are among those warmly welcoming this blockchain trend as they deal with these issues frequently. Other victims of counterfeit like the luxury goods market will be happy to get on board as well.
The tech can help companies in the jewelry business, such as De Beers, detect so-called ‘blood diamonds’ and eliminate them from the market. Also, a distributed ledger helps track the origin of every stone and thus increase credibility with diamond buyers.
Investment and trading made accessible
Blockchain and cryptocurrencies make trading and investing much easier for a beginner. In the past, managing stocks and other traditional assets required special education and training. You also needed some inside information if you were looking to find a greater return on investment.
In 2020, blockchain-powered financial apps and platforms make it possible for ‘dummies’ to exchange and trade various crypto and fiat currencies with just a few taps on a screen. Many of these applications feature clear and intuitive interfaces and offer useful add-ons like portfolio trackers, news feeds, and more. You can handle your investments and track their price dynamics from your mobile, tablet, or laptop — there are wallets for any type of device.
Blockchain also has the potential to tokenize any physical asset, including real estate, land, art objects, and collectibles. It will open new opportunities for small and medium-scale investors. For instance, they will be able to buy a fraction of a tokenized artwork or mansion. Unlike most material things, digital tokens are divisible.
Blockchain-related specialists are in great demand
Blockchain is a red-hot innovation with great growth potential. At the same time, the tech is still new, meaning there are few developers able to create and maintain blockchain apps. This gap between demand and supply may get even wider in the near future as the technology goes mainstream.
As a result, the market will need more proficient blockchain developers, solution architects, project managers, UX designers, and quality engineers. Also, the industry will look for educational content creators, because most regular users still don’t understand how the innovation works.
Another important job is that of legal consultants as the current crypto regulation is rather inconsistent and varies greatly across countries. Taxation issues are often unclear, too, prompting crypto-friendly companies to seek professional advice.
Blockchain-related skills are in hot demand in the current job market. If you are looking for a career change, it’s certainly a good option to consider. The early birds will have a huge advantage over those who enter the market later.
Blockchain and AI becoming interlaced
Artificial intelligence (AI) is a relatively new technology that allows the software to perform tasks that usually require reasoning and logic. Among these tasks are understanding speech, translating, analyzing given data, and smart planning. businesses may use AI to automate routine operations, predict customers’ preferences, personalize offers, and improve the quality of service.
Training AI-powered software requires you to feed huge amounts of data into the system. The quality of this information is also important. Data should be up-to-date, trustworthy, and relevant.
AI systems can use blockchains to facilitate data storage and sharing. Many big retailers and service providers have developed their own databases for storing clients’ information and purchase history. A blockchain is able to connect data from various retailers, so all the market players get a panoramic view. As for customers, they benefit from better pricing and customized offers.
Blockchain can work hand-in-hand with AI to address the so-called ‘black box’ issue. Typically, if a machine makes a wrong decision it’s quite hard to figure out what caused the mistake. A blockchain that stores a tamper-free and unbiased history of all the actions allows us to track the mistake back to its origin and take the appropriate measures to correct it.
De-Fi apps bring true decentralization to the finance sector
De-Fi stands for Decentralized Finance. It’s a movement that aims to transform traditional financial products and services by putting them on the blockchain. Among the products this future blockchain trend seeks to reinvent are insurance, currency exchanges, and loans. Potentially, decentralized financial platforms are superior to banks, as they let users interact peer-to-peer, without any intermediaries claiming their share of the pie.
This is a tectonic shift that can make financial services accessible for many “unbanked” people and businesses. The barrier to entry becomes lower as there are no gate-keepers to decide if you are eligible for the service.
De-Fi products give users access to:
- Alternative savings
- Lending and borrowing cryptos
- Fast, cheap, and secure payments
- Crypto and fiat trading on decentralized exchanges
- Affordable insurance
- Asset tokenization and management.
Currently, many of these revolutionary Di-Fi apps are working in test mode. However, at the current rate of progress, they should soon be suitable for widespread commercial use.
Solving Blockchain’s Interoperability Problem
Interoperability is one of the problems slowing up massive blockchain adoption. To put it simply, every blockchain speaks its own language and doesn’t communicate with other networks. This means its users cannot move their assets or data directly across platforms.
In an ideal situation, they would be able to make cross-chain transactions and exchange information without any unwanted delays or additional fees set by mediators. Many leading players in the market are currently focused on solving this interoperability problem.
Some of them seek to build new gateways through blockchain apps and established networks. Others prefer to develop their own platforms that bridge the gaps between blockchains and create new and open ecosystems. The biggest interoperability initiatives to follow in 2020 and beyond are:
- Echo is a Dapp network that applies Ethereum and Bitcoin sidechains to facilitate interaction between Echo, Bitcoin, and Ethereum platforms. With these sidechains you can use ETH, BTC, and ERC20 tokens in the Echo blockchain and easily transfer them between networks.
- Cosmos unites many independent but compatible platforms called zones. A new zone is free to have its own consensus mechanism but it has to comply with the uniform standard.
- Polkadot as a blockchain ecosystem consists of parachains (individual networks) and a central hub called the Relay Chain. All parachains share the same consensus mechanism.
- Ark is a scalable and user-friendly ecosystem that makes it possible to create new blockchains in a matter of minutes.
Blockchain is an exciting innovation and a major trend. There are many ways to benefit from it. You can become a well-paid developer, or trade cryptocurrencies, or invest in one of the promising De-Fi projects. Taking on such a project or applying a blockchain solution to solve your business challenges often comes with its own bottlenecks.
It’s important to partner with an experienced and well-regarded blockchain development team with a proven track record and portfolio of DeFi projects. A team like that is able to provide guidance and consulting, take care of all the preparations and planning to get your project on the right track from the beginning, and shortly kick-start the development process. Don’t get left behind in the innovation!
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