Back in the last quarter of 2017 and the first quarter of 2018, cryptocurrencies took the world by storm as most of them saw meteoric rises in valuations across the board. It was unprecedented and the few that were already well-positioned investors in blockchain saw windfall ROIs like never before. This is all good, especially for these particular investors, but how was this phenomenon beneficial to the overall blockchain technology industry. Well, for one thing, all the farce attracted the ‘right’ attention. Traditional investors, lawmakers, venture capitalists, and regulators even the average Joe paid attention. Even though blockchain had been around for close to a decade, 2017 was arguably the year that blockchain gained mainstream momentum.
Cryptocurrencies are the most successful application of blockchain but they are not the only application. Blockchain has so much potential outside bitcoin and Ethereum among other digital assets. So far, the use and application of cryptocurrencies have been the leading application but there are other useful and clever applications with even greater potential for disruptive innovation than even cryptocurrency. However, most of these applications are still under development. This just goes to show that we are at the beginning of a great journey. Well in this cryptocurrency post, we will discuss some predictions on the future of blockchain and how it could come to pass. We’ll highlight some developing innovations that could upend the current economy as we know it. We will also talk about some developments in the space, not necessarily innovations but whose occurrence affects the innovations in blockchain.
Central Bank Digital Currencies (CBDCs)
CBDCs are digital currency versions of government-issued fiat currencies. For instance, the Chinese Yuan is issued by the People’s Bank of China. If China, succeeds in implementing its digital Yuan, this will be a CBDC since it is also developed and issued by the PBoC. The ideal world for a blockchain future is a world where all people use a similar cryptocurrency such as bitcoin for all their needs. Also, this digital currency would be cheap, fast and continent to use. The problem with the current implementation of coins such as bitcoin (from the governments’ perspective) is that they lack centralization and therefore anyone can accumulate enough powers to upend the system. This scenario does not sit well with any government so to avoid this future, we have seen a surge in interest by most governments researching a way to launch their very own digital currencies. This may define the future of blockchain as we know it.
Akin to the previous prediction is the emergence of supportive regulations to guide the development and issuance of cryptocurrencies as well as the development of various blockchain projects. As a technology, blockchain is promising to be disruptive, however, governments are becoming weary of change happening too soon. In an aim to protect their economies against the wrong use of blockchain, several governments and lawmakers are fast-tracking their efforts to get the right regulations in place. For instance, just his past week, the Financial Stability Board, an organization of the G20 tasked with global financial stability released recommendations on how to regulate stablecoins especially those intended to be used on a global scale such as Facebook’s proposed Libra project.
Within the blockchain sector, several innovations are expected to happen in the next few years. Blockchain interoperability is the leading given the need to share data and take advantage of innovations from different sectors. For instance, the Bitcoin and Ethereum blockchains could be brought together to pool resources from developers to how the two blockchains operate to make use of each blockchain’s strong features.
There are other applications of blockchain that are slowly gaining traction such as digital identities, supply chain implementation, smart contract use to replace traditional paperwork processes. These are just a few ways blockchain is disrupting the economy. At this point, it is safe to say that every industry has seen an application of blockchain in one form or the other. In the immediate future, we can predict that the nascent technology will play an even bigger role and have wider-spread adoption.