2019 was remarkable for blockchain innovations. The technology grew beyond adoption by developers and early movers to embrace an increasing number of businesses aiming to use blockchain tech effectively.
As active blockchain networks bring real transformative change to various industries, we’ve carried out detailed research on blockchain trends 2020, and these are five blockchain developments to keep an eye on this year.
Pragmatic governance models
Designing a governance system where all members agree on common issues can be a challenging task. Studies show that 41% of businesses believe that the major obstacle to championing their blockchain proof of concept or minimum viable product is a lack of mutual governance standards across partners.
This year will mark the beginning of new governance systems that enable significant and extensive consortia to approach decision-making, permission structures, and even payments more effectively. Such models will standardize information from various sources and capture new and more vigorous data sets.
In the next one to three years, 68% of CTOs and CIOs expect scalable governance systems, for communication across various blockchain networks, to be an integral feature of their company’s blockchain environment.
To achieve a standard agreement- especially by those main participants that single-handedly make the network more valuable. There should be an eagerness to cooperate and collaborate. Sometimes, to achieve this, you must incentivize participation.
This year, participants of a particular network may entice strategic industry players to join them using monetary incentives. For instance, an international supply chain consortium might subsidize members of a government-based customs authority agency to join their network, based on the fact that their contribution and data, will enable the network to be truly more meaningful.
Another 2020 blockchain trend is interconnectivity. Success in a blockchain network depends on partnerships from different parties. However, with the capacity for tens or hundreds or even thousands of players on a blockchain network, it is irrational to believe that every member within a system will hire the same vendor or include a new computing structure for just one use. Nevertheless, there is a remarkable demand for companies to share information seamlessly.
Although attaining interconnectivity at the optimum level might be miles away- and the interpretation of interoperability can take various forms- many businesses today believe the assurance of governance and standards that permit interconnectivity and interoperability among permissioned and permissionless networks is a significant aspect to being part of an industry-wide blockchain network.
Though there is still a lot of work to do on this front, this year, as more emerging networks achieve significant masses, we realize that more players of a single network need guidance on integration between different protocols.
Integration with adjacent technology
Now that blockchain use cases are capturing millions of data points and making their presence significant across various industries, they are opening the door to new levels. Related technologies, such as the Internet of Things (IoT), 5G, Artificial Intelligence (AI), and edge computing- and many others- will combine with blockchain to drive superior value for their network players.
For instance, blockchain applications that connect with IoT and AI, compared to other emerging technologies, are anticipated to be the leading accelerators of blockchain-based marketplaces in the future.
Combing closely related technologies with blockchain will help businesses accomplish things that have not achieved before. More trusted data from blockchain networks will better inform and reinforce the underlying algorithms.
Blockchain will support and maintain the security of data and each step in the decision-making process, offering shaper insights driven by data that network players trust.
Validation to combat fraudulent data sources
Research shows that most businesses believe that the assurance of standards to share information to and from blockchain networks is an essential element to take part in an industry-wide blockchain network. Therefore, it is evident that trust and transparency are essential features.
However, in an environment where data is being generated and shared faster than ever, it is assumed that there will be inconsistencies in data, either from human or malicious individuals.
The need for advanced data protection methods, this year, blockchain solutions will employ validation tools and crypto-anchors, IoT beacons and oracles, methods that connect virtual assets with the physical world by introducing external data into blockchain networks.
This will improve trust and eliminate the dependency on human data entry, which is more vulnerable to mistakes and fraud.
Central bank digital currencies
Tokens, digital currencies, and central bank-backed digital currencies, or CBDCs, have been attracting a lot of attention lately in the capital markets landscape. Tokenizing assets and securities, making them digital tokens, and then trading, exchanging and settling custody of such digital assets are changing the effectiveness, safety, and productivity of capital markets.
As a matter of fact, 58% of companies surveyed by IBM Blockchain think that they can develop new sources of revenue by tokenizing assets traded on a blockchain-based marketplace. Besides, more establishments and laws have come into force to allow the creation, management, trading, and settlement of such tokens and cryptocurrencies.
What changes do we expect to witness in this area in 2020? With countries in Asia, the Middle East, and the Caribbean starting to experiment with CBDCs in real time, there is no doubt that they will continue to acquire momentum this year and redefine payments in numerous ways.
For one, CBDCs will experience continued growth in wholesale CBDCs, with some early raids in retail CBDCs. Furthermore, there will be a heightened interest in the tokenization and digitization of other types of assets and securities, like central bond debentures for treasury bonds.
Blockchain trends 2020 conclusion
While taking time to think about the future of blockchain technology is very exciting, we acknowledge new dynamics that may challenge these trends as we know them currently, are regularly entering the market. In addition, there are also many potential trends, such as the emergence of digital identity for blockchain, that we have not discussed in this article.
Nevertheless, one thing is certain, blockchain technology will never stop to disrupt, enhance, and improve the world and make our lives better. These five trends show how blockchain technology will flourish as governments and businesses embrace it in 2020.