The most interesting days for blockchain are ahead.
But anyone who wants to have a clear look at its future has to first understand that the blockchain industry is not a monolith and therefore the prediction has to be approached on multiple fronts. At the least, consider the crypto market performance, technology adoption, development, and scalability.
The crypto market performance
Here the focus is on crypto prices, volatility and market capitalization.
The blockchain industry comes with an asset class that is interesting to both long-term investors — so-called holders — and day traders. The items in the asset class include cryptocurrencies, tokens, and tokenized real-world assets.
The prices in the crypto space have normally been volatile but the general trend over the years has been upward. The ‘to the moon’ trajectory has primarily been driven by the fact that most crypto assets are deflationary and as awareness spreads there is an increase in demand, which in turn pushes the prices up.
Many believe this trend is not going to halt any time soon. And even though, especially in the last few months, the prices of many crypto assets have largely plateaued, the general belief, especially among enthusiasts, is that we haven’t seen the all-time highs in regard to prices and market capitalizations.
Some have made very bold predictions. For example, venture capitalist and angel investor Tim Draper has put it on record that he believes the Bitcoin price could possibly hit the US$250,000 mark by 2022.
With Bitcoin and other crypto assets having a high positive correlation, price growth is going to be an industry phenomenon in the coming decade if all the predictions are correct. That also means the industry will also see growth in terms of market capitalizations.
It is important however to be cautious about how crypto prices will move in the future. It is hard to predict.
Decentralized application growing to be the norm
While cryptocurrencies and tokens were the first applications of the blockchain to capture the interest of many, it seems like the focus is slowly turning to other things the technology can do. One particular application that is showing a lot of potential in smart contracts, agreements written in code that can self-execute on the blockchain.
There is also a lot of focus towards using the blockchain as the backend that will not only execute all kinds of applications but also store and secure data from these applications. The blockchain offers several advantages over what centralized servers offer in this regard. These include improved security, privacy, and reliable uptime.
In every industry you look at today there is a startup or a couple of them building disruptive applications that will run on top of the blockchain. The interest is also seen in major technology companies and public institutions around the globe.
One way they are getting involved is through consortium protocols such as R3 and Hyperledger. They are also individually doing research and making investment efforts into blockchain projects.
Much of what is happening the blockchain is work in progress. The full results will be seen in the next coming years. And indeed, everything shows there will only be more involvement from different stakeholders in building more solutions on top of the blockchain.
Scalability and interoperability
The third aspect of the blockchain industry that is bound to change in the coming years involves scalability on blockchains. It is turning out that capacity is being created by building completely new blockchains as well as fixing the old ones through on-chain scaling solutions such Segregated Witness and off-chain ones like Lightning Network.
However, the trend that we might start witnessing more soon in regard to blockchain scaling is the building interoperability capabilities. With more and more blockchains coming to space, we might see the industry undergo what the internet underwent in its development to what we know it to be today
In the early days of the internet, most networks were local area networks (LANs). They did not communicate to one another initially because they were built by different entities, served different functions and, most importantly, they lacked agreed with industry standards.
That changed with the arrival of TCP/IP protocols, which meant all networks could integrate and interoperate. Anyone who wanted to build a new system could do so knowing how it will work with existing ones.
We are at the point where the blockchain industry is moving towards developing standard protocols that will ensure that anyone can build public or private blockchain but still their projects will be able to communicate and share with those that are already in existence.
And just as the TCP/IP protocols made it easier for data to flow throughout the globe in seconds without the necessity of intermediaries, the value will also be able to flow throughout the globe with little regard for the blockchains involved.
The blockchain industry could be said to have a bright future in one way or another.