Top Five Blockchain Trends to Watch Out in 2022

Blockchain and other distributed ledger technologies transform how businesses operate and allow enterprises to rethink managing digital and physical assets. Blockchain is the underlying technology that underpins Bitcoin and many other cryptocurrencies. While early use cases are centered around crypto trading and speculation, blockchain technology is influencing many industries because of its ability to increase openness and fairness while also saving businesses time and money. Today, we are seeing more and more applications emerging in various business sectors such as cross-border trade, supply chain management, NFT marketplaces, healthcare, voting mechanism, etc.

It has commonly been assumed that blockchain adoption in various industries will continue to boom in 2022. The global spending on blockchain-based business solutions, at $6.6 billion in 2021, is expected to hit $11.7 billion in 2022. According to International Data Corporation (IDC), the spending will continue to grow by 2024, with a whopping CAGR of 48%.

This article lists a few trends that will drive the growth of blockchain adoption in 2022 and over the next few years.

1. A Clearer Metaverse Definition

The Metaverse is a digital world where anything and everything can exist, composed of virtual reality, gaming, and digital assets supported by blockchain technology. It combines the physical and digital world, immersing us in a fiction-like experience. As a large amount of information about Metaverse explodes, people get overwhelmed and confused about what to follow. Everyone and every industry see the Metaverse from their perspectives, making it more difficult to understand and define Metaverse, especially when it does not even exist.

In 2021, we saw a great deal of news about Metaverse. For example, Facebook changed its name to “Meta” to dedicate its pursuit into this new digital universe. In 2022, as organizations start exploring and leveraging this new concept, the purpose and functions of Metaverse will become more explicit.

2. Green Blockchain Initiatives

Blockchains consume a lot of energy and emit a lot of carbon dioxide, which is why Tesla CEO Elon Musk decided to temporarily stop taking Bitcoin as payment for his cars in 2021. For this very valid reason, efforts to “greenify” blockchain will likely receive much attention in 2022.

This issue can be addressed in many ways, including carbon offsetting, though many people believe that this is only bandaging a wound that shouldn’t have been caused in the first place.

Switching to more miniature energy-intensive blockchain models is another option, such as organizations that use “proof-of-stake” rather than “proof-of-work” methods to generate consensus. Ethereum, the second most well-known blockchain, will switch to a POS mechanism in 2022, considering the energy-related issues.

Cathy Wood, CEO of tech-focused hedge fund Ark Invest, has advocated for another path to a greener operating model. Rather than making the blockchain itself more energy-efficient, she assumes that rising energy demand will lead to more investments in renewable energy generation, which can further be used for operating blockchains.

3. The Sustained Growth of Enterprise Blockchain

Currently, most enterprise blockchains are permissioned blockchains among multiple parties, so the data can be altered if all the entities involved agree. However, certain businesses such as banks and financial institutions require better security and privacy protection blockchain solutions. Asa result, enterprise blockchain adoption has steadily increased in 2021, and it will boom in 2022 as more organizations explore enterprise solutions.

Notably, new technologies such as hybrid blockchain that combine both private and public chain features have emerged to meet the demand of enterprises and traditional businesses. For example, the Open Permissioned Blockchain (OPB), initiated by Blockchain-based Service Network (BSN), substitutes the usage of virtual tokens in paying transaction’s GAS fee with fiat currency. This change allows the benefits of public blockchains to be realized in regions where crypto is strictly prohibited while avoiding the negative impact of cryptocurrency volatility. Additionally, improved reconciliation efforts result in increased efficiency, which leads to lower operational expenses. Finally, a shared industry utility allows for creating entirely new market types and models that did not exist before due to access to a single shared source of records.

4. Blockchain-5G-IoT Integration

We see an increasing trend of blockchain combined with other technologies in 2021, like Big Data and Artificial Intelligence. Corporations are also becoming more interested in using blockchain for IoT (Internet of Things) applications. The IoT industry is rapidly growing, and this trend will likely intensify in 2022, owing to the recent adoption of the 5G network. Nonetheless, an excessively fragmented IoT environment hinders the 5G IoT market’s estimated potential.

Many 5G IoT difficulties are due to centralization. For instance, the control and management of most IoT devices are based on a centralized cloud-based infrastructure, which leads to scalability issues. Moreover, the system would be vulnerable to a single point of failure (a severe security problem) if the client-server approach was centralized and governed by a central authority.

The automatic encrypted and immutable nature of blockchain can help solve numerous problems related to security and scalability. For instance, in smart cities, blockchain 5G-IoT solutions are increasingly used to enable e-Governance, payments, monitoring, and security services. More pilot projects and initial use cases in this subject will likely be announced in 2022. Some interesting newcomers include Ambrosius, Modum.io, IOTA, Atonomi.

5. More Central Bank Digital Currencies (CBDCs)

The number of countries researching CBDCs are more than double in 2021. Major countries like China, Australia, France, Japan, Malaysia, etc., are currently conducting pilot projects. Increasing digitization, the global pandemic, decline in cash usage, and a desire to cope with the centralization of the existing banking system have contributed to the tremendously growing adoption of CBDCs.

2022 will be a year for CBDC to skyrocket with more global presence. Regardless of the size and geographical location, we will witness multiple new CBDCs in 2022. For instance, China appears to be ahead of the curve, with plans to launch its digital currency, the ‘e-CNY,’ in February 2022, although the current e-CNY is not using blockchain. According to the PBOC, the e-CNY can be used to pay for online and offline goods and pay for tolls, electricity bills, and transportation costs. In addition, China announced conducting the large-scale digital yuan test at Winter Olympics in early 2022.

Other central banks, including those in the United Kingdom, the United States, Russia, Japan, and the European Central Bank, will very definitely follow suit. Also, Kazakhstan has built a digital tenge platform prototype and will ultimately determine whether to launch its CBDC by the end of 2022. A trial test of Russia’s digital ruble, similar to Kazakhstan’s, will begin in early 2022.

Conclusion

As the demand for and research into blockchain technology grows, its adoption will increase in various areas such as cross-border trade, healthcare, identity verification, vaccine supply chain, etc. At the same time, more governments will begin to impose stricter crypto regulation rules, considering risk and compliance management. Therefore, if 2021 was the year that blockchain and crypto-assets became a popular topic of discussion and research, 2022 appears to be on track to be the year that regulation and laws catch up with market reality.

Although it is still much too early to forecast how the blockchain industry will develop, the fundamental trend is clear: this technology has entered the mainstream and will continue to grow. As a result, 2022 could be even more exciting, as a new norm around Metaverse, enterprise blockchain, and a more diversified blockchain ecosystem will be established to galvanize innovation.

As the calendar turns to 2022, investors, individuals, and company owners should watch this space.

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BSN

The BSN is a cross-cloud, cross-portal, cross-framework global infrastructure network used to deploy and operate all types of blockchain DApps.