Public decentralized blockchain applications are thriving, but successful permissioned enterprise blockchain projects are rare. Users need to understand how new developments support the integration of business requirements with public blockchain innovation.
That is the conclusion of our Hype Cycle for Blockchain, 2021 that we just published.
While cryptocurrency prices have plummeted in recent months, it’s important not to confuse the value of blockchain with the latest price of various currencies
Volatility expected as crypto markets settle. Meanwhile, blockchain innovation is constantly advancing.
Key adoption drivers, described in detail in our research, include:
- Widespread adoption of Bitcoin, including the adoption of Bitcoin as legal tender in El Salvador in June 2021.
- Adoption of payment, banking, and social networking technologies of distributed ledgers (DLT) for the movement of money, with the expected deployment of central bank digital currencies (CBDCs) being a key influencing factor.
- Decentralized finance (DeFi) applications offer substantially greater financial rewards than traditional finance. Centralized companies like hedge funds already take advantage of this.
- Asset tokenization, including the explosive growth of NFT and DeFi tokens, and the promise of physical asset-pegged tokens in the future.
- Blockchains like Binance, Cardano, and Solana that offer viable and profitable alternatives to Ethereum on-chain transactions.
- Monumental progress in blockchain interoperability, including gateways and abstraction middleware, already used by DeFi applications.
- Blockchain migration from Proof-of-Work (POW) consensus method (still used for Bitcoin) to more energy-efficient consensus methods such as Proof-of-Stake (PoS). The ongoing Ethereum upgrade leads this trend.
Still, the picture is not all rosy. There are many challenges documented in our research, including:
- Permissioned blockchain adoption is moving much more slowly. Some use cases, especially around supply chain and authenticated provenance, are taking advantage of ledger technology. However, most users are stuck trying to align use cases with technology.
- Global regulations and accounting standards need clarification before most businesses embrace cryptocurrency
- China continues to clamp down on crypto activities as they work to make their own CBDC the world’s dominant currency.
Bottom line for businesses
We project that by 2023, 35% of enterprise blockchain applications will integrate with decentralized applications and services.
The rewards are simply too great to ignore and far outweigh the costs.