As 2021 kicks off, we can start to make our predictions for what the year will bring. While many industries face a lot of uncertainty for the coming year, the blockchain industry is continuing to boom.
Many of the trends involving blockchain that started in 2020 will likely continue into this year, making it easy to guess where 2021 will take the burgeoning technology. Here are our top seven predictions for what we expect to see from blockchain in 2021.
- 1. A Growing Global Blockchain Market
Blockchain technology exploded in popularity last year. As COVID-19 accelerated digital transformation, businesses looked for secure, efficient ways to conduct their operations and many of them turned to blockchain.
Now, digital transformation is an essential part of everyday operations if organizations want to maintain success. We will likely continue to see more and more companies embrace blockchain, leading to growth in the global blockchain market.
- 2. Adjusting Blockchain Project Goals
As many businesses rushed to embrace blockchain solutions, they focused on immediate implementation. They overlooked key aspects of blockchain technology, like smart contracts and tokenization, in favor of features they could benefit form as soon as possible.
We can expect to see many organizations change their blockchain project goals as they realize that they have missed some important benefits of blockchain. While businesses will keep their blockchain projects going, they will likely readjust their expectations.
- 3. A Focus on Private Blockchains
We will see more and more businesses turn to private blockchains over public ones. Private systems are more customized to an organization’s unique needs and offer higher efficiency, privacy, reliability, and transparency than public blockchains.
Additionally, private systems provide more opportunities for companies to utilize blockchain for business-to-business transactions. They are more secure and controllable, making it easier to conduct transactions between businesses.
- 4. China Leads in Blockchain Development
In 2020, China took the lead in developing blockchain technology, and we will see that continue into 2021. They have made it a goal to integrate blockchain into the country’s digital infrastructure.
Their state-backed Blockchain-Based Service Network plans to release a beta central bank digital currency, or CBDC, within the next 12 months. A successful Chinese CBDC could drastically change how we view nontraditional banking and currencies.
Because most other nations are just beginning to recognize blockchain’s potential, ambitious plans like these have caused China to take the forefront in global blockchain development.
- 5. The Financial Sector Leads Blockchain Development
While China is leading the world’s nations in blockchain development, the financial sector is doing the same for the world’s businesses and industries.
Banks and other financial organizations have had to adapt to the increasingly digital needs of customers. Blockchain offers a modern, streamlined approach to financial services and enables secure contactless transactions.
To ensure they are offering the best possible options for their customers, financial institutions have begun to explore new possibilities for blockchain technology. They are leading the way in innovating an already unique and ingenious technology.
- 6. Further Growth in Cryptocurrencies
Bitcoin has shown everyone that cryptocurrencies are a viable alternative to traditional money. The currency had a record-breaking year in 2020 and its growth has continued into 2021, prices soaring past $33,000 per Bitcoin.
The uncertainty most people have about the traditional market was compounded by 2020’s plunging stocks. Many began to turn to cryptocurrencies like Bitcoin, though it is far from the only one, as a safe-haven for their assets.
- 7. More CBDCs
Central bank digital currencies are relatively new to the blockchain industry, but they operate on the same principles as many other cryptocurrencies. They utilize the secure, decentralized nature of blockchain technology to facilitate financial transactions.
CBDCs are essentially cryptocurrencies backed by a central bank. Dozens of central banks have started to research CBDCs in the past few years, though only a few are past the early stages of development.
As we mentioned earlier, China is one of the few places with a central bank that is almost ready to launch their pilot CBDC. Most other nations are still researching how to implement a CBDC without significantly impacting the rest of their economy.
The biggest advantage of CBDCs is that they are legal tender that does not rely on a commercial bank. Similarly to Bitcoin, many people began exploring CBDC as a real option after experiencing instability in the traditional market.
2021 is going to be a big year for the blockchain industry. We will see different blockchain technologies and approaches, along with further growth of cryptocurrencies.
While we cannot be completely certain of what tomorrow holds for blockchain, we know that this innovative technology has many potential applications. This year is just the beginning of a long, bright future for blockchain.
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