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Key Blockchain Trends to Follow in 2023
What are the main tendencies of the industry this year?
Blockchain is a great tool for companies and end users to democratize services and ensure data privacy and security. Moreover, the growing demand for cryptocurrencies and integration with Web3 is driving the development of blockchain in various industries. We have prepared an overview of the top Blockchain trends and innovations in 2023. Those range from tokenization and smart contracts to Blockchain security and enterprise Blockchain.
Startups and large-scale companies are developing solutions to accelerate the deployment of cryptocurrencies and transactions. Tokenization increases the physical and digital assets liquidity, while smart contracts allow complex transactions to be carried out on Blockchain. In addition, Blockchain developers are promoting new cryptography and Blockchain security techniques to improve the security and reliability of data. There is also a growing interest in Blockchain networks tailored for enterprise applications, including private Blockchains. Finally, startups are developing decentralized applications (dApps) for various use cases on Blockchain networks.
Cryptocurrencies use Blockchain to store transactional data in peer-to-peer networks. As a result, they are eliminating centralized authorities such as banks in order to lower transaction fees and speed up the transfer of funds. The growing interest in cryptocurrencies is driving innovation in sustainable and high-performing cryptocurrencies to reduce the carbon footprint and transaction times. Moreover, Blockchain gives crypto transactions intrinsic security, making financial interactions more secure. However, most exchanges store wallet data on centralized servers, making them vulnerable to attacks. Advances in Web3 will allow cryptocurrency exchanges and users to mitigate this threat and use cryptocurrencies to replace fiat currency.
Tokenization uses Blockchain to separate digital or physical assets into digital tokens. This is the same principle that cryptocurrencies use. However, Blockchain-based tokenization allows businesses and retail users to convert assets such as real estate portfolios and works of art into digital tokens. This increases the liquidity of illiquid assets, allowing holders to conveniently sell tokens through secondary markets. This improves investors’ access to previously inaccessible assets and provides new opportunities for portfolio diversification. In addition, smart contracts automate token transactions and increase transaction transparency by offering a single source of trusted information. Hence, tokenization allows all stakeholders to verify their assets and ensure good faith.
Smart contracts are essential components of all Blockchain ecosystems as they replace intermediaries to manage and execute all P2P transactions. Therefore, startups offer easy-to-use platforms that enable enterprises and Blockchain developers to create smart contracts. They usually require minimal coding and thus speed up development workflows. In addition, there is a growing interest in solutions that check smart contracts for vulnerabilities due to an increase in the number of cyberattacks on Blockchain systems. Such platforms allow smart contract developers to automate security analysis. Advances in cryptography, access control, and contract structure also make smart contracts more efficient.
Blockchain networks use cryptography to encrypt communications between nodes, ensuring transactions are immutable and verifiable. To do so, Blockchain developers rely on symmetric and asymmetric cryptographic algorithms. The symmetric cryptography method offers the same key for communicating nodes, while the asymmetric method uses public and private keys to encrypt and decrypt messages. For example, multi-signature algorithms generate digital signatures involving multiple parties. Zero-knowledge proof (ZKP) is another method of proving knowledge without sharing knowledge over a network. These methods allow Blockchain developers to increase the privacy of users and transactions while maintaining security.
Blockchain networks allow applications to be decentralized through peer-to-peer nodes and smart contracts. For example, the Ethereum Blockchain offers specialized tools for building decentralized applications. dApps remove control and interference from centralized authorities and thus provide privacy and development flexibility. In addition, it provides fair pricing for applications and services for all stakeholders, increasing transparency and monetization opportunities. In addition, dApps have no downtime as they use decentralized computing and provide a secure development ecosystem with an open-source licensing. Finally, Blockchain-based decentralized applications are critical to accelerating Web3 integration.
The availability and flexibility of cloud services is pushing the business model as a service for Blockchain networks. This allows Blockchain developers to quickly build and host Blockchain applications and smart contracts, reducing time to market. For companies, Blockchain-as-a-service also saves the cost of hiring developers to develop the network internally. This allows them to focus on enhancing features and optimizing products for their offerings while keeping their network agile and efficient at the expense of service providers.
Private Blockchains are permissioned Blockchains owned mostly by businesses and organizations. Unlike public Blockchain networks, private Blockchains have centralized controls that determine the network’s accessibility to users. Moreover, each node in private Blockchains holds a copy of the entire Blockchain, and the owner can cancel or delete transactions. This allows businesses to have greater control over corporate data while maintaining validation and transaction verification capabilities. Since private Blockchains have far fewer nodes than public networks, the former are also characterized by high transaction throughput and easy scalability.
Blockchain is primarily used for financial transactions and investment instruments. In addition, data integrity and privacy are becoming critical for all Blockchain networks as businesses and users move towards more blockchain-centric workflows. To ensure the security of such networks, startups are developing various Blockchain security solutions. They use advanced analytics and artificial intelligence (AI) to monitor smart contracts, nodes, and transactions to identify discrepancies. This allows to quickly identify intruders and prevent theft of data or assets. Blockchain-based security solutions are essential for businesses using Blockchain for supply chain management, asset trading, and data management.
Companies are hesitant to use public Blockchains like Bitcoin and Ethereum due to lack of data control and increased data visibility. Even though some companies rely on public Blockchains, there is a growing demand for private and consortium blockchains. Such enterprise Blockchain networks provide companies with better control over their data while maintaining other Blockchain features including security and traceability. This allows companies to comply with data requirements when integrating Blockchain-based applications. Moreover, Blockchain automatically enhances the security of corporate data, reducing the risk of costly data breaches.