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Blockchain is hot right now. The industry has a staggering CAGR rate of over 69% between 2019 to 2025. Blockchain is no longer only relevant to cryptocurrency, either—blockchain-based applications are emerging to support many other scenarios that require decentralized data storage and accessibility.
I recently met with Medha Parlikar, co-Founder and CTO, CasperLabs, to learn about some of the top trends that will likely impact this burgeoning sector in the coming months. According to Parlikar, we are still in the early stages of both blockchain and NFT development, and 2022 will see continued growth in the sector.
These movements will likely include more significant investment into blockchain technologies and the emergence of nuanced business models that leverage NFTs. Proof-of-stake (PoS) models will likely become more critical to curbing negative climate impacts and more solutions will emerge to support the development and operations that sustain blockchain-based applications.
First, we will likely see greater investment in blockchain technology in the coming year. Unsurprisingly, finance will probably experience the most adoption, as the use of blockchain in the financial sector is anticipated to reach a value of 22.5 billion U.S. dollars by 2026. But outside of finance, blockchain investment will seep into innovative areas as well. For example, spending on blockchain in health care is expected to rise to $5.61 billion by 2025.
Blockchain not only appeals to corporate interests—developers on the ground seem excited as well. “Developers are waking up to the opportunities that blockchain brings,” explained Parlikar. “We’ll see a big increase in developers moving into blockchain.” She pointed to a surge of developer interest in blockchain to construct tools that go beyond widgets to extract real business value.
We’re also seeing a peak of interest in blockchain funding from nation-states. For example, in 2021, the European Union announced plans for a multibillion-euro investment into blockchain infrastructure.
Blockchain is ushering in major economic shifts. But the cryptocurrency market is still a ‘wild west’ with little regulation. According to recent reports, it appears the U.S. Securities and Exchange Commission is gearing up to more closely regulate the cryptocurrency industry in 2022.
“More investment in blockchain is bringing it into the mainstream, but what’s holding back a lot of adoption is regulatory uncertainty,” said Parlikar. Forbes similarly reports regulatory uncertainty as the biggest challenge facing blockchain entrepreneurs.
Blockchain is no longer relegated to the startup domain, either; well-established financial institutions also want to participate in the massive prosperity, said Parlikar. This excitement is causing a development-first, law-later mindset, similar to the legal grey area that followed Uber as it first expanded its rideshare business.
“[Blockchain] businesses are trying to hedge risk,” Parlikar explained. “We want to comply and aren’t doing nefarious things intentionally—there’s just a tremendous opportunity to innovate and streamline operations and increase the end-user experience.”
If you follow any artist accounts on Twitter, you’ve probably heard a lot about NFTs lately. Non-Fungible Tokens (NFTs) use blockchain technology to imprint ownership and value onto all types of assets.
“I see NFTs as a great representation of the real world,” said Parlikar. Blockchain-fueled NFT technology is creating marketplaces out of ephemeral or purely digital things—such as 3D artwork—which could not be easily traded on typical markets.
But, we’re likely only on the cusp of overall NFT usage. “The value of NFTs is still underutilized,” said Parlikar. Right now, NFT marketplaces are mainly just about asset ownership. But there’s no reason one couldn’t build, for example, an NFT rental system that shares access for a period of time, or one that offers subscriptions for recurring revenue, she suggested.
“[There are a] lot of interesting markets that could emerge,” said Parlikar. For example, combining NFTs with the internet of things (IoT) could bridge the metaverse to the real universe, proving ownership for our physical assets.
The dark side of cryptomining is that it takes significant computational power. Unnecessary computation is a drain on energy that exacerbates humanity’s environmental impact. And, if your say in a network is correlated solely with computational power, there will inevitably be an escalating computational arms race to one-up others in the network.
This is why Parlikar is putting faith in proof-of-stake blockchains. “Proof-of-stake is definitely the way to go,” she said. In PoS networks, power is tied to the state of each actor in the network, which can be determined or modified by a consortium. Participants can agree on the governance model and set boundaries. This is opposed to proof-of-work (PoW), in which your power in the network is directly correlated to computational power.
PoW systems become unsustainable for enterprises trying to spin up their own blockchain networks, or when attempting to lift up an entire industry, Parlikar explained, as well as increasing negative environmental impacts. Thus, PoS are a better fit to bring collaboration to enterprise-grade consortium networks.
Overall, blockchain penetration is still relatively low. This is, in part, due to the fact that it’s still tough to use. As I’ve covered before, blockchain-based development is still relatively inaccessible. It requires nuanced theory to grasp and specific technical knowledge to implement. “It’s not trivial,” added Parlikar. “Dealing with private keys, obtaining keys—it’s still very complicated to get started.”
Managing a blockchain could also use a dose of DevOps. Yet, blockchain’s immutability and decentralized nature create friction with traditional DevOps. “The majority of protocols will not allow you to put a smart contract under CI/CD,” Parlikar explained. Thus, organizations may opt for blockchain solutions that play nicely with test-driven development. These solutions will likely enable the ability to iteratively develop using established DevOps pipelines.
Interest in blockchain and distributed ledger technologies continue to surge. But, what are the end benefits of this blockchain and NFT-infused reality? According to Parlikar, we are heading toward “a world with greater trust and transparency.”
Blockchain ensures provenance. To put it plainly, it validates that something was done at a certain point in time. With this knowledge, participants in a network could prove things beyond a shadow of a doubt.
This has the power to avoid corruption and unlock more collaboration and value potential. “You don’t have to trust an individual—you can trust the information they are providing,” said Parlikar.
It’s still early in the blockchain revolution. “Blockchain technology is still at the embryonic stage and facing many challenges,” wrote the European Commission in their report, Blockchain Now and Tomorrow: Assessing Multidimensional Impacts of Distributed Ledger Technologies. For blockchain to reach ubiquity, the community will have to overcome challenges, including lowering the energy footprint, improving developer usability and responding to impending legislation.
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Trends in Blockchain for 2022 – DevOps.com