The big challenges of the Blockchain in 2022


$ 11.7 billion. Here is the total estimated blockchain spend around the world for next year, 2022. Year over year, the outlook has almost doubled. Global spending in connection with “block chain” technology will certainly be around $ 6.6 billion this year, enough to register, already, an increase of 50% over one year.

Where are these funds going? More and more capital, the cumulative annual growth rate of which is estimated at 69% until 2025 are injected into the research and development of new blockchain-based solutions in increasingly diverse sectors. Bitcoin and cryptocurrencies are no longer the only beneficiaries and representatives. After the NFTs which also brought it to the fore, the banking and health sectors are no longer hiding their interest.

To understand everything about what Blockchain technology is and why more and more investors are predicting it as the next pillar of industries, let’s look at its challenges for 2022. In the midst of mass adoption, some are applying it to their industry while others are working to fill its gaps. Review of the roadmap of a technology intrinsically linked to that of the future of the Internet and the digital transition

Definition

Blockchain is the English name given to the method of “block chains”, in French, in reference to the new technology of database management and storage – and consequently exchange of values. Unlike conventional computer technologies, blockchain is entirely decentralized, without an intermediary appointed for control.

Its security is based on storage nodes and “smart contracts” verified by a large number of independent machines participating in the operation of the system. It is defined by its industry as the most secure, making it possible to manage a very large amount of data without ever compromising the accuracy of the information contained. In short, a system making immutable data.

In 2008, the anonymous creator of Bitcoin, Satoshi Nakamoto, was the first to set up a blockchain, the future underlying element of his cryptocurrency. Since the bEthereum lockchain, which gave the name to the second most popular cryptocurrency in the world, is even more used in decentralized finance (finance with computer tools based on blockchain technology). She was born on July 30, 2015.

While Bitcoin may be the first blockchain project to come to fruition, the work around the technology dates back to much earlier. Here are some examples in the form of a timeline, with several of the important events for the sector © UNESCO

Why so much proximity between blockchain and cryptocurrency? Quite simply because any blockchain works with a virtual currency, whether it is a cryptocurrency or a simple token (a token based on a parent cryptocurrency). This rule was not erected because the technology arrived with Bitcoin, but rather that in order to be able to motivate people to contribute to the functioning of a blockchain, we had to find a way – just as decentralized – to pay them. From this was born the term of cryptocurrency “miner”.

1 / Ecology

Invisible to most of us, the blockchain remains a very real system, with millions of very energy-hungry machines. To be able to establish itself, the blockchain shares the same challenge as the rest of the industries: that of ecology. Cryptocurrencies have already shown us: just to make Bitcoin work, the annual electricity consumption is equivalent to that of a country like Switzerland.

Reducing the amount of energy required for the blockchain will involve optimizing operating protocols, in particular transaction management, moving from “proof of work” algorithms to “proof of stake” algorithms. Currently, Ethereum is preparing a colossal update to how it works for Spring 2022 (ETH 2.0).

Other blockchains like Solana, backed by Qualcomm, enjoy strong popularity for its capabilities beyond any competition. But these “alternatives to Ethereum,” as they are now called, are not as adopted and building projects backed by these blockchains is not as easy and secure as building on Ethereum.

Since the migration of cryptocurrency mining from China to the United States and Northern Europe, it is also expected that networks of machines will deploy on land to networks operating with renewable energies, such as wind power. Currently, the new El Dorado for miners – particularly Bitcoin – is located in Texas.

2 / NFT

Blockchain media exposure has long been reserved for cryptocurrencies. In 2021, non-fungible tokens, better known as NFT, have hit the mainstream media, but for reasons that certainly don’t reflect their seriousness. What is an NFT? It is no more and no less a technology that makes it possible to deliver digital certificates of authenticity through the blockchain.

With platforms like Sorare or by completely crazy auctions like the one of the first tweet published on Twitter, public opinion has not yet taken into account the very broad and revolutionary utility of NFTs. But to be able to support the commerce of tomorrow and the digital industries (video games, art, entertainment, etc.), NFTs have a large part to play in 2022. Ultimately, they could also replace current contracts, to take advantage of greater information security (by definition tamper-proof).

Equally promising, each project forming part of the development of the Metavers of tomorrow comes close or far to the NFTs. Some startups have even made it their business model. This is the case of The Sandbox, launched by two French people. The Hong Kong-based company offers developers the opportunity to create plots and virtual infrastructures, which they can then sell to actors preparing their metaverse, all via its platform and in the form of NFT.

The SandBox Metavers NFT 2021

The Sandbox shows a possible face of the deployment of NFTs through the development of Métavers © Presse-citron / Unsplash – James Yarema

3 / New sectors

According to CoinJournal, the banks It should not take long to jump at the blockchain opportunity. Because changing their database management protocol could reduce their current infrastructure cost by 30%, or 12 billion euros.

Crypto, DeFi, NFT … sectors intrinsically linked to blockchain are not the only ones showing interest in technology. In the current context of a pandemic, the organization around vaccination could be a relevant case of an integration of blockchain in the health sector.

The distribution of vaccines faces constraints of tracing, volume inventories, and optimal coordination to guarantee cold chains. In terms of data, the distribution must also be the subject of a precise count so that it can then be analyzed and be the result of transparent and serious studies.

All these challenges find their answers in the blockchain, provided there is consensus at the international level. With its security and the impossibility of falsifying documents and transaction histories, the technology would also make it possible to avoid the risks of counterfeit vaccines.

4 / Cryptocurrencies, at the country level

In 2021, the first country in the world to recognize and integrate a cryptocurrency as a national currency was El Salvador. Bitcoin has been integrating itself into the local economy with force, which did not necessarily please some residents. That said, other countries could follow in 2022 and El Salvador has even floated the idea of ​​basing an entire city’s economy on the digital token.

Why choose to recognize Bitcoin (or another cryptocurrency) as the national currency? Some countries will find it useful, in particular to avoid taxes on money transfers. One Cointribune article listed, for example, all the countries with a large diaspora, with emigrants penalized by taxes when they transfer money to their country of origin. This list includes Ukraine, Senegal, Jamaica and Montenegro.

In China, where Bitcoin and all other cryptocurrencies are banned, Beijing has started rolling out its digital yuan. Whoever fits among CBDCs (central bank digital currency) departs from the very concept of decentralized currency, but may well end up running on a blockchain.

Last September, the deputy director of the Digital Currency Research Institute at the Chinese central bank hinted that China could move away from its conventional technological approach to blockchain. For once, the gaps cited refer more to international trade (for interoperability) than to the interests of users.

5 / IoT and cross-chain projects

The Internet of Things (IoT) is our last mentioned challenge, but it is far from the least relevant. Convergence is very likely between the two, but should take longer: according to a study by Zion Market Research, the IoT-blockchain market will be worth more than $ 3 billion in 2025. Communication between objects through the Internet and sensors could be supported by blockchain and its usefulness in the automation of transactions.

The underlying amount of data is significant and needs to be secured. To guarantee this, blockchain could have a role, rather than systems that centralize data storage. Interoperability would be another advantage, as all machines do not run on the same software architectures for programming and data sharing. The blockchain would therefore accelerate development.

To successfully complete this challenge, and the others presented in this article, Blockchain players will need to continue to build the web and correct the shortcomings of current approaches. A sign that is far from trivial: some cryptocurrencies are seeing their prices explode thanks to their projects to better connect blockchains to each other (“cross-chain” projects). Similar to centralized systems, interoperability will not be possible if Bitcoin, Ethereum, and other blockchains cannot communicate with each other.


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