Blockchain solutions continue their quest for maturity and broad adoption.
In 2023, blockchain technology is expected to continue its growth, with the potential to yield a business value of $176 billion by 2025 and $3.1 trillion by 2030, according to Gartner. To reach these heights, blockchain will continue tackling the complex challenges of the past years. Today, we have several questions: What are the prospects of advancing blockchain networks’ interoperability? What is the future of law, regulation, and governance in terms of blockchain’s advancement? What will the main contributions of blockchain to the healthcare and pharmaceutical industry look like? In this article, we will explore these questions and more, by delving into the latest developments and advancements in blockchain technology.
Currently, blockchain networks mostly function independently, which makes it difficult to ensure seamless communication and value transfer between the various parties. For instance, some blockchains are more suited for transactions, while others are better for storing data or executing smart contracts. An advancement in the interoperability of blockchain networks refers to one of the key blockchain trends, as it will help overcome the limitations of underlying protocols and platforms and allow for a more interconnected blockchain ecosystem.
These developments in interoperability are already beginning to bring day-to-day benefits. In the decentralized finance (DeFi) space, they make it possible for users to transfer data and assets across multiple platforms, create pathways for more efficient resource allocation, and expand access to liquidity. Another use case comes from the gaming industry. Here, blockchain interoperability provides opportunities for players to use assets from one game in another game, creating new opportunities for in-game economies.
The process of increasing blockchain networks’ interoperability is related to these three cornerstones: common blockchain standards, protocols, and APIs. Their integration will enable different blockchain networks to connect and communicate with each other. This, in turn, will result in more flexible blockchain environments where data, resources, and value can be shared more efficiently.
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Over the years, the DeFi ecosystem has generated new opportunities for inclusion and democratization in the financial sector as it helped remove intermediaries and fostered a culture of trustless transactions. Although these blockchain applications have already experienced substantial growth, there is still much room for innovation and improvement in the foreseeable future. In particular, the DeFi space is likely to deliver more user-friendly interfaces and broader integration through mainstream financial institutions.
DeFi solutions simplify the process of new financial product creation in the blockchain industry. They enable users to conduct decentralized exchanges, manage synthetic assets, or enter prediction markets with ease. As there is no need for traditional banking operations and collaboration with intermediaries, these blockchain-enabled products significantly impact financial markets and create new opportunities for investors who are searching for higher returns. Despite the 2022 decline, the DeFi market continues to change: the number of DeFi users in 2023 has increased by 300 000 compared to the beginning of 2022, according to Statista.
New digital products for DLT and blockchain environments will be at the center of the spotlight in the 2023 blockchain trends, and they will alleviate the pressure of blockchain adoption for numerous businesses. According to Fortune Business Insights, the global BaaS is predicted to reach $24.94 billion by 2027, with a CAGR of 39.5% during this period. As organizations opt for blockchain, the growth of digital products and services for its adoption will become a crucial factor in the game.
In turn, this rise will propel the development of BaaS, especially since it delivers a cloud-based infrastructure with the capabilities to host and leverage blockchain solutions. As a result, there is no need to create a blockchain network from scratch or map out any setup, which significantly contributes to the convenience and flexibility of the adoption. In this way, small companies can avoid the burdensome process of crafting and maintaining their blockchain infrastructure. BaaS platforms also eliminate the need for profound expertise or extensive resource allocation, thus creating new opportunities for large-scale and small-scale organizations to integrate blockchain.
Big technology companies, like Amazon or Microsoft, are some of the greatest forces that are pushing forward the integration of BaaS and DLT products. For example, Microsoft Azure caters services that allow businesses to create and use decentralized applications for their specific needs. It makes it possible to benefit from a faster time to market during new blockchain projects.
Cryptography constitutes the primary foundation of blockchain technology. That’s why the evolution of cryptographic protocols opens up space for higher privacy and security in blockchain, which are two of the major concerns investors have encountered for years. Newly developed protocols will open the way for increased confidentiality, as well as more reliable interactions and transactions within a blockchain network.
What level of privacy and security does blockchain offer? That was one of the fundamental questions in the wake of the emerging blockchain technology. Today, advanced cryptographic protocols, such as zero-knowledge proofs and homomorphic encryption, are designed to tackle these challenges. They operate on the premise that data can be verified without revealing the data itself. As a result, users can ensure the safety of transactions and avoid potential threats. Zero-knowledge proofs can be especially beneficial for the promotion of the secure exchange of sensitive information in healthcare. On top of that, the advancement in cryptographic protocols has led to the introduction of new instruments, such as threshold signatures and distributed key generation. They enhance the resilience of blockchain networks and drive seamless data processing.
Asset tokenization serves as a way to build digital tokens which embody certain physical items. Their number usually encompasses real estate, artwork, or renewable energy assets. Tokenization has grown by leaps and bounds in recent years, especially in the real estate industry, where it positions investors to leverage their funds for high-value assets which were previously reserved for institutional investors or high-net-worth individuals. Besides, it was a great option when users wanted to avoid intermediaries and advance the transparency of transactions.
The year 2023 will continue to shape asset tokenization as a critical element of the digital economy. One of the primary consequences of this process is the increased accessibility of blockchain technology. In addition to making it possible for a wide range of investors to access high-value assets, asset tokenization allows them to finance a portion of an asset rather than having to buy the entire thing. This will result in greater liquidity and accessibility for investors, especially for assets that are illiquid or difficult to sell in traditional markets.
The integration of the IoT with blockchain technology has been an area of growing interest in recent years. This trend is expected to remain relevant in 2023. Blockchain-enabled tools, particularly smart contracts, will typically be leveraged to automate payments between various IoT devices. This approach will cut down on transaction costs and drive up their speed. It will also bring innovative solutions, such as smart contracts for automated insurance claims and supply chain management of pharmaceutical products. Moreover, blockchain can help break down data silos and enable more efficient sharing of health information between the different stakeholders within the healthcare ecosystem.
Beyond that, the transfusion of IoT with blockchain technology is likely to create new decentralized marketplaces for IoT data and services. They will create a space where different parties can exchange value and transact securely without the need for intermediaries. Consequently, this can create new opportunities for businesses to monetize their IoT data and services, and provide greater control and ownership over their data.
Value chains will develop hand-in-hand with blockchain technology in 2023. This process will span multiple industries, including healthcare and the pharma segment. In healthcare, blockchain-based systems will empower patients to control their medical data and share it securely with healthcare providers, thus improving patient privacy and data interoperability. This type of adoption of blockchain can eventually lead to better patient outcomes and enhance data management which results in the improved security of patients in clinical trials.
Blockchain technology is also getting attention as a solution for supply chain traceability and drug authenticity verification. Counterfeit drugs pose a significant threat to public health and can be difficult to identify and track. Leveraging blockchain technology to track the entire supply chain of pharmaceuticals, from the manufacturer to the end-consumer, can become an effective instrument for eliminating this problem.
In 2023, we are likely to witness the growth of blockchain-enabled decentralized applications (dApps) that run on Web3, a decentralized version of the internet. With blockchain-enabled dApps, users will be able to interact with Web3 networks seamlessly and contribute to a more decentralized internet ecosystem. These dApps will deploy blockchain technology to facilitate peer-to-peer transactions, smart contracts, or decentralized storage. What’s more, blockchain-enabled dApps will provide users with more control over their data and identity, and create new revenue streams through digital assets and tokens.
Adjusting regulatory policies according to the emerging blockchain trends is key for the advancement of numerous industries, from healthcare and finance to insurance and gaming. Some countries have shown a more supportive stance toward the blockchain and crypto industry, while it turns out that others have established a more cautious approach and are grappling with regulation frameworks for further adoption of blockchain. Here is a Deloitte report that demonstrates areas where new regulations are necessary:
Figure 1. Deloitte on the emerging types and areas of blockchain regulations
Despite the progress that was made in the last several years, there are few globally coordinated efforts to set up a common framework for cryptocurrencies, as World Economic Forum’s Global Future Council on Cryptocurrencies highlights.
And, more difficulties loom on the horizon with the emergence of decentralized autonomous organizations (DAOs). They have already been leveraged for various goals in project management, funding, startup investment, and decentralized applications development. However, some experts argue that DAOs could disrupt traditional corporate structures and governance models. They could also pose challenges for regulatory authorities, as they are difficult to classify within existing legal frameworks. For example, in the United States, the Securities and Exchange Commission (SEC) has already brought enforcement actions against DAOs for violating securities laws. That’s why the legal status of DAOs, as well as their potential risks and benefits, still need to be clarified in other countries.
Although international organizations have worked on risk assessment and gotten a pulse of the recent blockchain developments, different countries use different strategies for adjusting to blockchain implementation. They might have similar goals when it comes to illicit financing mitigation, consumer rights protection, or data protection, but their strategies are usually disparate. To make matters more complicated, countries rarely share identical terminologies across the blockchain industry.
With these blockchain trends in mind, the 2023 developments will likely bring another round of maturity to the global blockchain tech market. Despite the previous complications and widely present hype, the blockchain’s decentralized nature still makes it a suitable technology for building trust and transparency in industries like pharmaceuticals, healthcare, or logistics. In the meantime, increased pressure for regulations as well as consumers searching for more independent financial systems will greatly contribute to its evolution.
Avenga is an international tech company with deep industry knowledge in pharma, insurance, finance, and automotive. The company’s IT specialists operate from 8 countries around the world, supporting digital transformation with projects along the entire digital value chain – from digital strategy to the implementation of software, user experience, and IT solutions, including hosting and operations. Interested in building a transparent and productive technology partnership? Contact us.
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