Outlook for 2023 and beyond
Blockchain technology burst onto the scene with promises of decentralized transactions, immutable records and disruptive potential across various industries. Originally introduced as the underlying technology for cryptocurrencies such as Bitcoin, blockchain quickly captured the imagination of technology enthusiasts and innovators.
But as with many revolutionary technologies, its introduction over the past few years has raised a host of questions about its readiness for widespread use. Today, as we stand at the crossroads of AI-led technological advancement, it is critical to evaluate how far blockchain has come, the extent of its adoption, and the challenges it faces on the path to mainstream implementation.
The potential of the technology to transform industries beyond finance, including supply chain, healthcare, real estate and more, led to heightened expectations and fervent speculation. However, it can also be argued that the technology was introduced ahead of its time, and requires extensive development, infrastructure and education to reach its full potential.
According to Nikolay Denisenko, co-founder and CTO of Brighty App, a Swiss bank that combines crypto and fiat banking services, there are both benefits and concerns that blockchain brings to the table.
“From a social perspective, blockchain has the potential to empower individuals by giving them control over their data, assets and digital identities, which can increase the privacy, security and freedom of people around the world. Furthermore, the decentralized nature of blockchain can contribute to to reduce corruption, promote transparency and promote trust among users, Denisenko tells The Recursive.
However, there is concern that the widespread use of blockchain could exacerbate existing inequalities and create new ones, he warns.
“For example, access to the technology may be limited to those with the necessary resources and technical expertise, potentially excluding marginalized populations. The technology’s potential for anonymity may also facilitate illegal activities, such as money laundering and cybercrime,” adds Denisenko.
Blockchain to save the planet?
For people like Sandi Fatic, co-founder of blockchain infrastructure startup Calimero Network, the technology even has the potential to save the planet, as he outlined during his keynote address at the Green Future Conference in Split, Croatia last week.
“There’s a lot of negative buzz about blockchain, like with fraud and stuff, but we’re not talking about the good things in the world. A lot of people are unbanked — 1.7 million people in the world, they don’t use banks, and they started using Bitcoin and blockchain. It also opened up a huge global market. The war in Ukraine as well – one of the things that the crypto community did was we raised $187 million since last year to support humanitarian action in Ukraine. And these things are not so talked about, and I think they should be visible, says Fatic.
In addition, there are many use cases where blockchain technology already makes a difference, he claims.
“There are many use cases where ESG in FinTech can be combined with blockchain for example energy, P2P rigs, monitoring how much electricity is consumed, billing settlement markets for these environmental agreements – you can track how much funding goes to which environmental agreement. Then you can tokenize the carbon credits, track them, trade them, see what the quality is, supply chains and so on. So you can build a blockchain where each participant has a private key and you can track the process from harvesting, landing, processing distribution to the consumer,” explains Fatic.
While there are major concerns about the mass adoption that will be required for blockchain to truly make a difference – for Fatic, the process is already underway and there is no going back.
“I think a lot of governments are working on adopting blockchain right now. People are also saying that businesses will never adopt blockchain. And I tell them: 10 years ago they said they would never adopt the cloud. Everyone is using the cloud now. They said: You know, we don’t want to be digitized. Today, everything is digitized. Five years, 10 years from now, I think every business will run on a blockchain,” he points out.
There is still a long way to go for blockchain to make a difference
For others, while blockchain is indeed here to stay, the current phase that the technology is in is still in its infancy.
“We are certainly still in the early days of mass adoption and application of blockchain, and I would definitely consider us still in the ‘innovative stage’ of blockchain for years to come, although there are real-world use cases that are really taking off for blockchain. Semir Gabeljic, director of digital asset hedge fund Pythagoras Investments, tells The Recursive.
According to Gabeljic, such use cases include tokenization of real assets such as real estate, gold, oil and gas, and so on.
“All of them are being tokenized and put on the blockchain to create more liquid markets in a transparent way. NFTs on blockchains have proven useful for patents, launching global brand campaigns and generally a way to authenticate a work of art of a membership through The blockchain, however, still has a long way to go and this will be a decades-long transformation, Gabeljic points out.
“The tokenization of assets provides a new way for individuals to securely manage and transfer wealth. At the same time, certain types of smart contracts introduce an increased level of fairness and balance in various transactions. Nevertheless, critics argue that the blockchain’s potential benefits may come at a cost of specific sectors and jobs, as technology may render some traditional roles obsolete, Denisenko adds.
Furthermore, recent years have also shown that blockchain has made significant progress, and indeed is attracting the attention of governments, businesses and innovators worldwide. Cryptocurrencies have gained prominence, while blockchain-based platforms and applications have emerged, offering improved security, transparency and efficiency.
Despite the remarkable progress, the widespread adoption of blockchain technology is still a work in progress, with several challenges standing in the way.
“I am convinced that blockchain technology provides an unprecedented opportunity for a majority of individuals to significantly and permanently enhance their freedom and liberty as citizens and individuals. Yet, however beautiful and empowering this may sound, we must be wary of the technology’s potential risks and work to ensure that the benefits are shared fairly across society, Denisenko concludes.