Crypto

The great challenges of Blockchain in 2022

$ 11.7 billion. Here is the estimated total blockchain spending around the world for next year, 2022. Year over year, the outlook has almost doubled. Global spending related to blockchain technology will certainly be around $ 6.6 billion this year, enough to record, already, a 50% increase in one year.

Where do these funds go? More and more capital, whose cumulative annual growth rate is estimated at 69% until 2025, is being injected into the research and development of new blockchain-based solutions in increasingly varied 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 healthcare sectors no longer hide their interest.

To understand everything about what Blockchain technology is and why more and more investors are predicting it as the next mainstay of industries, let’s look at its challenges for 2022. Amid a period of mass adoption, some are applying it to their sector when others they are working to fill in their 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 “blockchain” method, in French, in reference to the new technology for managing and storing a database and therefore for exchanging values. Unlike conventional IT technologies, blockchain is completely decentralized, with no designated middleman for control.

Its security is based on storage nodes and “smart contracts” verified by a large number of independent machines that participate in the operation of the system. This is defined by your industry as the most secure, allowing you to manage a large amount of data without compromising the accuracy of the information contained. In short, a system that makes data immutable.

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 then, the Ethereum blockchain, which gave the name to the second most popular cryptocurrency in the world, has been used even more in decentralized finance (finance with computer tools based on blockchain technology). He was born on July 30, 2015.

Bitcoin may be the first blockchain project to come to fruition, the work around the technology dates back much earlier. Below 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? Simply because any blockchain works with a virtual currency, be it a cryptocurrency or a simple token (a token based on a main cryptocurrency). This rule was not established because the technology came with Bitcoin, but in order to motivate people to contribute to the operation of a blockchain, we had to find a way, equally decentralized, to pay them. This is where the term cryptocurrency “miner” was born.

1 / Ecology

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

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

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

Since the migration of cryptocurrency mining from China to the United States and Northern Europe, machine networks are also expected to be deployed onshore to networks that operate on renewable energy, 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 NFTs, have taken over the mainstream media, but for reasons that certainly do not reflect their seriousness. What is an NFT? It is nothing more and nothing less than a technology that allows issuing certificates of digital authenticity through the blockchain.

With platforms like Sorare or completely crazy auctions like the one in the first tweet posted on Twitter, public opinion has yet to take into account the very broad and revolutionary utility that NFTs are. But in order to support tomorrow’s commerce and digital industries (video games, art, entertainment, etc.), NFTs have an important role to play in 2022. Ultimately, they could also replace current contracts, to take advantage of greater security. information (by definition tamper-proof).

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

The SandBox Metavers NFT 2021

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

3 / New sectors

Banks should soon seize the blockchain opportunity, according to CoinJournal. Because changing your database management protocol could reduce your current infrastructure cost by 30%, or € 12 billion.

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

Vaccine distribution faces tracking limitations, volume inventories, and optimal coordination to guarantee cold chains. Regarding the data, the distribution must also be the object of a precise count so that it can later be analyzed and is the result of transparent and serious studies.

All these challenges find their answers on the blockchain, as long as there is consensus at the international level. With its security and the impossibility of falsifying documents and transaction histories, the technology would also allow to avoid the risks of falsified 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 into the local economy strongly, which did not necessarily appeal to some residents. That said, other countries could follow in 2022 and El Salvador has even raised the idea of ​​basing the economy of an entire city on the digital token.

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

In China, where Bitcoin and all other cryptocurrencies are banned, Beijing has started to implement its digital yuan. Whoever fits between 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 Chinese central bank’s Digital Currency Research Institute hinted that China might move away from its conventional technology 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 highly likely between the two, but it 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 over the Internet and sensors could be backed by blockchain. and its usefulness in the automation of transactions.

The underlying amount of data is significant and must be protected. To ensure this, blockchain could play a role, rather than systems that centralize data storage. Interoperability would be another advantage, since not all machines work with the same programming software and data exchange architectures. Therefore, the blockchain would 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 skyrocket thanks to their projects to better connect blockchains with 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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