The main challenges of the blockchain in 2022

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

Where are these funds going? More and more capitals, whose cumulative annual growth rate is estimated at 69% until 2025 are injected into the research and development of new blockchain-based solutions for increasingly diverse sectors. Bitcoin and cryptocurrencies are no longer the only beneficiaries and representatives. After the NFTs that have 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 heralding it as the next pillar of industries, let’s take a look at its challenges for 2022. In the midst of mass adoption, some apply it to their industry while others work 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 “blockchain” method, in French, referring to the new technology of database management and archiving – and therefore of exchange of values. Unlike conventional computer technologies, the blockchain is entirely one decentralizedwithout a designated intermediary 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 its sector as the most secure, allowing the management of a very large amount of data without ever compromising the accuracy of the information contained. In short, a system that does immutable data.

In 2008, the anonymous creator of Bitcoin, Satoshi Nakamoto, was the first to create a blockchain, the future building block of his cryptocurrency. Since the bethereum blockchain, which gave its name to the second most widespread cryptocurrency in the world, is all the more used in decentralized finance (finance with IT tools based on blockchain technology). She was born on July 30, 2015.

Bitcoin may be the first blockchain project to be built, but the work around the technology dates back much earlier. Here are some examples in the form of a timeline, with some 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 parent cryptocurrency). This rule was not set up because the technology came with Bitcoin, but rather because in order to motivate people to contribute to the functioning of a blockchain, it was necessary to find a way – equally decentralized – to remunerate them. Hence the term “miner” of cryptocurrency.

1 / Ecology

Invisible to most of us, the blockchain remains a very real system, with millions of machines consuming a lot of energy. 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 it is equivalent to that of a country like Switzerland.

The reduction of the amount of energy needed by the blockchain will go through the optimization of the operational protocols, in particular the management of transactions passing from “proof of work” algorithms to “proof of stake” algorithms. Currently, Ethereum is preparing a colossal update to its operation for the spring of 2022 (ETH 2.0).

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

After the migration of cryptocurrency mining from China to the United States and Northern Europe, it is also expected to implement networks of ground machines with networks operating with renewable energy, such as wind energy. Currently, the new El Dorado for miners, especially Bitcoin, is in Texas.

2 / NFT

Exposure to blockchain media has long been reserved for cryptocurrencies. In 2021, non-fungible tokens, better known as NFT, have invited themselves into the mainstream media, but for reasons that certainly don’t reflect their seriousness. What is an NFT? It is neither more nor less than a technology that enables us to deliver digital certificates of authenticity through the blockchain.

With platforms like Sorare or through completely crazy auctions like that of the first tweet published on Twitter, public opinion has not yet taken into account the very wide and revolutionary usefulness of NFTs. But in order to be able to support tomorrow’s digital commerce and industries (video games, art, entertainment, etc.), NFTs have an important role to play in 2022. Eventually, they might as well replace existing contractsto take advantage of greater information security (by definition tamper-proof).

Equally promising, every project that is part of the development of tomorrow’s Metavers is closely or remotely similar to NFT. Some startups have even made it their business model. This is the case of The Sandbox, launched by two Frenchmen. The Hong Kong-based company offers developers the opportunity to create virtual textures and infrastructures, which they can then resell to actors preparing their metaverse, all via its platform and in the form of an NFT.

The SandBox Metaverse NFT 2021

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

3 / New sectors

According to CoinJournal, the banks it should not be long in seizing the blockchain opportunity. Because the change in the management protocol of their databases could allow them to reduce their current infrastructure costs by 30%, or 12 billion euros.

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

Vaccine distribution faces traceability constraints, volume inventory and optimal coordination to ensure cold chains. In terms of data, even the distribution must be subject to a precise count in order to be then analyzed and be the result of transparent and serious studies.

All these challenges find their answers in the blockchain, provided there is an international consensus. With its security and the inability to falsify documents and transaction histories, the technology would also help avoid the risk of counterfeit vaccines.

4 / Cryptocurrencies, nationwide

In 2021 it was the first country in the world to recognize and integrate a cryptocurrency as a national currency El Salvador. Bitcoin has integrated into the local economy at a rapid pace, which hasn’t necessarily satisfied some locals. That said, other countries could follow in 2022, and El Salvador has even pitched the idea of ​​basing the economy of an entire city on the digital token.

Why choose to recognize Bitcoin (or another cryptocurrency) as a national currency? Some countries will find this useful, particularly for getting rid of money transfer fees. A Cointribune article, for example, listed all countries with a strong diaspora, with emigrants penalized by taxes when they transferred money to their country of origin. This list includes Ukraine, Senegal, Jamaica, and even Montenegro.

In China, where Bitcoin and all other cryptocurrencies are banned, Beijing has started rolling its own digital yuan. One that fits CBDCs (central bank digital currency) deviates from the very concept of decentralized currency, but could end up running on a blockchain.

Last September, the deputy director of China’s central bank’s Digital Currency Research Institute hinted that China could move away from its conventional technology approach to blockchain. For once, the shortcomings mentioned relate 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’s 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 it will be worth over $ 3 billion in 2025. The communication between things through the Internet and sensors could be strengthened by the blockchain and its usefulness in automating transactions.

The amount of underlying data is significant and must be protected. To ensure this, the blockchain could play a role, rather than the systems that centralize data storage. Interoperability that would be another advantage, as not all machines run on the same programming software and data sharing architectures. The blockchain would therefore accelerate development.

To successfully complete this challenge, and the others presented in this article, Blockchain players will need to continue building the web and correcting the shortcomings of current approaches. Sign far from trivial: some cryptocurrencies see their price 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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