The rise of blockchain began with cryptocurrency but now it is evolving as a standard of operation for better security and privacy. From NFTs to smart contracts, and from DAOs to Metaverse, all the present technological developments and trends are embracing blockchain at their core.
However, an endless series of new trends in the crypto markets confuses the end consumer and creates a state of uncertainty. These uncertainties result in major fluctuations in the crypto prices and affect those projects which are worth their metal. In this article, we are going to discuss how blockchain is evolving with its changing technology and what are some of its major use cases that can transform our experience as end consumers of this technology.
The role of blockchain has already gone beyond cryptocurrencies and it is being utilized as a model for decentralization. Blockchain is now transforming digital arts via NFTs, making data transfer easier and more secure, tokenizing real estate, making cross-border payments seamless, and developing decentralized supply chains. The technology utilized in the core of these use cases works on decentralizing data to multiple nodes over an anonymous network. These nodes act as the validators of any transaction over the blockchain network ensuring multiple layers of gatekeepers for better security.
The cost of operating on the blockchain is relatively cheaper than opting for advanced security tools, thus most businesses are leveraging blockchain tech to drive privacy in their processes and ensure transparency within the organization. The presence of high-stake vendors in the blockchain will empower the new developments in its technology and we will experience a faster, more reliable, and more refined blockchain technology in the future.
Development in the blockchain is picking up pace as the numbers of DeFi users are increasing with every passing day. Fast-paced adoption is also enabling the blockchain development and advancement of its supportive technology, enriching the developmental resources and receding the time depleted in the process. Following are some of the significant developments in blockchain technology that are fostering blockchain adoption for the masses.
Smart contracts are digital and non-immutable contracts between two parties. The terms and conditions for these smart contracts are being encoded into a self-executable file that accounts for an irreversible transaction. Smart contracts are developing a trustless transaction environment based on open and decentralized blockchain technology.
Smart contracts dismiss the need to have any central authority while interacting with any anonymous blockchain node. The transaction or the payment occurs when a series of mutually agreed conditions are met. Now smart contracts have become a powerful tool for decentralized organizations that allows them to interact with multiple vendors without the need to validate their identity.
Decentralized applications or DApps are those applications that are developed over blockchain technology. DApps are 100% open-source and all of their records are stored in public blockchain ledgers. These applications are similar to any other applications in their functioning but on the micro-level, they work on a peer-to-peer network and ensure that there is no central authority dictating the operation of these applications.
DApps are considered to bring a new technological revolution as they cannot be censored or controlled due to their decentralized nature and their open-source code encourage further developments from independent developers. Some of the most popular DApps are Pancakeswap, Axie Marketplace, OpenSea, etc.
NFTs or Non-Fungible Tokens are said to be the future of digital arts with an expected market cap crossing billions of dollars by the end of 2022. But how can some random code change the way arts are being shared and owned? Non-fungible means unique and irreplaceable and Non-fungible tokens are a way to define clear and unique ownership of digital art, real-world assets, unique artifacts, in-game objects, or anything that has value.
The ownership of these assets is encoded on the blockchain which makes it immutable but transferable. The NFT market has seen a steep rise in its popularity as they are going to play a crucial role in the upcoming Metaverse. NFTs might seem like a trend to many but the unique value that it provides indicates the fact that NFTs are here to stay.
The Crypto world is known for its agile innovations and embracing new technologies to deliver a better experience to its users. However, there is a fair share of ecological, managerial, and affordability challenges that the crypto world is struggling to overcome. In this article, we are discussing some of the key technologies which are being adopted by the crypto world to ensure faster transactional speeds, cheaper transaction costs, and lesser carbon footprints.
Ethereum and Bitcoin are two of the largest cryptocurrencies in terms of their popularity and market capitalization. Both of these cryptocurrencies use the Proof-of-Wok (POW) consensus mechanism to validate their transactions that require high-end processing hardware and high power consumption to validate a single transaction. The time consumed in the process and the cost of processing these transactions are unreasonably high. Apart from these disadvantages POW mechanisms also have a massive carbon footprint.
To tackle these challenges an alternate validation protocol named Proof-of-Stake or POS mechanism is being adopted in the crypto world. With 99% lesser power consumption and 90% lesser transaction cost, POS is emerging as a viable solution to the POW challenges. Even Ethereum blockchain is shifting to adopt POS in its awaited Ethereum 2.0 update that will add to the universality of the POS mechanism.
Another critical challenge that blockchain is facing in recent times is the lack of scalability and interoperability across different blockchain networks. For example, there is no way the Bitcoin blockchain will be able to share data and assets with the Ethereum blockchain directly without using any third-party exchange.
As an answer to these, new bridging protocols are being developed across diverse blockchain networks which allow a free flow of information and resources between multiple blockchains. This free flow of data and assets allow a high degree of productive collaboration. All of this collaboration is possible only by cross-chain and multi-chain protocols and due to these reasons, quick adoption of this tech can be observed across the crypto world.
Layer-2 solutions are an attempt to reduce the transaction traffic over the Ethereum main net by shifting its transactions to a less congested blockchain network. These less congested blockchains are called Layer-2 solutions for the Ethereum main net. Layer-2 solutions such as Polkadot, Loopring, Immutable-X, Polygon, and others provide much faster transaction speeds and reduced transaction costs.
Layer-2 solutions provide the same level of security, privacy, and transparency as that of the Ethereum main net without charging excessively high gas fees.
Blockchain and decentralization are the undisputed future of business and finance in particular. However, the rate of change in trends and technologies is rising with every passing day, resulting in frequent market fluctuations and the disappearance of those projects that are unable to adapt to these transformations. Technology in cryptocurrencies is exceptionally unpredictable as we have seen in the recent Terra LUNA crash.
This high pace of technological advancements creates highly volatile market conditions which result in uneven asset flow within the market. New trends and technologies are an inevitable part of cryptocurrency but seeing through the value proposition of the development rather than popularity will allow the stakeholders to make better decisions and pinpoint those innovations that will become fundamental to blockchain in the future.