Blockchain Trends to Watch in 2023/2024 | by Blockchain Today | Coinmonks | Sep, 2023

Blockchain Today

Blockchain technology has come a long way since the launch of Bitcoin in 2009. What started as a novel way to create decentralized digital money has evolved into a versatile platform for transforming data management, business processes, and digital ecosystems across industries.

Now in the 2020s, blockchain adoption stands poised to accelerate exponentially. As the technology matures and gets deployed in more complex enterprise and government environments, exciting new capabilities and use cases continue to emerge.

This guide surveys the most important blockchain trends expected to gain traction in 2023/2024 based on technological innovations, standards evolution, real-world implementations, and market dynamics:

  • Growth of layer 2 scaling solutions
  • Web3, DAOs, and the creator economy
  • Supply chain tracking enhancements
  • Rise of decentralized identity frameworks
  • Increased IoT and 5G integration
  • Mainstream NFT adoption
  • Greater regulatory clarity and compliance tools
  • Institutional DeFi growth
  • The expanding metaverse niche

Gaining familiarity with the rapidly evolving blockchain landscape sets organizations up for success integrating these decentralized solutions. The building blocks are falling into place for blockchains to transform how business gets done across most industries.

Blockchain scalability has been the perpetual challenge limiting adoption. In 2023/2024, various Layer 2 solutions will gain steam:

What Layer 2 Entails

Layer 2 refers to secondary frameworks built atop base blockchain networks to improve transaction throughput. This preserves the security of the underlying network while adding capacity.

Leading Layer 2 Approaches

  • State channels for off-chain transactions
  • Sidechains using simplified consensus
  • Plasma chains with combined validating
  • Optimistic and zk-Rollups that batch operations

Advantages Over Layer 1

  • Much higher transaction volumes
  • Lower gas fees for users
  • Supports intensive smart contract applications

Current Limitations

  • UX and liquidity fragmentation challenges
  • Still rely on mainchain security
  • Replay attacks and withdrawal delays

2023/2024 Outlook

As usage of applications like DeFi and NFTs continues to surge, Layer 2 adoption will accelerate to provide the throughput and lower fees they require to thrive. Expect companies like Optimism and Matter Labs to gain prominence.

Web3 and decentralized autonomous organizations represent a move toward user-centric internet communities:

What Web3 Means

Web3 refers to a conceptual decentralized version of the internet built on public blockchains, decentralized identifiers, and token-based economics.

How DAOs Operate

DAOs feature decentralized governance based on open member voting and programmatic rules enforced through smart contracts on the blockchain.

Web3 and DAO Advantages

  • Censorship resistance
  • Community ownership
  • New funding models like tokenization and NFTs
  • Transparent processes enforced by code

Current Challenges

  • Mass adoption still low
  • Dependence on Web 2.0 ecosystems
  • Legal uncertainty around DAOs
  • User experience gaps

2023/2024 Trajectory

A wave of new DAO experiments will emerge around media, social networks, and creator economies. Mainstream brands will also look to capitalize on the Web3 hype, leading to greater maturity.

Blockchain-backed supply chain traceability will expand in sophistication:

Current Use Cases

  • Tracking food across farms, processors, distributors, and retailers
  • Verifying ethical sourcing of raw materials
  • Authenticating manufactured components and equipment
  • Monitoring pharmaceutical supply integrity from factory to consumer

Limitations Today

  • Interoperability gaps between disconnected blockchain networks
  • Onboarding friction across disparate supplier ecosystems
  • Lack of common data standards across industries

Expected Evolution

Hybrid middleware solutions will better integrate existing supply chain data silos. Increased asset digitization and sensor integration will enrich transparency. Industry groups will coalesce around needed standards.

Business Benefits

Granular traceability improves inventory management, reduces waste, automates compliance, and builds trust with customers.

Self-sovereign digital identity is set to disrupt traditional centralized models:

What Decentralized Identity Entails

Individuals control and own their personal data via private keys instead of relying on external authorities. Identifiers like DIDs resolve to verifiable claims.

Benefits Over Centralization

  • Privacy and security
  • Preventing single point of failure or abuse
  • User control over identity sharing

Current Limitations

  • Verifier adoption still limited
  • UX friction with key management
  • Perceptions as tool only for anonymity

2023/2024 Projections

Frameworks like ID4me and Blockstack will gain mainstream traction by emphasizing customer benefits beyond privacy. Integration with major platforms like Apple Wallet and PayPal will accelerate adoption.

Combining blockchains with IoT unlocks new capabilities:

What Blockchain Offers IoT

  • Decentralized device identity and authentication
  • Integrity for data flowing between vast sensor arrays
  • Native asset tokenization and machine wallets
  • Trusted automation through smart contracts

IoT Scenarios Enabled

  • Autonomous electric vehicle coordination for charging
  • Supply chain trackers that can also autonomously dispatch payments
  • Medical device integration into confidential patient records
  • Drone fleet communication and control across aviation corridors

Hurdles to Adoption

  • IoT sensor scalability limits with public blockchains
  • Confusion navigating the tech stack
  • Sensor data privacy regulations

2023/2024 Outlook

Reaching critical embedded technology scale will allow chunked and sharded IoT data flows to be immutably tracked. Blockchains specialized for internet of things throughput like IoTeX will benefit.

NFTs will expand beyond art into utilities for wider audiences:

Non-fungible tokens provide verified digital ownership of unique assets like art, music, videos, and collectibles. Metadata immutably recorded on blockchains.

While exaggerated valuations and scams exist in the space, NFTs logistically enable types of digital ownership not previously possible. Unique identities and royalty structures baked into NFT standards provide clear value proposition.

Brands launching NFTs tied to products and services will enhance loyalty. NFT-gated access to content or experiences will engage fans. Land deeds, tickets, licenses, and certificates will be tokenized as NFTs.

By tying NFT origins and applications into contexts already resonating with mainstream audiences, broader understanding and enthusiasm will follow.

Compliance frameworks for blockchain will reduce legal uncertainty:

Clear legal, tax, and accounting guidance around crypto payments, DeFi, NFTs, token offerings, blockchain contracts, and records authentication.

  • Regulatory Progress So Far

Bodies like SEC, IRS, and OCC have issued initial guidance but gaps remain. States enact contradictory policies. Lots of grey area.

Regulators face complex technical constraints and lobbying pressures. But thoughtful evolution is better than reactionary crackdowns for industry health.

More sophisticated analysis will prevail across jurisdictions, preventing stifling overreach but closing loopholes. International coordination will increase to prevent regulatory arbitrage. Standards will emerge.

Blockchain data will feed intelligent real-time regulatory compliance:

What Automated Compliance Provides

Smart contracts ingesting blockchain data like asset origin, transaction history, deal terms, and entity classification can conduct automated audits.

Use Cases

  • Validating trading partners and materials provenance
  • Checking transaction KYC and AML compliance
  • Enforcing permitted uses of data per privacy regulations
  • Verifying authenticity and safety of pharmaceuticals

Benefits Over Manual Review

Greatly increased speed, accuracy, and visibility while lowering costs of compliance processes.

Implementations Remain Limited Today

Integrating siloed systems and bridging real-world data to trigger smart contract logic is still challenging. But progress is accelerating.

DeFi will expand beyond crypto-native retail investors:

What is DeFi

Decentralized finance protocols allow trading, lending, borrowing, earnings, and payments without centralized intermediaries. Over $100B locked in DeFi now.

Limitations for Institutions Currently

Price volatility, technical barriers, fragmented systems, lack of recourse, unproven security, and regulatory ambiguity have limited institutional DeFi adoption so far.

What Will Drive More Institutional Participation

  • Staking deposits earning yield
  • Capital efficiency and arbitrage
  • Faster settlement finality
  • Global access and disintermediation
  • New packaged products like ETFs

2023/2024 Projections

Major players will build bridges for institutional investors to capitalize on DeFi opportunities using wrappings, stablecoins, decentralized governance, and structured products to limit risks.

Crypto economics will provide ownership and incentives across virtual worlds:

What the Metaverse Entails

Persistent 3D virtual environments where users collaborate, play, and create / own virtual assets and identities via cryptocurrency integration.

Appeal for Users

Greater agency, customization, connectivity, and continuity across virtual experiences compared to isolated games and apps today.

Driving Enterprise Interest

Fresh revenue models by selling virtual goods and services as NFTs. New advertising formats. Direct access to tokenized user engagement.

Obstacles to Maturity

Lack of interoperability. Poor UX. No dominant platforms or standards. Scaling limitations.

Outlook for 2023/2024

Major investments by Big Tech will accelerate metaverse roadmaps and integrations. Blockchain asset ownership becoming a default competitive baseline across virtual worlds.

These blockchain trends show the decade ahead will feature much more integrated and sophisticated applications of the technology across industries, ushering in Web 3.0.

Technical barriers around scale, identity, compliance, security, and ease-of-use are falling rapidly. Meanwhile, booming investment is funding new meta-ecosystems blending the virtual and decentralized into our tangible world.

The foundations are solidifying for blockchain to re-architect financial, creative, and informational exchange at a truly global and mainstream scope. These trends reflect maturation but also just the beginning as blockchain becomes the backbone of re-democratized economies and communities.

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