Decentralized public blockchain applications are thriving, but successful permissioned enterprise blockchain projects are scarce. Users must understand how new advances are supporting integration of enterprise requirements with public blockchain innovation.
That’s the conclusion of our just published Hype Cycle for Blockchain, 2021
While cryptocurrency prices have crashed in recent months, it’s important to not conflate the value of blockchain with the most recent price of various coins.
Volatility is to be expected as crypto markets sort out. Meanwhile, blockchain innovation is moving steadily forward.
Key adoption drivers — outlined in detail in our research — include:
- Mainstream adoption of Bitcoin, including El Salvador’s adoption of Bitcoin as legal tender in June 2021.
- Payment network, banking and social network adoption of distributed ledger technologies (DLTs) for money movement, with the expected deployment of central bank digital currencies (CBDCs) being a key influencer.
- Decentralized finance (DeFi) applications offer substantially greater financial rewards than traditional finance. Centralized firms like hedge funds already take advantage of this.
- Tokenization of assets, including explosive growth of NFTs and DeFi tokens, and the promise of tokens linked to physical assets in the future.
- Blockchains such as Binance, Cardano, and Solana offering viable cost-effective alternatives to Ethereum chain transactions.
- Monumental progress in blockchain interoperability, including gateways and abstraction middleware, already used today by DeFi applications.
- Blockchain migration from the proof-of-work (POW) consensus method (still used for Bitcoin) to more energy-efficient consensus methods such as proof of stake (PoS). The ongoing upgrade of Ethereum leads this trend.
Still, the picture is not all rosy. There are plenty of challenges documented in our research including:
- Adoption of permissioned blockchains is moving much more slowly. Some use cases — especially around supply chain and authenticated provenance — are benefiting from ledger technology. However, most users are stuck trying to align use cases to the technology.
- Global regulations and accounting standards need clarification before most enterprises adopt cryptocurrency
- China continues to clamp down on crypto activities as they work on making their own CBDC the world’s dominant currency.
Bottom Line for Enterprises
We project that by 2023, 35% of enterprise blockchain applications will integrate with decentralized applications and services.
The rewards are simply too high to ignore, and are far greater than the costs.