By Teodor Stefan, Modex’s Head of Content. Modex helps developers, teams and businesses of all sizes get started on blockchain, providing the full set of tools needed to learn, create, test, deploy and sell smart contracts and DApps.
Blockchain’s evolution over the past few years has been steady and solid. Even so, this groundbreaking technology still has a lot to offer and continues to hold much promise. Continuing from last year’s buzz and the entrance of regulators, blockchain is poised to evolve even further. A key area is technology for enterprises that require trustless transactions and secure record keeping. Enterprises can track transactions with greater confidence and security, and blockchain adoption – completely distinct from the cryptocurrency hype or doom – is steadily gaining in enterprise environments. While some may lament the entry of regulators in 2018, clamping down on ICO projects, and putting in place strict frameworks for compliance, these are signs of a market maturing.
Here’s what we can expect to see in the rest 2019:
Blockchain as a service (BaaS)
While many startups and enterprises are working on their own blockchain solution, it is not always feasible to create, maintain and manage an individual blockchain solution. This is where Blockchain as a Service (BaaS) comes in. Blockchain as a Service (BaaS) is an offering that allows customers to leverage cloud-based solutions to build, host and use their own blockchain apps, smart contracts and functions on the blockchain. A cloud-based service provider manages all the necessary tasks and activities to keep the infrastructure agile and operational. We predict Baas will speed up the adoption of blockchain across businesses.
More Security Tokens
In 2018, the utility token market saw a slowdown, so the arrival of security tokens has been one of the hot topics last year. The market has long-waited for the grand entrance of institutional investors, but they have not yet significantly entered the scene. The success of security tokens is contingent on digital asset exchanges being up and running. Alongside crypto exchanges seeking regulatory clearance for security tokens, we also see traditional players like Nasdaq, London Stock Exchange and the Swiss Stock Exchange developing digital asset platforms, signs indicating that market infrastructure will be in place by the second half of this year. As processes stabilize and regulatory concerns are addressed, most likely we will see the launch of several STO projects towards the end of 2019, with major activity in early 2020.
Moving from crypto to digital assets
With several indicators pointing towards the possibility of a global slowdown this year, investors are looking for alternative asset classes. With the developing market for security tokens, there are immense possibilities in the tokenisation of well-performing assets that previously lacked liquidity. Consider healthy Small-Medium Enterprises (SMEs) and Real Estate Assets, that tend to have robust returns, but lack wide market access. While they may not be able to afford public market listing, opening up to global markets of investors could provide an infusion of capital that could help scale their businesses. With over 90% of companies in operation globally listed as SMEs, the potential for growth is significant.
More digital asset services by financial institutions
This trend started last year and, most likely, will continue in 2019. The user experience of managing your own assets is scary to a lot of people, and there is a strong desire from a business point of view to have custodial services for digital assets. While many businesses are looking for new blockchain use cases, some are embracing cryptocurrency market. Yes, this market has been hit hard last year, with major cryptocurrencies but despite that, people know that cryptocurrency is here to stay, even if they don’t use it themselves in the near future.
Interoperability between blockchains
As the market progresses, there are new blockchain networks showing up, which leads to new chains that offer different speeds, network processing, use-cases. Blockchain interoperability aims to improve information sharing across diverse networks. These cross-chain services improve blockchain interoperability and also make them more practical for day-to-day usage. For instance, with blockchain interoperability, you can send information from EOS to Ethereum blockchain. In 2019, we should see an improvement in the technology that enables blockchain interoperability.
UX Development and scalability
Scalability and performance hurdles affect both enterprise and public adoption. Promising solutions, like sidechains or innovative platforms, are expected to become more sophisticated and adapted this year. Moreover, many blockchain applications now have a mostly complex user interface, which is far from intuitive for the average, non-tech user. In 2019 we expect to see more user-friendly solutions, which are capable of mass adoption both in technology and design.
Convergence between blockchain and the Internet of Things
This topic is quickly picking up steam. IoT adoption is increasing the number of devices and sensors that gather data, and many parties are typically involved in a business transaction based on that data. Blockchain enables safe record-keeping through an immutable ledger, and permits decentralized operations and transactions while preserving trust between all players in the value chain. In 2019, look for the intersection of these two technologies to speed up implementation of both.
More favourable regulations around the world
European countries like Switzerland, Malta, Lithuania, and Lichtenstein will find competition around the world heating up as more and more states will push for additional favorable regulations around blockchain and crypto-ventures. Malaysia, for instance, is planning in Q1 to review its crypto and ICO (Initial Coin Offering) regulations. In addition, governments of various countries will start to explore what blockchain technology can do for them and look for possible use cases.
Stable Coins could also see a boost in 2019. Cryptocurrencies are the side product of blockchain, but they are volatile. This gives rise and more market traction to Stable Coins. Unlike cryptocurrencies, Stable Coins have stable prices. It is not affected by the market condition and ensures that the stability is maintained all time. Most of the Stable Coins are fiat-backed, but there is still another type of Stable Coins that are backed by commodity, cryptocurrency or belong to the non-collateralized.
Decentralization of apps, not just of the ledger
2019 should also see more decentralization of apps themselves. Too many applications using a blockchain ledger rely on a centralized application that represents a single point of failure and also a vulnerability that could allow tampering with the data before it gets written to the ledger. The same approach needs to be applied to the application’s logic, which must be decentralized with no single point of control. Each trading partner or member of the ecosystem runs their own app. Building such applications is no easy feat, but it is a required step to ensure wide blockchain adoption for business usage.
Without doubt, hybrid blockchains should be on your radar in 2019! The hybrid blockchain works by providing the best features and functionality of both public and private blockchain. Hybrid blockchains stand out by offering a customizable solution and also making proper use of what blockchain has to offer – characteristics such as transparency, integrity and security. To name several use-cases of hybrid blockchain: Internet of Things (IoT), banking, supply chain, enterprise services.
This year we can also expect to witness a rise in the use of federated blockchain as it gives private blockchain a more customizable outlook. Federated blockchains are similar to private blockchains, but with a simple twist: instead of one organization controlling it, many authorities can control the blockchain and pre-select nodes. The selected group of nodes then ensure that block is validated for processing transactions. Some of the use cases of federated blockchain include insurance claims, financial services, and supply chain management. IBM’s blockchain for food traceability is another good example of federated blockchain.