Blockchain, the underlying infrastructure behind cryptocurrencies, is likely among the most transformative technological innovations of our age, with promising use cases for many industries. In a nutshell, blockchain is an open and censorship-resistant database model, secured by encryption and decentralization. Blockchain records information in blocks on a shared ledger, storing a synchronized copy of it on all the systems participating in the network, hence assuring its immutability. As companies start recognizing the benefits of this technology, we’ve seen exciting new blockchain developments this past year. Below we’ll take a look at five of the biggest blockchain trends of 2021 and what they might mean for the next year.
Blockchain in supply chain
Blockchain can be a game-changing technology for multiple sectors, especially for the supply chain industry.
The distribution of the Covid-19 vaccine has created more stringent logistic requirements, due to the vaccine’s limited supply and need to be kept refrigerated. As a result, two UK-based hospitals have started experimenting with blockchain technology — which they were previously using to track chemotherapy drugs — to monitor and track the supply chain of vaccines. Vaccine shipments are equipped with internal temperature sensors, and a rise above the minimum threshold temperature will automatically create an entry in the blockchain, removing the affected dose from the supply chain.
FedEx has integrated the blockchain into its chain of custody to improve traceability and provide a trustworthy record, helping to address customer disputes.
DeBeers is using the blockchain’s tracking technology to monitor the source and progress of every single natural diamond they mine.
Smart contracts are fostering blockchain adoption
2021 has seen an increase in blockchain adoption, partly thanks to the development of smart contracts. Smart contracts are essentially agreements between two or more parties, recorded as computer code on the blockchain — making them immutable and tamper-proof for all parties. Smart contracts are automatically executed by the blockchain when the set predetermined conditions are met, making trustless agreements possible without any intermediaries.
Smart contract algorithms make blockchain-based services accessible for companies that don’t have the means to invest in years of research and development for their blockchain network. DeFi platforms like Ethereum, Solana and Avalanche enable companies to create smart contracts directly on their blockchain and benefit from their immutability. Statistics by Valuates Reports predict the global smart contracts market will grow from US$106.7 million in 2019 to US$345.4 million by 2026 — with increasing adoption in banking, supply chain, insurance, and real estate being some of the major driving factors of the industry.
You can use smart contracts for all sorts of situations that range from financial derivatives to insurance premiums, breach contracts, property law, credit enforcement, financial services, legal processes, and crowdfunding agreements.
The concept of a virtual metaverse has caught the attention of some of the biggest companies worldwide, considering Facebook’s US$10 billion initiative to rename the company Meta and start developing a metaverse strategy.
Pros of the metaverse:
Increased engagement — virtual reality is supposed to increase the time users spend online and consequently spur content consumption
The new content market — the metaverse offers huge opportunities for creating and selling virtual content, far greater than those of Instagram or Tik Tok
A new branch of the economy — according to Zuckerberg, Metaverse must have its own comprehensive economic system
A new level of communication — metaverse will allow people thousands of kilometers away from each other to communicate as if they were sitting in the same room
Hoping to get a head start, Nike also announced the launch of Nikeland, the company’s own metaverse built on Roblox. Nikeland will offer users a virtual experience where they can create avatars, play sports games and acquire virtual Nike merchandise.
Competing with Facebook’s centralized metaverse concept, the idea of a decentralized metaverse emerged, as the Winklevoss twins raised US$400 million to build an alternative metaverse experience to Meta. Whether a centralized or decentralized metaverse will become the most popular alternative is yet to be seen, but both iterations need to address the accuracy and reliability of data, and this is where blockchain comes into play. Applied to the metaverse, blockchain can store user data on a tamper-proof, shared ledger, assuring users of its immutability. As blockchain ledgers are openly verifiable, this will create more trust in these emerging virtual environments.
NFTs are introducing more use cases for blockchain
NFTs, short for non-fungible tokens, have been among the hottest trends in blockchain technology this year. NFTs are minted on the blockchain as unique tokens that can’t be duplicated, hence introducing the principle of scarcity to digital assets for the first time. NFTs enable a myriad of new use cases for blockchain, extending beyond art and digital collectibles.
The music industry was among the first to embrace NFTs, as artists started tokenizing their songs and selling them directly to their fans. Another advantage for the music industry is that NFTs can enable automatic royalty payments to record labels, musicians, managers, and all the parties involved.
Vogue has also launched two digital covers as NFTs in its September edition, marking the fashion magazine’s entry into the metaverse. Beyond magazine covers, philanthropy is also proving to be a compatible use case for NFTs. The founder of Visualize Value, Jack Butcher, has created an NFT fund to help Afghan families affected by the recent conflict. Each NFT was priced at 0.028 ETH, or US$89.50, covering the emergency needs of a family for an entire month.
Last but not least, NFTs are ushering in a new era for play-to-earn gaming, as games like Axie Infinity and MIR4 are tokenizing in-game assets and characters. The tokenization of in-game assets represents the first time in gaming history that gamers are the true owners of their items, which they can sell on NFT marketplaces for cryptocurrency, extracting real-world value from these games. As the metaverse concept is being developed, NFTs will likely become a significant part of these virtual worlds, and gain new use cases in the process.