4 predictions for blockchain in 2021 – from money to art | World Economic Forum
This year has been off to a notable start for crypto and blockchain. On Jan. 7 the total cryptocurrency market hit an all-time high exceeding $1 trillion for the first time. Renewed interest in, and conversations around, blockchain technology and digital currencies from industry and government leaders have accompanied the rise.
The COVID-19 crisis has increased consumer demand for identity solutions that don’t compromise individual privacy and freedoms. Of course, ideas of what constitutes the ideal level of privacy preservation vary widely around the world, with China and the U.S. taking deeply divergent perspectives. As the travel industry and various governments continue to explore ideas like “immunity passports,” which would maintain vaccination and/or testing records, the creation of a global standard around digital credentialing seems both necessary and elusive.
As it stands, there are very few regulations or industry standards to prevent fragmentation of technical solutions, protect privacy or promote inclusivity, interoperability and portability – all essential principles – for digital credentialing beyond time-sensitive use cases. As global society struggles to return to “normal,” there is a need to ensure potential solutions that embrace the use of digital credentials, leverage the experience of the digital identity community, consider a longer-term and holistic view, and create strong partnerships with public authorities.
Blockchain is an early-stage technology that enables the decentralized and secure storage and transfer of information. It has the potential to be a powerful tool for tracking goods, data, documentation and transactions. In this way, it can cut out intermediaries, reduce corruption, increase trust and empower users.
The potential uses of blockchain technology are essentially limitless, as every transaction is recorded and distributed on a ledger that is almost impossible to hack. Though the most well-known use case is cryptocurrencies, blockchain is being positioned to become a global decentralized source of trust that could be used to collect taxes, reduce financial fraud, improve healthcare privacy and even ensure voting security.
Still, many governments and central banks, including the U.S. Federal Reserve and European Central Bank, continue to research whether central bank digital currencies (CBDC) hold potential but have maintained they do not see value in issuing one at this time. Many are also watching the growth in the stablecoin space – with total value now surpassing $25 billion – fueled by decentralized finance (DeFi) and institutional interest. This has corresponded with increased attention from regulators, for instance the controversial STABLE Act in the U.S. and the recent letter from the Office of the Comptroller of the Currency. We can expect continued regulatory interest and activity in this area from around the world.
This may create an increase in demand for decentralized service provision. In 2020, we saw the highly anticipated launch of Filecoin from Protocol Labs and continued growth of Web 3.0 projects such as Keep, Oasis and Polkadot. The public cloud market is among the most highly concentrated in existence, with four providers controlling 80% of the market. Decentralized cloud storage is currently the only alternative that could pose a challenge to this status quo. Along with advances in AI, this transition could lead to significant expansion of the scope of human and machine interaction, and an acceleration of the transition to Web 3.0.
Even as we have been wrestling with the consequences of the greatest social and economic disruption of our lifetimes, the pace of work across the blockchain ecosystem has been accelerating. The great news is that awareness of the potential of decentralized systems now lives beyond the minds of a tiny minority and is slowly gaining awareness among a larger audience (although the bitcoin price index remains the biggest reason most people pay any attention to the space).
As a result, it’s likely that we will see continued interest from regulators and policymakers around the globe, especially around digital currencies. We’re already starting to see increased market consolidation, which may be a sign of increased market maturity. Regardless of what happens in 2021, it’s sure to be a wild year and one for the books.
This content was originally published here.