With
interest in enterprise blockchain development peaking, one
can expect 2020 to be a volatile year. Along with several new opportunities,
some challenges threaten to derail the ride. Here is a countdown of the trends
that might impact startups this year.
1. NEW RULES AND REGULATIONS TO NAVIGATE
Since
the inception of blockchain technology, it has enjoyed the freedoms of an
unregulated political and financial climate. This gave them the freedom to
explore innovative solutions otherwise off limits to startups. But this also
prevented investments from bigger, centralized institutions.
However,
this is set to change soon. Governments have realized the potential as well as
the threats of this ground breaking tech. This has led them to regulate certain
aspects of the ecosystem. India and China banned virtual currency transactions
which in turn limited the scope of cryptocurrency-based startups in the
countries. Japan, on the other hand, legalized Bitcoin tender a few months ago.
While the US has made moves to strengthen policies on virtual currency, it
continues to be a hotbed for blockchain innovation.
2. THE PROMINENCE OF ICOs WILL CONTINUE TO GROW
Owing
to the dynamics of the crypto market, many investors are turning to ICOs as a means
of a quick profit. Traditionally, crypto investors made money by dealing, that
is, buying and selling cryptocurrency. But the growing volatility has pushed
investors to look for better options such as ICOs.
Most
blockchain based startups use the ICO route to fuel their funding requirements.
The older route of VC funding has become less appealing to them with its
lengthy paperwork and negotiations. This also led to increased regulation by
government bodies who continue to keep a watchful eye on this segment.
Even
with new rules and tighter laws, most analysts foresee continued interest in
blockchain technology as well as ICOs. The value and number of ICOs has been
climbing steadily and is poised to spill over into 2018 too.
3. OPPORTUNITIES IN NEW INDUSTRIES
Although
blockchain was primarily designed to support the virtual currency market, its
concept of a decentralized public ledger can be utilized in other industries
too. The main benefit of a public ledger is the trust factor. The presence of
blockchain reduces the chances of forgery and fraud. This idea has led to a lot
of interest from non financial sectors too.
A
cooperative in Arkansas, USA, called Grassroots is already utilizing the
potential of blockchain. They have created an interface that helps farmers
track the path of their poultry from the farm to the table. This enables the
customer to be sure of the origin of their foods. Deloitte has used the public
ledger system to reduce forgery of certificates. Other platforms such as Sia
and Jrop have integrated blockchain into their services.
This
clearly shows that blockchain has the potential to disrupt any market where
authenticity and trust are paramount.
4. PRIVACY ISSUES
The
essence of blockchain lies in its publicly accessible shared ledger. This
potentially raises concerns about the privacy of confidential transactions.
This has also prevented blockchain from being integrated into industries such
as security services.
This
weakness can be hidden by creating a ledger that is accessible only by
invitation. A private blockchain network with restricted entry can help vet
unwanted characters.
5. SCALABILITY ISSUES
Heated
differences on scalability saw Bitcoin, the largest cryptocurrency by market
value, split into two different coins. Each crypto transaction is stored in
nodes which increases block sizes. This in turn limits the number of
transactions per second to just seven. Which is miniscule compared to the
thousands of transactions that occur in the financial industry.
Thankfully,
cryptos are working on methods to increase the transaction volumes which will
further help promote blockchain.
The
blockchain industry is yet in the nascent stage with new developments
increasingly making it a preferred choice. 2020 will surely open up a plethora
of opportunities for the startups in this field.
