With a decentralized and immutable nature, blockchain has re-emerged as a transformative force in 2024. This technology behind the cryptocurrencies and NFTs, according to HCLTech Trends 2024 report, has redefined the very concept of trust in a connected and decentralized world.
Through secure and tamper-proof transaction records, blockchain is recontextualizing trust in relationships and enabling new forms of collaboration and innovation. It’s journey to maturation sees the potential to revolutionize how we interact, share information and conduct business, which will usher in a new era of trustless trust in a connected and decentralized world.
Blockchain technology helps to provide a secure and transparent way to record and share data and can also help reduce an organization's costs, while improving efficiency and building trust. According to the report, 23% of respondents believe that decentralized identity will enable the future of blockchain adoption in the enterprise.
The need for NFTs
Non-fungible tokens (NFTs) are blockchain-based tokens that provide a unique and verifiable way to prove ownership of digital items, such as artwork, collectibles and virtual goods. NFTs are revolutionizing digital ownership and monetization in a decentralized Web 3.0 landscape.
In Web 3.0’s more decentralized digital world, NFT’s are significant for digital art, where counterfeiting and fraud are increasingly prevalent. Among the benefits of NFTs are how they empower artists and creators to maintain control over their work, ensure proper attribution and compensation. However, the potential of NFTs has expanded beyond their focus on digital art and collectibles. NFTs are now commonly used for ticketing, identity management, supply chain tracking and voting systems. NFTs have the potential to reshape the digital landscape and impact various industries from art and gaming to finance and governance.
“An advantage of Web 3.0 is that users will interact with apps sitting on the infrastructure while the network verifies transactions between applications, without generating access credentials or getting permission from a third-party provider,” said Shyam Enjeti, Executive Vice President, Digital Business, HCLTech. “All transactions are then recorded on the blockchain, preventing bad actors from misusing the data.”
NFTs are beginning to enter the mainstream and adoptability is on the rise. Due to the rise of Web 3.0, NFTs have attracted many speculative investors and collectors and are causing a surge in the opening of new markets and monetization opportunities for creators. Furthermore, technological advancements, expanding use cases, growing interest in digital ownership, creator empowerment, the rise of play-to-earn models, investment potential and community building are a few of the factors contributing to the rise of NFTs.
Great advancements in technology often see challenges to their development and NFTs are not exempt. A lack of standardized regulatory measures and platforms compared to traditional financial markets can make the NFT space susceptible to fraudulent activities, scams and counterfeit tokens, while making seamless transfers and transactions across different platforms difficult.
Among other challenges for NFT adoption includes valuation complexity arising when NFT owners artificially boost the worth of an asset for personal gain, which can lead to a subsequent drop in value that impacts other collectors. In addition, NFT transactions have fluctuating and unpredictable gas fees — the payment made to blockchain miners for processing and embedding a transaction within the blockchain — potentially surpassing NFT cost, which can deter users and make NFT transactions impractical, especially for smaller-value assets.
Fostering a responsible and compliant crypto ecosystem
The impact of cryptocurrencies on socioeconomic and security factors is currently at its highest, however the increased carbon footprint with crypto has caused a hesitancy to its broader adoption. There is a rising interest in crypto and Bitcoin’s value increased by 160% in 2023, with investors anticipating good returns and governments looking to approve their first cryptocurrencies. However, a lack of robust and regulatory frameworks is hindering its movement into the mass adoption scale.
Cryptocurrencies are causing significant changes in traditional financial systems and provide access to financial services for individuals who are unbanked or underbanked, especially in regions with limited traditional banking infrastructure. Crypto enables instant and cross-border transactions without the need for currency conversion or intermediaries, creating a benefit for international trade.
Cryptocurrency holders also have direct ownership and control over their digital assets, which reduces the reliance on traditional financial institutions. Additionally, some cryptocurrencies allow for programmable money through smart contracts, which enable automated and conditional transfers of funds.
There are many drivers for establishing a responsible and compliant crypto ecosystem, including its ability to empower individuals with greater control over their finances and allowing them to bypass traditional banking systems and intermediaries. Significant returns on investment have attracted both individual and institutional investors to the crypto market and cryptocurrencies have the potential to extend financial services to unbanked and underbanked populations, granting them access to the global economy.
User-friendly interfaces are also a key driver for adoption as easy-to-use crypto wallets and exchanges have simplified the process of buying, holding and utilizing cryptocurrencies.
The future of the trending blockchain landscape
Much of the future of blockchain will depend on the adoption of cryptocurrencies, NFTs and Decentralized Apps (D-Apps), which are self-operating applications that run on a decentralized platform— such as blockchain — using smart contracts.
D-Apps adoption is more mature compared to NFTs and cryptocurrency, according to the HCLTech Trends 2024 report, primarily because of its wide range of utility across different industries. While NFTs are not far behind D-Apps in terms of maturity, their adoption is likely to rise as Web 3.0 becomes mainstream.
“While the future of blockchain has the ability to bring transparency, security and decentralization, it still requires proper implementation by the right technology partner,” said Enjeti.
Crypto and D-Apps are currently very agile because of their capability to address growing market needs and various governments will be looking forward to introducing their cryptocurrencies to meet growing public demands. Furthermore, crypto has the highest impact on socioeconomic and security infrastructures with their capabilities to challenge the current financial system and make them more decentralized.
As the technology landscape becomes more decentralized and the internet era continues to evolve, embracing blockchain opportunities will be critical for organizations. This growing trend will continue to recontextualize trust in relationships. How we interact, share information and conduct business will be revolutionized as decentralization and asset tokenization paves the way for a more inclusive and empowered digital economy.
