The Internet era has brought us a new phenomenon known as cryptocurrency. At the same time, many people still do not have even a rough idea of what it is, as blockchain technology is not explained in simple terms everywhere.

Most users of digital money believe that the ancestor of the movement in this direction was an unknown person called Satoshi Nakamoto. However, not everyone knows that the development of electronic money was carried out long before that, back in the XX century.

The use of blockchain

The blockchain technology was first used in 2009 to create the bitcoin cryptocurrency and has gained wide popularity for the development of other cryptocurrencies, such as ethereum, ripple, and litecoin. The positive qualities of the system contributed to its further penetration into the economy, and now blockchain is used in banking, public administration, law, and other areas.

For example, in the summer of 2017, Accenture and Microsoft introduced blockchain technology for digital identity cards. Blockchain startups Civic and UniquID Wallet allow people to create digital identity documents that cannot be faked – perhaps in the future they will replace “traditional” passports, driver’s licenses and other documents. International payment systems SWIFT, MasterCard, and VISA have repeatedly announced their development and plans to use blockchain in the future. In Estonia, the state uses an electronic blockchain system for citizenship registration.

Blockchain trends and prospects in 2023

Despite encountering significant challenges in the blockchain space such as the crypto winter and the failure of the stablecoin algorithm in 2022, experts remain optimistic about the technology’s future development and implementation. They agree that as blockchain technology advances, it will play an increasingly important role in society and the economy.

This year is likely to be a transitional year as more individuals and businesses begin to integrate Web3 technologies like blockchain to take advantage of their benefits. Banking, finance, supply chain management, healthcare, and cybersecurity are among the leading industries expected to expand with blockchain technology.

The blockchain industry has opened up a whole new world of economic and business opportunities and prospects thanks to its security and privacy capabilities. According to the Business Research Company, the global blockchain services market is expected to grow from $3.28 billion in 2022 to $4.7 billion in 2023 and reach an astounding $19.76 billion by 2027.

So, what are the key blockchain trends in 2023 that will shape the future of technology? Let’s take a closer look.

Blockchain technology facilitates traceability throughout the supply chain, enabling instant access to the status or authenticity of a product due to data being stored in a decentralized digital ledger. This boosts efficiency, guarantees reliability, and creates a global value chain for goods.

Smart contracts, an essential part of the blockchain ecosystem, have been adopted by many companies. They simplify the processing of licenses and certificates, among other documents, which reduces overall costs while eliminating dependence on third parties. This speeds up and enhances the accuracy of international trade.

Decentralized finance (DeFi) involves storing money in a secure digital wallet using smart contracts instead of paying a fee for bank services. This application of blockchain technology may be the future of finance, and the world’s most powerful corporations are already developing decentralized applications. For example, Amazon Web Services and Avalanche offer scalable blockchain solutions for businesses and governments.

Blockchain technology is used by both cryptocurrencies and payment systems to store transaction data in peer-to-peer networks, removing centralized bodies such as banks. This lowers transaction costs, enhances security, and increases the demand for high-performance systems with reduced transaction times.

The growth of blockchain-enabled business operations is one of the most significant trends in blockchain development in 2023, as the decentralized nature of the blockchain enhances security, transparency, and protection against cyberattacks. Therefore, more and more companies will use the technology to their advantage, with BMW, for example, betting on blockchain technologies for future competition.

Software developers with blockchain experience will be in high demand in 2023, with a sharp increase in demand for blockchain technology, which can help create powerful applications for secure transactions, develop advanced Know Your Customer (KYC) functions, and more.

Benefits of using blockchain for business

The essence of this technology is that digital information – data on transactions, contracts, contact databases – is stored in the form of sequential interconnected blocks. Moreover, all authorized users have equal access to this data in real time. It is impossible to unnoticeably remove or replace part of the information, because the system is updated automatically in response to any changes, sending the relevant data to everyone who has access to the information. This avoids both deliberate manipulation and calculation errors.

By using blockchain in the process of settlement transactions, entrepreneurs can significantly reduce operating costs and increase working capital. The most promising areas for the use of blockchain are the following

– P2P (Peer-to-Peer) lending

– dispute resolution, order management, and product promotion;

– accounting of fixed assets and reconciliation acts.

Disadvantages of blockchain

However, nothing is perfect, and the blockchain system also has its drawbacks. For example, since the data is stored on all participating computers, large amounts of data need to be processed to register transactions, which causes increased computer and Internet speed requirements for network participants. This fact also contributes to high energy costs for servicing operations in the system, for example, according to economists, in 2020, the electricity consumption for servicing bitcoin in the world will be comparable to the annual energy consumption of a small country, such as Denmark.

Blockchain technology is not regulated by any legislation, which carries additional legal risks, for example, if your account is hacked by hackers.

How viable is blockchain on a large scale?

No one can give a clear and unambiguous answer to this question yet. To tell the truth, this technology has been around for almost a decade thanks to bitcoin, but it has only now begun to attract a lot of attention. Most companies that test it do so in a very limited way (as part of pilot or demonstration projects). No one can be sure that blockchain will be able to cope with scaling, as many of its developers have suggested.

Perhaps one of the best real-life examples of blockchain application in real-world conditions is the partnership between Ripple and banking giants: American Express and Banco Santander. Since mid-November 2017, American Express users have been able to send funds to Banco Santander accounts through the AmEx international payment network and conduct transactions via the Ripple blockchain. The attractiveness of this partnership lies in the instantaneous execution of international payments with a minimum amount of commission.

Can blockchain really become mainstream? So far, this question remains unanswered. In the following articles, let’s go further and try to figure out what cryptocurrencies are, how they work, and what they can be used for.

The author of this publication: Jeff Vertes (expert in the field of crypto casinos)