In 2024, blockchain has seen transformative growth. According to a Coinbase report, on-chain projects announced by Fortune 100 companies have increased 39 percent from last year. Furthermore, 56 percent of Fortune 500 executives say their companies were working on on-chain projects.
Major actors in financial services are now embracing blockchain technology. From HSBC, IBM, and Nasdaq to JP Morgan, big names are now driving blockchain innovations. Here, this article explores ten blockchain trends expected to dominate the second half of this year.
1. Decentralised finance (DeFi)
A financial disruptor, DeFi enables peer-to-peer financial services without intermediaries such as banks. DeFi services such as Uniswap, Aave, or SushiSwap offer products and services like lending, trading, and asset management, often at competitive rates.
Under a Decentralised Autonomous Organisation (DAO), governance is placed in the hands of token holders. This results in a more inclusive decision-making process.
2. Smart contracts
Smart contracts are computer programmes that automatically execute agreements when predefined conditions are met.
One example of the financial institutions that have experimented with this is BNP Paribas. In 2020, it announced a collaboration with fintech company Digital Asset to design real-time and settlement applications using DAML smart contracts. It has also been involved in pilot projects for trade finance using blockchain.
Other than finance applications, smart contracts are also used in government services, legal industries, and notaries.
3. Cross-border payments
Most cross-border transactions are complicated and costly. Often, they also involve multiple intermediaries and currency conversions.
Blockchain offers a more efficient and cost-effective solution by allowing funds to be transferred directly between individuals and institutions. Blockchain-enabled payments take only a few seconds compared to traditional payments, which may take 3-5 business days.
Companies like Faster Payments Service, Ripple, IBM World Wire, and Strike have already demonstrated successful blockchain-based cross-border payments.
4. Digital identity verification with blockchain
Last year, 3,205 data compromise cases affected 353 million victims in the US. Nearly all were data breaches, affecting 349 million victims.
Blockchain-based digital identity verification offers a solution to this problem. Personal identity verification protocols like Civic and decentralised identity networks like Sovrin allow users to control their personal information in a way that prevents identity theft and phishing.
Additionally, these platforms simplify and speed up the data verification process, allowing service providers to reduce the time, cost, and resources spent on manual verification.
5. Asset management
Blockchain’s technological capability can reduce the risk of losses when facilitating asset management. Tokenised securities, for instance, allow users to trade digital tokens representing ownership of assets such as stocks, investment funds, and bonds.
An example of this is Paxos Gold (PAXG), an asset-backed digital token with a total market capitalisation of $327 million.
Blockchain also allows for real-time tracking of asset ownership, transactions, and changes throughout the asset lifecycle management.
6. Fraud prevention with blockchain
With blockchain, organisations can permanently track and verify transactions, which makes it a powerful tool against fraud.
Cryptography and encryption techniques help ensure the authenticity and integrity of information, making it difficult to counterfeit. Institutions like Barclays Bank, JP Morgan, and HSBC have already integrated blockchain technology into their payment infrastructures.
7. Supply chain finance
Blockchain-based supply chain finance models are becoming increasingly popular. This is because it allows supply chain partners to share information more easily.
An immutable digital ledger can track all information, from assets to product quality, saving time and money for all parties involved. IBM Food Trust uses this feature in the food supply chain sector. With a permanent, tamper-proof record of every transaction, from farm to table, the technology helps ensure the authenticity and safety of food products.
The Provenance network also uses blockchain to allow consumers to verify the origins and authenticity of products. This system makes sure that product histories are permanently recorded and easily accessible.
8. Blockchain-based trading
This year saw an increasing ownership of digital assets. The global user base for digital currencies reached 562 million people, a significant increase from 420 million in 2023. Within virtual worlds and the metaverse, trading volumes have only been increasing since the bullish run in 2023.
Blockchains can also be used to trade various assets, such as luxury goods, real estate, and intellectual property rights.
9. Internet of Things (IoT)
Blockchain can connect IoT devices to ensure safety in interactions between devices and networks. This feature opens up new opportunities for financial services such as micropayments and decentralised insurance.
Hyperledger Fabric, for example, acts as a distributed transaction ledger for various IoT transactions, helping keep track of millions of connected devices.
Another ledger, IOTA, is specifically designed for the Internet of Things (IoT). It secures sales and trading data streams to facilitate micropayments between IoT devices without transaction fees.
10. Insurance
Smart contracts built on blockchain technology can protect health records and detect fraudulent claims. Aside from that, its ability to automate claims processes can minimise human interference.
Etherisc is a company that claims to be a pioneer in parametric blockchain insurance, having used the technology since 2016. It is a decentralised insurance protocol built on blockchain technology that has developed solutions like flight delay insurance and crop insurance.
Another example is Insurwave, a blockchain-based platform developed by EY and Guardtime in collaboration with insurers and shipping companies.
- Blockchain
