Blockchain Challenges And Opportunities
The blockchain industry is experiencing considerable growth in the past year and a half. Ever since the COVID-19 market crash, the crypto markets are booming. Investors are flocking the markets to buy Dogecoin along with thousands of other cryptos to make the best out of this bullish cycle.
Moreover, the Defi ecosystem is growing exponentially and is providing more and more ways for individuals to reliably make passive income. NFT popularity is also exploding, with art collectors joining the craze for the next NFT that will make x10 returns in just a few days.
And to top things off, institutional interest in cryptocurrencies is higher than ever, driving more businesses to adopt blockchain and invest in cryptocurrencies. However, there are still a lot of challenges that need to be overcome in this industry.
This article will try to list some of the most important concerns about blockchain technology, as well as some of its strongest opportunities for the foreseeable future. This should give you a good idea of what to expect from this industry and whether you should consider investing in some of its strongest players.
Top blockchain challenges
To have a clear view of the future of the blockchain industry, we need to have an in-depth look at the most difficult challenges that the technology is facing as a whole. Below are some of the woes that could cause a few setbacks to this growing industry.
The most important issue with blockchain technology is scalability. The original cryptocurrency was initially planned to be a payment instrument, used for daily transactions. However, the rise of the price of BTC has brought incredible amounts of traffic to this payment network. Hence, this network saturation has made it impractical to use BTC as anything else than a store of value.
This issue is plaguing other blockchains like Ethereum, where the scalability of its PoW can’t accommodate the number of users that want to use its network. This has resulted in extraordinarily high fees and a slow transaction process.
However, there’s some light at the end of the tunnel. Many newer blockchains such as Solana and Cardano are adopting more scalable models that should ensure smooth sailing for both developers and users on the network. Ethereum is also switching to a PoS consensus model in 2022, so we should see some improvement there as well.
This is especially important as Ethereum-based projects compose more than 90% of all of the decentralized finance ecosystem.
The second, and equally important challenge of blockchain-based projects is their regulation. Governments around the world are still struggling to draw out a common regulative framework for crypto. While some embrace them completely, others want to regulate them, or even ban them altogether.
As a result, this has a strong influence on the mass adoption of cryptos as a means of exchange. Investors and individuals still remain hesitant to go all-in on a type of asset that doesn’t have a clear future drawn out for it.
Top blockchain opportunities
That said, the blockchain industry has dozens of strong opportunities that could bring in mass adoption and contribute to the growth of cryptocurrencies. Two of the most important ones are explained below.
Defi is growing exponentially, and for a good reason. This ecosystem is slowly beginning to appeal to mainstream investors by becoming easier to use and providing better ROI than traditional financial products. Decentralized exchanges and lending platforms are getting safer to use, and their interfaces are becoming more beginner-friendly.
Moreover, because of their decentralized and permissionless nature, their popularity in third-world countries is growing. Individuals that were previously prevented from investing because of poor banking infrastructure, can now access complex financial instruments that bring incredible yields.
And finally, one of the most important opportunities for blockchain is the adoption of the technology from businesses on a global scale. Institutional investors have already started taking interest in Bitcoin and some are investing massively in this cryptocurrency.
This gives blockchain technology more legitimacy, and businesses are looking into the tech to find incredible benefits that improve their operational processes. Consequently, as scaling woes are being addressed, we should see blockchain tech being adopted by an increasing number of companies.
We can conclude that even though it might have been considered a novelty at first, blockchain technology is here to stay. While it is still a niche technology, it is slowly gaining mainstream attention. The main reasons for this increase in popularity are, of course, cryptocurrencies. Their skyrocketing value has stirred up the markets as Bitcoin is getting incredible amounts of attention from institutional investors.
That said, the real potential of blockchain is still nested in the adoption of businesses in various industries. This tech can be extremely powerful in the right hands and will help streamline crucial industries such as medicine, supply chain, food production, and agriculture, among others.