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March 20, 2024

Navigating the Future: Analyzing Blockchain Trends in 2024

In the 21st century technological landscape, "Blockchain" is both an advancement and a challenge. Many stakeholders consider it an industry disruptor capable of transforming both the financial and information sectors. Blockchain technology is leading to new business models and significant changes in various industries.

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Despite the rapid development and growth of blockchain technology over the past 15 years since Bitcoin's inception, many still perceive it as intangible. Some individuals, however, still consider blockchain to be an " emerging " technology in its early stages.

Throughout 2023, analysts and experts studied and predicted Blockchain's relevance. Another intriguing topic is the domain in which Blockchain will shine and which domain will face challenges.

A number of important trends in 2024 will be highlighted throughout this article. A focus will be placed on the growth of DeFi, particularly in relation to cryptocurrencies, as well as on the development, management, and investment strategies surrounding this sector.

Defi Will Grow

Recent events have highlighted the growing interest in blockchain investments, particularly in the financial sector. It is expected that this trend will continue throughout 2024.

According to Avivah Litan, an analyst at Gartner, data indicates that the cryptocurrency market is poised for growth. Financial institutions are increasingly adopting blockchain technology to enhance financial development. This trend aims to provide customers with access to cutting-edge financial services and infrastructure.

According to the analysis provided in the ReportLinker report titled "Blockchain in Banking And Financial Services Global Market Report 2023",  investments in global blockchain financial and banking services increased from $1.89 billion in 2022 to $3.07 billion in 2023. These investments encompass financial services deployed on both public and private blockchain platforms.

It is also predicted that the banking and financial services sector utilizing blockchain technology will grow to reach $1.92 billion by 2027.

In 2022, North America still emerged as the leading region utilizing blockchain for banking and financial services. However, the Asia-Pacific region is anticipated to become the fastest-growing region in the future.

Global corporations and organizations venturing into banking and financial Services include Microsoft Corporation, IBM, Infosys, Amazon Web Services, Hewlett Packard Enterprise, R3, Intel, Oracle Corporation, SAP SE, Accenture plc, JPMorgan Chase & Co., Bitfury Group Limited, Auxesis Services & Technologies (P) Ltd., ConsenSys, Akamai Technologies Inc, Alphapoint, and others.

Scams and Corruption Diminish Interest in Blockchain

Despite the increased investment flowing into the financial industry on blockchain, concerns regarding negative news over the past two years have contributed to a decline in interest in blockchain technology.

Commencing with the fall of Terra in 2022, which significantly impacted the market, subsequent events unfolded with the crash of FTX, a prominent global cryptocurrency platform. Its CEO and founder, Sam Bankman-Fried, faces prosecution on multiple charges, including fraud. Shortly thereafter, in early 2023, crypto lending service provider Genesis Global Capital filed for bankruptcy, having been affected by the FTX crash. It was revealed that Genesis is $3.4 billion in debt.

According to the 2022 Internet Crime Report by the FBI, fraud in crypto investments surged from $907 million to $2.57 billion in 2023, marking a 183% increase. Additionally, the report for 2023 reveals a rising number of scams, crypto service providers offering false promises of recovering lost assets, and the proliferation of fake NFTs designed to defraud investors' wallets.

These issues have led to growing concerns among various parties. Avivah Litan acknowledges that such news significantly impacts the market, stating, "There is still innovation, but it's stifling adoption." She further added, "It has an influence over the whole industry.” People don't get excited anymore. It just turns people off."

Advancements in Legal Policies and Regulations

As the crypto market expands, it faces disruption from scams and frauds, prompting regulatory and legal organizations to establish common ground. This facilitates the crypto world's operation while eliminating crime and chaos.

For example, in the vast USA market, legal standards have escalated to become more strict. In March of this year, the U.S. Securities and Exchange Commission (SEC) filed charges against crypto entrepreneur Justin Sun, the founder of TRON, along with three other companies. These charges pertaining to the unregistered offer and sale of crypto assets, as well as fraud related to hiring celebrities to illegally promote TRX and other coins without disclosing compensation. Additionally, the US SEC also filed charges against six celebrities involved in illegal promotion of TRX and other coin investments.

In February of this year, the US Securities and Exchange Commission (SEC) also prosecuted Payward Venture Inc. and Payward Trading Ltd., commonly known as Kraken, for operating Kraken's crypto trading and staking platform as an unregistered securities exchange. Kraken agreed to pay a civil penalty of $30 million as part of the settlement.

The prosecution against Kraken occurred shortly after the US Securities and Exchange Commission (SEC) filed charges against Nexo Capital for the unregistered offering of crypto assets lending products. Nexo agreed to pay a civil penalty of $45 million as part of the settlement.

Furthermore, in 2023, the US Securities and Exchange Commission (SEC) also filed charges against numerous unregistered companies and products.

However, amidst the efforts in fraud prevention and tackling illegal business operations on the blockchain, there is still positive news for Bitcoin. For instance, the US Securities and Exchange Commission (SEC) authorized a Bitcoin ETF fund in January 2024.

The regulatory landscape in the US is evolving. In March, US Congressman Tom Emmer, who is a chairman of the Congressional Blockchain Caucus, highlighted the progress of the Blockchain Regulatory Certainty Act. This act has received approval from some members of the committee.

The Blockchain Regulatory Certainty Act will serve as a tool to establish legal transparency for blockchain developers and service providers who do not hold or manage consumer funds. It will enable them to offer financial services under strict regulations.

Currently, many US states have introduced draft laws regarding the management of blockchain and cryptocurrencies.

Organizations and Corporations Embrace Blockchain Investment

Business leaders are now studying and analyzing how Blockchain can drive change and increase operational efficiency. There are examples of Smart Contracts being used in management and supply chain management to enhance product efficiency and validation.

Organizations are currently experimenting with blockchain operations within their structures, without fully committing to serious implementations, and examining ideas.

Seth Robinson, Vice President of Industry Research at CompTIA, explains that while blockchain applications are prevalent in the financial sector, they have not yet become widely applicable in other sectors. This limitation stems from the difficulty of adjusting funds within the system to meet satisfactory thresholds; in essence, there is still a lack of funding.

Additionally, Robinson believes that blockchain adoption within organizations will increase if blockchain software service providers develop products and services that reliably enhance organizational operations.

He adds that "the vendors will have to show why the blockchain-based solution is better -- and that it is so much better -- that it's worth ripping out and replacing what [companies] have in place."

In recent years, several organizations have adopted blockchain technology to explore and expand its applications beyond the financial sector. In addition to obtaining ESG (Environmental, Social, and Governance) approval and improving transparency in supply chain management, the applications also validate material sources' credibility.

NFTs in Business world

Undoubtedly, the popularity of digital assets such as Non-Fungible Tokens (NFTs) is on the rise, with constant creation and exchange occurring on the blockchain.

A study conducted by Morgan Stanley in 2021 valued the Metaverse gaming market and NFTs at $56 billion by 2023.

While Deloitte showcased the business potential of NFTs in 2022, emphasizing, "The more companies develop and test new use cases, the clearer it seems that NFTs in their many forms—current and future—may radically change the way we engage and record the transfer of digital rights and obligations, a development that could redefine the very nature and boundaries of modern commerce."

Following the approval of the Bitcoin ETF in the US, South Korea also took action. The South Korean Financial Supervisory Service (FSS) initiated a dialogue with the US SEC to explore drafting an act aimed at regulating NFTs and digital assets in Asia.

The dialogue between the FSS and the US SEC occurred amid predictions that the value of NFTs in the market would increase from $1.6 billion in 2023 to $3.2 billion by 2027.

Likewise, Bitcoin exhibited substantial growth at the outset of 2024, experiencing a 35% increase compared to December 2023 (data sourced from January 2024).

Sources: TechTarget, CoinDesk, NFT Plazas, ReportLinker

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