What does the future of blockchain look like?
An interview with Fast Offshore founder Ron Mendelson.
What does the future of blockchain look like?
The future of the blockchain market really excites me, as we just don’t know how it will continue evolving and what exciting developments lie ahead. What we do know is that the demand for blockchain technology across multiple sectors is high. We already see it in finance, health, travel, government, finance and payments, and entertainment, which will continue. If they aren’t already, most big companies are looking to integrate blockchain soon. In terms of crypto, despite volatility, we can still say we are moving towards mainstream adoption, as there is still much work to do. That said, you can now be paid in crypto, buy your groceries with it, and even book flights. It is becoming more and more common and accepted, presenting a multitude of opportunities for entrepreneurs.
What key challenges have you seen in the blockchain sector over the last few years?
There have been and continue to be several problems with blockchain technology, but that doesn’t mean they cannot be fixed. There is progress in the sector almost daily, with skilled experts working to improve blockchain systems. For example, there is the issue of scalability- the fact that the bitcoin network has a limited capacity to handle large amounts of data needed when making many transactions. This is mainly because blocks are limited in size and frequency. Historically, these issues have been helped by forks- be they hard or soft forks, but there have been other changes as well. A series of technical optimisations have resulted in decreased computer resource requirements. For example, Schnorr signatures, Merkelized Abstract Syntax Trees and, of course, the Lightning Network. Another consideration is that thousands of different cryptocurrencies are on countless blockchains, and many privately created blockchains for non-crypto use.
Another issue is regulation- either too much or not enough. When we talk about a completely decentralised system, we have to accept that it means there is no one there to enforce law and order. For example, smart contracts have much potential, but they are not recognised as legal agreements or proof in many countries. Add in the fact that blockchain users can be from different jurisdictions and continents, and it becomes even more difficult. But this is changing. I think there needs to be some regulation in place, but it should be cautious, allowing the sector to develop and flourish. The EU is currently looking to introduce rules to protect companies and consumers while providing some certainty. This will be interesting to follow.
What exciting applications of blockchain are we seeing in 2022?
So this is not a new application, but cryptocurrency will continue to be one of the leading and most exciting applications of blockchain technology in 2022. The two technologies are intrinsically linked, and blockchain’s ability to facilitate secure and decentralised payments will continue to be a big selling point this year and beyond. But it is not just about bitcoin and ether anymore. We see stablecoins, central bank currencies, and non-fungible tokens become more popular, presenting new opportunities and solving many issues linked to the first cryptos. I think it is essential to separate bitcoin from our idea of financial blockchains and to focus on other ways it can be used within the financial ecosystem. Many banks and investment institutions worldwide and governments are using blockchain technology, while many more plan to do so.
Of course, developments in blockchain gambling are also on our radar. We are already seeing more clients using provably fair algorithms that rely on blockchain technology. There is also growing interest in offering crypto payments using blockchain. We expect this to increase further, despite volatility with the value of cryptocurrencies such as bitcoin. Demand for blockchain payments will increase as more people come online and crave faster, more secure, and more private payment. We must also consider the vast amount of unbanked people that can be served through these other methods. We expect to see more people moving away from conventional payment methods and looking for alternatives that suit them.
What are the challenges when it comes to cryptocurrency?
Since day one, volatility has been one of the main challenges for cryptocurrency. This has come to the fore even more in the last months as bitcoin and some other currencies have shed billions in value, leaving investors frustrated. While we cannot solve the volatility issue on the open market, some solutions are on our radar. One is that of stablecoins. By definition, a stablecoin is a cryptocurrency with a value pegged to that of a fiat currency or traded commodity such as oil, gold, or grain. One of the advantages of these coins is that they are as stable as the asset they are pegged to, unlike other currencies, which are at the mercy of the market. The financial risk is somewhat reduced by pegging it to an established asset. Examples of stablecoins include Tether, USD Coin, Dai, Binance USD, Pax Dollar and TrueUSD.
Another solution is that of the central bank currency. These are digital currencies created by a country’s central bank and pegged to their value. Unlike most other cryptocurrencies, it is entirely centralised and therefore loses some of the crypto’s appeal for investors. Some use blockchain technology; some do not. As of July 2022, four central banks have issued their digital currency, including The Bahamas, Eastern Caribbean, Nigeria, and Jamaica. According to the head of the European Central Bank, Christine Lagarde, over 80 central banks are currently looking at implementing similar currencies and are in varying stages of the process.
Of course, other problems remain, but discussing them all and proposing solutions would take up far more space than we have. Safe to say that for every issue facing crypto, people are working to find answers. The sector is subject to an incredible amount of innovation from those motivated to drive forward adoption; therefore, we are confident that many of the issues will be ironed out over the coming years.
What advice would you give to entrepreneurs?
Our advice would be that the time is now. Over the last three to four years, we have seen a significant increase in the number of people looking to start blockchain and crypto-based businesses. For example, cryptocurrency gambling is currently experiencing huge interest, along with crypto payment providers and solutions. We are also seeing an increase in those looking to set up blockchain-based apps or create solutions currently in demand in various niches. Our advice would be to start the process as soon as possible. There is much competition in the blockchain and crypto sectors, so if you have a good idea, it is wise to move on it now. We have helped many blockchain and crypto entrepreneurs get started at Fast Offshore. This includes company incorporation, licensing, structuring, payments, and compliance. We also assist with all ongoing matters from the date of registration onwards.
To take advantage of the industry momentum, contact our team today!
