Blockchain technology has passed the peak of its innovation hype cycle and has undergone significant changes over the past two to three years, according to a new report.
Global uncertainty shapes innovation
The past five years have been anything but normal, with the global COVID-19 pandemic and escalating armed conflicts, according to a report by the International Trust Blockchain Applications Association.
These disruptions have fundamentally shifted industry priorities and policy agendas, particularly in the technology and IT sector.
The surge in energy prices following Russia’s invasion of Ukraine and the resulting disruption to global supply chains has necessitated a complete review of industrial strategy.
“Blockchain technology is no longer at the height of its innovation hype cycle, as it has been for the past two to three years,” the report noted, attributing part of this shift to the cyclical nature of the industry, triggered by Bitcoin’s four-year halving cycle.
The Future of Innovation
The report highlights that the next decade will see the entire industry either thrive or struggle as cybercriminal attacks, threats to industrial assets, and a shortage of skilled workers impact hyper-automation and hyper-acceleration.
“Exponential technologies will have to offer more than just iterative chatbots and meme coins,” the report said.
It argues that technological capabilities need to be thoroughly assessed to ensure they can function as an integral part of the future industrial framework.
Practical features of blockchain
According to the report, blockchain technology offers several key features, including flexible transparency options, secure automation, a rich governance toolbox, powerful cryptographic building blocks, and efficient settlement capabilities.
These features make blockchain particularly well suited for registry use cases, improving performance across the sector through gamification and new fundraising options.
“Blockchain technology can gamify key business outcomes across industries, bringing about new financing options and processes to drive efficiencies across and between industries,” the report highlights.
They also point out that blockchain can enhance infrastructure resilience using on-chain logic and an integrated technology stack.
Andy Liang, an expert on intergovernmental blockchain, praised leading initiatives such as EBSI, Catena-X and DIVE, saying they have the potential to revolutionize sectors ranging from supply chains to energy.
“Their focus on sustainability and regulatory compliance is particularly commendable,” Liang said, adding that the challenge of interoperability and fostering a strong ecosystem of developers and entrepreneurs are essential to maximizing blockchain’s impact.
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Basile Maire, co-founder of D8X, highlighted the huge impact the regulatory environment has on innovation.
“The report demonstrates the transformative potential of tokenized assets in financial markets,” Maia noted, highlighting D8X’s role in this transformation by offering derivative products collateralized by tokenized yield tokens.
Michael Repetny, a key contributor to Marinade, said that blockchain projects are no longer in the “hype” phase.
“There are far more practical use cases and applicability across the public and private sectors,” Repetny said, highlighting the role that regulatory frameworks like the EU’s MiCA play in facilitating growth and collaboration among blockchain projects.
Blockchain in Finance
The report highlights that blockchain is already making significant inroads into the highly regulated financial sector.
The company argues that exponential technological advances over the next decade will result in more options for financial leverage, not fewer.
“This is not a reflection of Silicon Valley techno-optimism, but given trends in technological change across sectors, the decline of the educated workforce in developed countries, and the erosion of the foundations of democracy, innovation is not an option but a necessity,” the report said.
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