Are blockchain and cryptocurrency likely to last for a long time?
And, Are they really a hit or just hype?
Let’s find out!
Before we probe into whether blockchain and cryptocurrency are living up to the hype being heaped upon them by experts and luminaries, let’s get familiar with these fashionable things!
Now, What Blockchain Really Is?
“Blockchain” is a smart technology that aids the creation of cryptocurrency. It is a distributed digital ledger of records across a network which are called blocks, These blocks record transactions across different computers. This decentralized technology makes sure no block can be amended retroactively without the amendment of all subsequent blocks. Using this technology, users can do transactions without involving any central authority, like a bank.
According to a survey by Deloitte, the most frequent use cases for this emerging technology for organizations worldwide include Digital Currency (40%), Data Reconciliation (35%), and Data Access & Sharing (31%). Other common use cases include Identity Protection (31%), Payments (30%), and Tracking and Tracing (27%). Moreover, 40% of organizations are currently planning to invest $5 million or more in blockchain in 2023.
The Global Blockchain Technology market is estimated to grow by $3.29 billion during 2022-2025 progressing at a CAGR of almost 36.41% during the forecast period. For 2022, the Year-Over-Year (YOY) growth rate is poised at 23.7% by the end of 2025.
The technology is significantly reducing the trust cost between the companies and individuals, making the business more convenient to do, cost-effective, and not as risky. It makes sure that a digital asset cannot be cloned infinitely, which is what made the NFTs come into existence.
And, What Is Cryptocurrency?
“Cryptocurrency” is a monetary medium, like a Euro, but the difference is that it’s digital-only and depends on encryption technology like blockchain in order to moderate the creation of crypto monetary units, and also to verify the transfer of funds.
The best-known cryptocurrency is “Bitcoin”, which has been on a wild ride since its inception in 2009. Bitcoin is a digital currency, based on blockchain technology so that it works without the intervention of a bank or any other third party. It can be sent directly from one user to the other on the peer-to-peer bitcoin network. Its transactions are verified via a public blockchain record.
To generate new bitcoins and verify new transactions, “mining” is done. Bitcoin mining is a record-keeping service done by using loads of computer processing power. Bitcoin and blockchain miners keep the blockchain unwavering, complete, and immutable.
But Now, How It’s Going?
Still, there are several barriers to blockchain & cryptocurrency adoption!
According to one survey by Deloitte, there are a couple of barriers to blockchain becoming widely implemented across various industries. The Regulatory Issues (30%), Implementation – Replacing or Adapting Existing Legacy Systems (30%), and Potential Security Threats (29%) as three prominent barriers to blockchain adoption. Some other reasons cited include Uncertain Return on Investment – ROI (28%), Lack of In-House Capabilities – Skills and understanding (28%), and Concerns Over Sensitivity of Competitive Information (25%).
58% of organizations think that cybersecurity is only one among many issues that they consider blockchain technologies for their digital asset strategy.
As it is growing in popularity, Bitcoin has become cumbersome, a bit slow, and relatively much expensive to use. It takes around 10 minutes to validate most transactions using cryptocurrency while its transaction fee has been at a median of about $20 last year. Bitcoin’s unstable value is one of the common reasons that has made it an unfeasible medium of exchange. It is as though your $15 bill could buy you a hamburger on one day and a bar of chocolate on another.
Bitcoin is not harmless. Since the transactions are processed by “Miners” to earn Bitcoin at the expense of huge amounts of computer power, therefore, it has led to a massive increase in electricity. Currently, blockchain miners are consuming 0.2% of the world’s total electricity, by the data from 1Blockchains. According to some reports, it has come to our knowledge that Bitcoin is consuming more electricity than many countries. Besides, by some estimates, Bitcoin is consuming energy equally as entire countries like Norway and Argentina. Currently, blockchain miners are consuming 0.2% of the world’s total electricity.
Blockchain is real and has started to live up to some of the hype that has been heaped upon it. There are a few useful applications in being able to cut intermediaries out for certain things, such as moving money around, yet due to some barriers like cybersecurity, environmental and sustainability issues, unstable value, and others, the technology is facing difficulty to grow massively.
But, let’s be honest. Doesn’t giving people the choice to bypass a middle man like a bank who is adding no significant value but benefitting enormously simply because of their proximity to money, make great economic sense for everyone?