Opinion Three Key Future Blockchain Development Paths open to the Global Market

Three Key Future Blockchain Development Paths open to the Global Market

November 16, 2019

The domain of cryptocurrency and blockchain technology never stands still. Yet even for the standards of this particular industry a previous couple of months have brought about a huge range of new technology. The same innovation impacted the industry on a global scale and it even sent state actors into their all digital currencies and similar agendas. All of these initiatives are forcing the global leadership everywhere to ask themselves what precisely is the role of digital money in the decades to come.

This ultimately is also forcing a radical shift in the broader economic landscape that is going to reshape and redefine and the future of the monetary system on an international level. Of course, this process is by no stretch of the imagination something new or recent.

Throughout that time, the presence of cryptocurrency tech and digital advancements like blockchain generated a sense of wonder in the crypto community, which kept growing. This, in turn, pushed the same advancements further into the regular mainstream consciousness. With that, the economic and financial systems began a long and hard process of digitalization.

Now, the idea that huge organizations like NATO and even nation-state actors are delving deep into the same technology is nothing out of the ordinary. Yet there are even more Innovations coming around to the mainstream level of use. These include things like smart contracts, crypto-powered central bank tokens are just some of the second generation innovations from the blockchain domain that is inbound for the economic sector. Thanks to these rapid changes, regulators all over the world are trying to grapple with a way to both understand and then overview the same field.

Shifting Foundations

There is no doubt that the actual foundations of the financial world are shifting under the weight of blockchain innovation. Public blockchain infrastructure is also on the rise and individual networks like that of ethereum are providing the ability to issue do new cryptocurrency tokens. All this is creating a new base layer of so-called automatic trusted computing, transaction processing, and record keeping.

This is comparable to the rise of the base layer of things like the HTTP protocol. This, for example, revolutionized the way the internet is used on a global scale now. Right now, one could successfully argue that the same is happening with the development and implementation of blockchain technology. Of course, like with the http protocol, the knowledge base is much older than the actual successful application. Still, what is important is not how long it took for the world to catch on to the blockchain innovation train, but the fact that the same is happening right now.

Furthermore, the speed with which all of this takes place is constantly gaining momentum. Shifting foundations are just going to shift even further in the months and years to come. Naturally, while all agree that this process will continue and become more potent there is less agreement about the potential routes it will take. Instead, there are several ways this process might continue and chances are that only one of them will be successful in the end and thus globally accepted.

Open Financial System

The first big approach might be called an open financial system. Companies that represent this approach are well known in the cryptocurrency ecosystem and they include Coinbase and Circle. These are building stablecoin setups that will have the rating points directly connected to the USD fiat currency. While on the surface this might look like in the case of more of the same, the stablecoin principle does offer some amazing opportunities that are simply not available with regular currencies. In theory, these will eventually lead to things like completely decentralized credit markets as well as decentralized lending.

Also, these have a huge advantage when it comes to a practical yet very important aspect of any cryptocurrency project. These should be much easier for the current regulatory domain as they are covered by existing banking rules and regulations not just in the EU but also in us as well. Thanks to this major advantage many private companies are deeply involved in stablecoin projects. Right now, the open financial system seems like the one that needs to be beaten by any other contender that wants to see its solution becoming the dominant choice.

Government-backed Networks

This option has the biggest guns behind it in terms of institutional support. All over the world governments are turning towards their central banks and looking for ways to incorporate and expand the use of blockchain in existing financial systems. Unlike many novel markets like esports or social media, the banking sector is rooted in the practices that sometimes go centuries back. Yet it is hard to deny that the same systems survive the test of time and will continue to exist even in the centuries to come.

During that time, the structures that guaranteed the survival of those systems did not sit idly by. Instead, they always implemented new and promising technological advances into their everyday practice. That is why many believe that tokens like that from the Chinese Central Bank could become a reality. One crucial thing is missing in this scenario and that’s speed. Banks might have the know-how and resources to create amazing and huge blockchain systems but they don’t take a lot of time to do so.

Big Private Consortiums

This approach combines the flexibility of big systems that are not government-run and the potential of endless financial support that comes from huge and successful corporations. Here the best example is the Facebook Libra initiative. This blockchain system aims to be a global financial solution for over 2 billion people.

However, Libra came across many hurdles in a lot of public distrust and so will any other similar project. Bitcoin basically offers the same potential but while it has some detractors it has nowhere near the same level of antagonistic views that Facebook has generated over the years. That is why this approach would likely face the highest level of resistance. Also, it is least likely because of that factor to actually achieve any results in the foreseeable future.