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Being one of the biggest breakthroughs of the past decade, blockchain technology has entered all walks of life: from manufacturing to Fintech. It also has been among the most talked-about technologies of recent years with the global market size predicted to expand from $3 billion in 2020 to $39.7 billion in 2025. 

Though the technology is still in the process of evolving and its possibilities are actively being explored, it undoubtedly has already transformed many areas of business. In this article, the most discussed blockchain trends of 2022 are presented and explained.

Trend 1: Tokenization

Tokenization is the process that involves the conversion of physical and non-physical assets on blockchain into digital tokens. Simply put, it's a digital representation of something that has value and contains sensitive information. This concept has gained a lot of popularity lately and many traditional financial enterprises have started leveraging the technology for the protection of confidential data. For instance, the credit card numbers of users are replaced with a token that represents a string of non-sensitive numbers and letters. If criminals try to hack this information, they can find only a token without any credit card info. Tokenization is not limited to financial data, it’s also widely utilized by hospitals to securely handle patient records, by the government for voter registration, etc. Blockchain tokenization revolves around assets, involving the creation of cryptocurrency tokens. It brings a high level of liquidity which significantly raises the number of potential customers in a wide range of industries. Let’s take real estate as an example. A house with a two million tag has a quite limited circle of buyers. Though if it’s tokenized, anyone can buy a share that is affordable for them. There is no need for any intermediaries and paperwork, the transaction is fast, transparent, and secure.


Trend 2: Transparency in the Supply Chain

The supply chain industry is currently facing a number of challenges. Accounting systems lack the capability to handle a large number of transactions, correcting mistakes takes too much time and money, products spoilage in the process of transportation leads to enormous financial losses, transportation costs a lot of time and bureaucratic effort, which in the end results in fraud and causes a lot of errors. Such complexity of tasks and challenges of modern supply chains require a systematic and secure approach offered by blockchain technology.  Let’s see the most common applications of  it.

  • Blockchain allows the creation of a cloud unified digital management system to track the cargo location in real time. Walmart already uses this to supply certain products and the largest chain retailer in North America plans to move all food supply chains to the Food Trust blockchain developed by IBM.
  • Tracing the origin of goods from a store to a specific location is also possible through leveraging blockchain technology. Each batch of goods is equipped with a tag that continuously monitors the location of items and interactions among participants in the supply chain.
  • Blockchain technology also helps automate most of the workflow and business processes through the usage of smart contracts. It will significantly reduce errors, detect frauds, and speed up the delivery of goods. Maersk, for example, partnered with IBM to launch a logistic system based on the Hyperledger Fabric blockchain named TradeLens. The system tracks  shipping freight traffic and exchanges customs and financial information between supply chain participants.

You can find out more about blockchain adoption in supply chain management in our article.

Trend 3: Fintech Transformation

Both banks and their customers already greatly benefit from blockchain technology. First of all, blockchain networks with decentralized and transparent digital ledgers are much safer than traditional ones. Nobody has access to private financial information and the ability to modify it apart from its owner. When identity management is run with blockchain technology, users can choose how to identify themselves and with whom to share their information. Blockchain in Fintech enables users to use a digital fingerprint scanner that can be stored on a distributed ledger and securely used by any bank in the network.

Blockchain as a service also significantly cuts down on transaction fees and eliminates delays in worldwide payments. The transaction doesn’t imply any fees and currency exchange losses so it’s much cheaper than traditional international transactions.  

McKinsey states that blockchain solutions for fraud detection, regulatory compliance, and onboarding can also significantly save banks’ costs.

Trend 4: Popularization of Cryptocurrency

Blockchain actually is the technology that enables the existence of cryptocurrency. Currently, cryptocurrencies are gaining more attention from investors, governments, and regulators. The most widely-known representative of a relatively new form of digital currency that is shifting the paradigm of the financial industry, Bitcoin, has already become a global phenomenon. And the technology behind it is blockchain, of course. According to a survey held by Deloitte, 53% of respondents stated that blockchain technology was a critical priority for their organizations in 2019 while 83% saw compelling use cases of the technology. What are the characteristics of cryptocurrencies that drive their popularity and exceedingly increase the demand for the technology they are based on?

  • Transparent transactions allow users to track any changes that have been made.
  • Decentralization eliminates the possibility of tampering with blockchain without the agreement of all participants.
  • No need for financial intermediaries in money transactions. Even large sums of money can be transferred across international borders within a few minutes.

Trend 5: Ricardian Contracts 

The Ricardian contract was invented in 1996 as a method of recording a document as a contract at law, and securely linking to other systems. It’s capable of placing all data contained in the legal document in a format that can be expressed and executed by software. The main aim of the Ricardian contract is to make the document format both machine-readable for computational purposes and also readable as a regular text document for contracting parties. The biggest advantage of the Ricardian contracts is that they are built with the help of blockchain technology which makes them completely transparent. The risks of fraudulent actions can be minimized as references to specific data are done through cryptographic hashes. As a result, Ricardian contracts are predicted to gain greater popularity in the near future and can be definitely listed among blockchain trends in 2022. 

Whether blockchain is utilized to manage supply chain operations, speed up financial transactions, or confirm identity, the main goal of the technology remains the same despite the industry where it’s been applied - bringing more transparency and security, and enabling more multi-entity intelligence. If you want to discuss blockchain possibilities for your organization, our software development company can offer you a free consultation.
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The article was updated on January 31, 2022

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