Blockchain Technology Is Stepping Up in 2023
Blockchain has long been recognized as the poster technology for cryptocurrencies. However, with ongoing advancements, we will likely see this progressive technology put to good use in other areas, too. According to the World Economic Forum, which describes the decentralized digital transformation system as innovative, opportunistic, and disruptive to existing systems, “Blockchain is a key technology of the Fourth Industrial Revolution.”
This latest technological revolution is “characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.” Blockchain certainly fits that bill as a part of the metaverse or uniting of our physical and digital worlds.
Nasdaq described the metaverse as “a place to immerse yourself in the digital world and build a physical reality while not being constrained to any time or place.” The article explained how all physical things will eventually be given a virtual representation for users to interact with, impacting all areas of our lives, including how we do business.
Even though it’s still in the early or conceptual stages, companies are investing in technologies and infrastructures supporting the metaverse model, such as blockchain. Nasdaq reported that by 2030, the overall economic value of the metaverse could reach $1.5 trillion, according to CB Insights’ market sizing tool.
This estimate seems extreme, but the technology’s popularity has already been evidenced by numbers extracted at the start of 2022. For example, in just the first five months of 2022, venture capital and private equity firms had already invested about $120 billion in metaverse advances. This amount equated to more than double the entirety of investments in 2021, which reached $57 billion.
There’s no doubt that Fourth Industrial Revolution technologies like blockchain are quickly growing, and Oxford is here to help lead you into the future.
What Is Blockchain Technology?
Blockchain technology is a digital ledger system that records transactions securely and transparently. These transactions are then stored on a network of computers worldwide, meaning the information is decentralized or not controlled by a single entity. This decentralization allows multiple parties to access and update data simultaneously without the need for a centralized authority or intermediaries like banks or governments.
There are different types of blockchains, including:
Public Blockchain (e.g., Bitcoin)
Private Blockchain (e.g., central bank digital currencies or CBDCs)
Consortium Blockchain (e.g., IBM Food Trust)
Hybrid Blockchain (e.g., XinFin Digital Contract or XDC)
Blockchain in the Real World
Blockchain technology is still unfamiliar to many, especially when applied to everyday life. Even if you’ve heard of blockchain, you likely associate it primarily with the use of cryptocurrencies like Bitcoin and Ethereum, as that was its initial purpose.
But it has since trickled into many other fields, including supply chain management, voting systems, and digital identity management. As a result, its many benefits are still being realized, and its expanded usefulness has become more commonplace in the “real world” and business.
How Does It Work?
A blockchain is supported by a network of computers known as nodes. These nodes collectively maintain and validate the digital ledger. Each node has a copy of the entire ledger, which contains a continuously growing list of records. These “blocks” are linked chronologically to form a chain.
When a new transaction is made, it is broadcast to the network. Each node verifies the transaction using complex algorithms. Basically, the nodes in the network work together to reach a consensus on which transactions are valid or not via a process called mining.
Once a transaction is verified and validated, it’s added to a block which is then added to the chain. This addition is broadcast to the other nodes so that they can all update their copy of the blockchain to reflect the new transaction. This creates a transparent and immutable record of all transactions on the blockchain, which anyone can verify at any time.
Is It Secure?
Blockchain technology is generally considered very secure due to its decentralized cryptographic protocols. However, the security of a blockchain network relies on several factors, including the strength of its consensus mechanism, the immutability of its ledger, and the difficulty of altering historical transactions.
Each block in a blockchain contains a cryptographic hash of the previous block, or unique identifier, creating a chain of blocks that cannot be altered without changing all the subsequent blocks. It’s difficult, if not impossible, to corrupt or change the data without a specific digital signature. Therefore, the technology is essentially tamper-proof.
Most vulnerabilities or attacks on specific blockchain implementations are due to human error (e.g., weak passwords or mishandling of private keys) or poor smart contract designs rather than flaws within the technology itself. Still, understanding the potential security risks and taking appropriate measures to mitigate them can help. Ways to improve or strengthen blockchain security include:
- Superior design
- Proper implementation
- Security tools (e.g., encryption, multi-factor authentication, and other access control measures)
- Regular audits or maintenance
How Is It Used?
Blockchain technology is helpful beyond currencies, and its potential applications are constantly expanding as more people explore its capabilities. Several ways to make good use of blockchain in real-world applications include:
This is what blockchain is best known for, the creation and management of cryptocurrencies like Bitcoin and Ethereum.
Supply Chain Management
Blockchain can track products and goods as they move through a supply chain. This technology adds transparency and accountability throughout the manufacturing process.
Creating and managing digital identities is another beneficial use of blockchain. There’s an added layer of security when verifying and authenticating individuals using this decentralized method.
Ensuring the integrity of the voting process is important. Blockchain is one way to achieve a more transparent and secure voting system, dispelling discrepancies and potential fraudulent actions.
Blockchain can be used to create and execute smart contracts. These self-executing contracts have the terms of agreement written into code, lending to user convenience and speed in contractual transactions.
Using this growing technology in the real estate industry can reduce the need for intermediaries by effectively tracking and managing property ownership and transfer, thereby streamlining the process of buying and selling houses, commercial assets, and land.
The healthcare industry handles a plethora of sensitive patient information. Blockchain can store and share patient health records securely, ensuring the privacy and security of confidential or protected data.
The Future of Blockchain in Business
The future of blockchain technology is promising, potentially transforming many industries and how we conduct business and transactions and exchange value. According to Insider Intelligence, investments in blockchain technology are expected to rise over the following year. In 2024, worldwide spending on blockchain will reach nearly $19 billion per recent projections, yielding a five-year compound annual growth rate of 46.4%.
Overall, blockchain technology will continue to evolve and become more widely adopted in 2023, with new solutions and use cases emerging as the technology matures. As blockchain ventures to take on a more prominent role in business, we can expect to see the following trends over the next year:
Increased Adoption of Blockchain in Mainstream Industries
As mentioned, blockchain technology is becoming increasingly popular across various sectors, including finance, healthcare, logistics, and government. One IT training site predicts that “over one billion people will have some form of personal data stored on blockchain by 2023.”
Specifically, in government, the implementation of blockchain technology might lead to a boost in productivity by offering solutions to large-scale data management issues. Beyond enhanced record management, blockchain can prove useful to government agencies by improving identity management, voting systems, compliance and regulatory oversight, management of resources for non-profits, and even tax filing processes.
Overall, as the technology develops and becomes more accessible, more organizations will likely implement blockchain solutions to improve operations, security, and transparency.
One of the main challenges facing blockchain technology is its scalability, making it an unrealistic option for most business operations in previous years. However, in 2023, we may see the development of new scaling solutions that can help to increase transaction throughput and reduce costs. These solutions could include off-chain solutions, sharding (a method of single dataset distribution allowing for increased storage capacity), and layer-2 protocols.
There is a growing need for blockchain networks to be interoperable with each other to enable seamless data sharing and transactions across different blockchains. This boost in demand for interoperability is primarily due to the emergence of additional independent altcoin networks. Altcoin is a play on words, combining both “alternative” and “coin” to create a term that simply means an alternative digital currency to Bitcoin.
Interoperability would allow users to switch from one blockchain to another, taking advantage of unique properties and benefits across various networks.
In 2023, we will likely see the development of more interoperability solutions and protocols that can facilitate this coveted cross-chain communication.
Increased Focus on Privacy
Privacy has been a major concern for many blockchain users, particularly in industries that deal with sensitive data. The decentralized nature of blockchain technology can lend itself to heightened security risks. However, most blockchain security failures are due to technology misuse (intentional or accidental) and lack of oversight.
Over the next year, we may see the development of new privacy-enhancing technologies that can help alleviate these concerns. These technologies will be two-fold, protecting user privacy while enabling secure blockchain transactions.
In addition, we can expect expanded regulations, enabling greater investments with the promise of increased consumer safety. While regulation is jurisdictionally limited, it can still effectively promote good faith among consumers to encourage augmented use.
Other Notable Advancements on the Horizon
Blockchain is expected to evolve in some exciting ways in 2023. For example, blockchain could permeate social media platforms, eliminating concerns about content or digital asset control and ownership. Other advancements that are likely to make blockchain technology increasingly desirable soon include:
- Blockchain and AI Integration
- Combination of Blockchain and IoT
- Increased NFT (Non-Fungible Token) Utility
- Significant Developments in Web3 and Metaverse Technology
- Spotlight on Ethereum
Getting Started: How Can Oxford Help
Change within the workplace can be an overwhelming experience. Oxford wants to make it easy. When you partner with us, we can discuss your particular needs and help you find the solution that will best benefit your operations and have long-lasting positive impacts on the future of your business.
There are many different ways to invest in blockchain technology for your business. You might begin with single-use applications to minimize risk and work toward more advanced localized, substitute, or transformative applications. We can help you evaluate every possibility, highlighting the pros and cons, to find the best fit. Whether you decide to test the waters or go all in, Oxford will be with you every step of the way, ensuring a smooth and effective transition.
Our approach to professional services places the focus on the client first. Ultimately, we know that your success equals our success. We promise to deliver superior results, overcoming each challenge with speed, accuracy, and efficiency to provide consistent and satisfactory outcomes. We will supply The Right Talent. Right Now.® to tackle any and all of your blockchain or digital transformation needs.