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Top 5 Emerging Blockchain
Technology Trends in 2021
October 27,
2021
Below we look at the following blockchain technology
trends:
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BaaS – Blockchain-as-a-Service,
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VC & SSI –
Verifiable Credential & Self Sovereign Identity
(Universal Identity),
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DeFi – Decentralized
Finance,
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NFT – Non-Fungible
Tokens, and
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CBDC – Central Bank
Digital Currency
This article is sponsored by
Trezor.io -- The safe place for your coins.
1) BaaS – Blockchain-as-a-Service:
Blockchain-as-a-service (BaaS) is the third-party
creation and management of cloud-based networks for
companies in the business of building blockchain
applications. BaaS is based on the software as a service
(SaaS) model and allows customers to leverage
cloud-based solutions to build, host, and operate their
own blockchain apps and related functions on the
blockchain. BaaS help the customers in a faster
application development, low maintenance cost and fast
adoption of Blockchain technologies.
BaaS has gained significant traction recently because it
can resolve complex issues around transparency,
efficiency and cost in a simplistic and straightforward
manner. The quickest adopters have been in the software,
fintech and logistics industries. BaaS has become so
popular, in fact, that some of the largest tech
companies in the world — including IBM, Microsoft and
Oracle — all have divisions dedicated to the integration
and evangelism of BaaS.
Here is a list of noteworthy BaaS developers:
Dragonchain
Location: Seattle, Washington
How it’s using blockchain: Starting as a company within
Disney, Dragonchain’s BaaS platform focuses on the
protection of vital business assets and data. The
company uses serverless cloud architecture to improve
interoperability, and privacy, between blockchains that
share a businesses’ most important information, like
finances.
Bloq
Location: Chicago, Illinois
How it’s using blockchain: Bloq offers a suite of BaaS
tools that focus on key issues in business
reconciliation, authentication and security. The
software platform helps businesses build and personalize
the BaaS technology that suits their current needs. Some
of their specific blockchain products include a smart
wallet, a smart contract platform and a decentralized
cloud to help businesses store and manage data.
Factom
Location: Austin, Texas
How it’s using blockchain: Factom has two tools
dedicated to BaaS for managing and securing important
documents. “Factom Harmony” is a ledger tool that
converts documents to a singular digitized platform to
reduce audit times and costs. Factom’s “dLoc” uses
encryption to authenticate and verify personal documents
like land titles and birth certificates.
Symbiont
Location: New York, New York
How it’s using blockchain: Symbiont lends its BaaS to
fintech companies in a variety of sectors. Fintech
companies and banks that lend for mortgages and loans
use the company’s blockchain to verify origination of
records and transparently record all payments on a
ledger. Private equity firms and crowdfunding platforms
can use Symbiont to secure private documents and show
ownership of securities in real-time.
Blockstream
Location: Mountain View, California
How it’s using blockchain: Blockstream’s BaaS creates
scalable solutions for the Bitcoin ecosystem and
protocol. The company’s Bitcoin processing software
creates a larger peer-to-peer financial system that
eliminates the need for third parties.
PayStand
Location: San Francisco, California
How it’s using blockchain: PayStand incorporates
blockchain into payment and documenting processes to
ensure immutability and auditability. The company’s BaaS
installs networks that notarize certificates (like
diplomas, deeds and receipts). It also provides an admin
platform that gives users an in-depth and real-time look
into their data. Additionally, the PayStand network
automates parts of the end-to-end financial process,
including cash management, accounting and
reconciliation.
tZERO
Location: Midvale, Utah
How it’s using blockchain: tZERO integrates its BaaS
ledger into financial platforms to create traceable,
real-time movements in the finance industry. The
company’s tZERO security token, paired with its “Digital
Locate Receipt” platform, helps financial institutions
distribute cryptocurrency and trace it throughout the
end-to-end spending process.
Skuchain
Location: Mountain View, California
How it’s using blockchain: The Skuchain EC3 Platform
installs blockchain-based infrastructure in current IT
processes for the shipping and logistics industry. The
company’s ledger enables businesses to simultaneously
access a cloud environment, blockchain protocol and
in-house applications. Compatible with any supply chain
process, Skuchain’s BaaS immediately installs smart
contracts and chain-of-custody tools.
Amazon AWS
Location: Seattle, Washington
How it’s using blockchain: Amazon Web Services (AWS) is
a BaaS leader in many industries. The company integrates
blockchain-based networks and business processes for
some of the largest companies in the world (including
T-Mobile and PwC) to improve IT infrastructure, business
processes, human resources, financial transactions and
supply chains. The company’s BaaS deploys Ethereum and
Hyperledger Fabric frameworks so the blockchain is
flexible enough to adapt to almost every environment.
LeewayHertz
Location: San Francisco, California
How it’s using blockchain: LeewayHertz offers a full
suite of blockchain-based services, including blockchain
consulting, hybrid ledger installation and maintenance.
At LeewayHertz, the end-to-end BaaS offerings range from
ideation to installation. The company has already
developed decentralized applications (dApps) for
industry leaders like Disney, Budweiser and 3M.
VironIT
Location: San Francisco, California
How it’s using blockchain: VironIT offers a multitude of
BaaS services, including consulting and blockchain-based
mobile app development. Specific examples of the
company’s BaaS include everything from smart contract
development and auditing to development of
cryptocurrencies and digital wallets.
Altoros
Location: Sunnyvale, California
How it’s using blockchain: Altoros uses blockchain to
automate workflow processes, fortify identity security
and manage records. The company has installed blockchain
in a variety of industries, including
telecommunications, finance, energy, supply chain and
manufacturing. The permissioned blockchains in these
industries do everything from mitigate fraud to detect
faulty parts.
Appinventiv
Location: New York, New York
How it’s using blockchain: Appinventiv offers a full
suite of blockchain-based tools and solutions for almost
every industry. The company builds dApps for healthcare,
entertainment, logistics, fintech and more. Over the
last four years, Appinventiv has produced more than 700
dApps that feature everything from smart contracts to
crypto wallet developments.
BlockApps
Location: New York, New York
How it’s using blockchain: BlockApps develops
security-focused, permission-based BaaS solutions for
enterprise customers. The company’s blockchain
development environment is designed to run a node
locally or on the cloud, and can be launched in a matter
of minutes. The BlockApps BaaS platform has been used to
develop blockchain solutions for everything from smart
insurance contracts to fraud prevention in ticketing
tools.
Fluence
Location: San Francisco, California
How it’s using blockchain: Fluence is an API for
businesses to deploy, integrate and manage smart
contracts and blockchains in their own environments. The
Fluence API lets companies do everything from create
dApps to deploy public net nodes.
Cryptowerk
Location: San Mateo, California
How it’s using blockchain: Cryptowerk’s Blockchain-as-a-Service
helps businesses create ledger-based tools that seal off
important data and create a tamper-proof
chain-of-custody. The Cryptowerk Seal — a blockchain API
that uses ledgers to verify the authenticity of data and
digital assets — has been use for everything from
shipment ID codes and GPS telemetry in cars to gathering
data from smart energy meters.
Clovyr
Location: New York, New York
How it’s using blockchain: Clovyr is an ecosystem of
blockchain applications that allows teams to experiment,
iterate and deploy products quickly and safely.
Employing a hybrid of permissioned and public networks,
Clovyr offers its users upgraded immutability and
authentication standards.
Kaleido
Location: Raleigh, North Carolina
How it’s using blockchain: Designed with business
networks in mind, Kaleido's full-stack BaaS platform
helps enterprises quickly build and run cloud-based
blockchain networks. Kaleido clients can manage multiple
clouds using blockchains that span the Microsoft Azure
and Amazon Web Services networks, as well as, any
geographic regions.
Innominds
Location: San Jose, California
How it’s using blockchain: Innominds’ Blockchain-as-a-Service
creates products for smart contracts and
cryptocurrencies that allow businesses to build and test
blockchain products, develop crypto solutions using
Ripple and maintain interledgers — protocols used for
payments between blockchain networks.
2) VC & SSI – Verifiable Credential &
Self Sovereign Identity (Universal Identity):
Self-Sovereign Identity (SSI) offers verifiable,
globally resolvable, and privacy-preserving credentials
that we store and manage from the security of our own
devices and can show it to anyone, anywhere. It can be
used for industry that can be used for personal
identification purposes. e.g. claim benefits, bank
account, loan, insurance, healthcare services etc.
In-short A Self-Sovereign Identity is an identity you
own. It’s yours. Only you hold it, on your own personal
digital identity wallet, and only you decide who gets to
“see” it and what of it they get to “see”. To see a more
comprehensive overview
click here.
3) DeFi – Decentralized Finance: Decentralized finance (DeFi) is shifting from
traditional centralized financial systems such as
brokerages, exchanges, or banks, and instead utilizes
smart contracts on blockchains.
DeFi technology creates decentralized money and
eliminates the necessity of government-controlled
central banks to issue and regulate currency. But DeFi
technology is also capable of providing many other
blockchain-based solutions for financial services.
Fintech companies use DeFi technology to offer savings
accounts and loans, enable securities trading, and
provide insurance, among other offerings.
How DeFi works: DeFi is a technology alternative to
relying on centralized financial institutions such as
banks, exchanges, and insurance companies. DeFi systems
achieve distributed consensus by using "smart contracts"
on blockchains such as Ethereum. Developers write smart
contracts to perform specific actions only when certain
conditions are met.
As a simple example, you could write a smart contract
stating that you will pay $500 to another person if the
Cardinals win the World Series this year. Once the smart
contract is pushed to the blockchain, everyone in the
blockchain's network can access and read the code, but
no one can change it. Smart contracts are often what
govern decentralized apps, or "dapps," which are not
owned or managed by any one company or person. While
Ethereum was the first platform to develop smart
contracts, other blockchain platforms use them as well.
DeFi enables any two parties to securely and directly
transact without involving an intermediary or central
authority. The result is that many more people can
access financial services at lower costs or receive
better interest rates than those offered by traditional
financial institutions.
Some of the most popular DeFi applications include the
following:
Stablecoins
One of the earliest applications of DeFi was the
creation of cryptocurrencies with stable values, also
known as stablecoins. Stablecoins, by being much less
volatile than other cryptocurrencies, are considered
suitable for making ordinary purchases.
One example of a stablecoin is DAI (CRYPTO:DAI). Issued
by MakerDAO, an open-source project on the Ethereum
blockchain, the coin is pegged to the U.S. dollar and
collateralized by Ether, the native Ethereum token. DAI
is purposely overcollateralized by Ether, which enables
the value of DAI to remain stable even as Ether's value
fluctuates.
USDC (CRYPTO:USDC) is another stablecoin, but, unlike
DAI, its collateral is centralized. USDC stablecoins are
backed by a reserve of U.S. dollars held in an audited
bank account.
Decentralized exchanges
Despite the decentralized nature of cryptocurrency,
several cryptocurrency exchanges such as Coinbase (NASDAQ:COIN)
function as centralized platforms to connect
cryptocurrency buyers and sellers. Decentralized
exchanges (DEXs) such as MDEX use smart contracts to
perform the work of centralized exchanges, with the
smart contracts providing pricing for each counterparty
at or near prevailing market prices. Using a DEX allows
each party to retain full control of their respective
cryptocurrency holdings rather than depositing them in a
wallet held by a centralized exchange that may be
vulnerable to hacking. DEX users who create liquidity by
supplying cryptocurrency can, in certain markets, earn
income by being awarded portions of the transaction
fees.
Prediction markets
The prediction markets are what enable people to bet on
the outcomes of certain events. DeFi prediction markets
can offer better odds of winning by modifying the
structures of bets. The associated fees are also lower,
and market participants can bet on anything in unlimited
amounts. Prediction markets, as compared with standard
sportsbooks, are much harder for central authorities to
dismantle. DeFi prediction markets can provide value
beyond increased access to gambling. Stock market
predictions weighted by the size of the bets behind them
are often fairly accurate.
Borrowing and lending
Perhaps the most traditional functions enabled by DeFi,
borrowing and lending services are available to
cryptocurrency users. Those who own substantial amounts
of cryptocurrency but want liquidity in other currencies
can borrow money by using their cryptocurrency holdings
as collateral. Individuals can lend their cryptocurrency
deposits to earn interest from borrowers, thereby
profiting from the values of their holdings without
triggering taxable events. The dapps that facilitate
this decentralized borrowing and lending are designed so
that interest rates automatically adjust based on the
changing supply and demand of the cryptocurrency.
Why use DeFi?:
Regardless of what you're seeking to accomplish, using a
DeFi platform in place of doing business with
traditional financial institutions can confer several
benefits. People use DeFi for these primary reasons:
Accessibility:
Some people are unable to open bank accounts or receive
loans, but anyone with an internet connection can access
a DeFi platform. That high level of accessibility means
that DeFi transactions occur without any geographic
restriction.
Low fees and high interest rates:
DeFi enables any two parties to directly transact. With
no intermediary, transaction fees are greatly reduced
and the parties themselves can directly negotiate
interest rates. People who lend money via DeFi networks
typically enjoy much higher interest rates than those
paid by traditional financial institutions.
Increased transparency and security: Smart contracts published on a
blockchain, along with all records of completed
transactions, are available for anyone to review.
Blockchains are immutable, meaning they cannot be
changed. While DeFi platform users benefit from the
transparency and security conferred by blockchain
technology, smart contracts are executed in a way that
preserves the privacy of the platform's participants.
The publicly available transaction data does not reveal
your real-life identity.
Functional autonomy:
DeFi platforms don't rely on any centralized financial
institutions. The financial collapse of 2008 illustrates
the significant interconnectedness of most banks and
governments and makes clear the inherent risks of
centralized systems. Individual financial institutions
holding your money can face hardship or corruption or
become over-leveraged and declare bankruptcy. The
decentralized nature of DeFi protocols mitigates much of
this risk.
Is DeFi safe?:
The newness of DeFi technology means that negative
outcomes can unexpectedly occur. New companies that use
DeFi technology may not succeed (failure among startups
is exceedingly common), and errors by programmers can
create profitable opportunities for hackers. Investing
in or storing money with a DeFi project that fails can
result in the total loss of your funds.
Deposits with traditional centralized financial
institutions are insured by the Federal Deposit
Insurance Corporation (FDIC), while DeFi platforms
generally don't provide any means by which to recover
lost money. If a traditional financial transaction goes
awry, a consumer can file a complaint with the Consumer
Financial Protection Bureau (CFPB), but no such recourse
exists if you become a victim of a fraudulent DeFi
transaction.
Interestingly, another type of DeFi application is
becoming available to address these deficiencies.
Decentralized insurance, which is created by individuals
pooling their cryptocurrency as collateral, is being
offered to those who wish to protect themselves against
losses from other smart contracts. The individuals who
contribute to the cryptocurrency pools collectively
charge premiums to those who are insured.
How to invest in DeFi:
There are several ways to invest in DeFi. The simplest
option, which provides only general exposure to DeFi, is
to buy Ether or another coin that uses DeFi technology.
Buying a DeFi-powered coin confers exposure to nearly
the entire DeFi industry.
You can deposit cryptocurrency with a DeFi lending
platform directly in order to earn interest on your
holdings. You can receive higher interest rates if you
are willing to deposit funds for longer terms, and the
interest rate paid on your deposit can be either fixed
or variable and change with the market.
Since demand for deposits is high among the various DeFi
platforms, a practice called "yield farming" has
emerged. Yield farmers deposit funds on whichever
platform pays the highest interest rate or other
incentive, and they continually monitor the current
interest rates and incentives offered by other
platforms. If another platform starts offering a better
incentive, then the yield farmers maximize their profits
by moving their deposits to the other platform. As
incentives constantly fluctuate, yield farmers continue
to move their funds from platform to platform.
If you want a role in deciding the future of DeFi
protocols themselves, you can buy a token like Uniswap's
UNI (CRYPTO: UNI). Known as a governance token, UNI
gives you decision-making authority, in proportion to
your holdings, about the future of the Uniswap protocol.
As more people participate in the decision-making
process by purchasing UNI coins, the future of the
service becomes of greater interest to more people, and
increasingly large holdings of UNI are required to
retain substantial decision-making authority. This
dynamic can cause the price of the token to increase
significantly.
4) NFT – Non-Fungible Tokens:
A NFT (non-fungible token) is a special
cryptographically-generated token that uses blockchain
technology to link with a unique digital asset that
cannot be replicated. NFT digital content represented as
tokens which ascribe provenance to uniquely
distinguishable assets by artist, gaming companies,
content creators, is driving a new wave of crypto
adoption. One recent report by market insights on NFTs,
says that in 2020, NFT trading was worth over $250
million.
To see more insight on NFTs
click here.
5) CBDC – Central Bank Digital Currency: A Central Bank Digital Currency (CBDCs) is a
digital form of central bank money based on Blockchain,
which is a legal tender created and backed by a central
bank. Many CBDC pilot projects are going on across the
globe. ##
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