What Are The Challenges and Opportunities for Blockchain Mainstream Blockchain Adoption?
Blockchain has reached new heights of adoption and integration across various industries, but we are still long ways from mass adoption. We have asked Shuo Chen, Singularity Expert, Blockchain, General Partner at IOVC and Faculty at UC Berkeley about what is dragging blockchain mainstream adoption and what the near future looks like for this game-changing technology.
Blockchain has been proven time and again as an enabler of secure, transparent, and decentralized transactions, and has affected businesses, governments, and individuals in a positive way. The rise of interoperability between different blockchain networks, the emergence of non-fungible tokens as a new asset class and the potential use of blockchain in metaverse projects are only a few of the solutions that blockchain technology offers, opening up exciting new possibilities for innovation and disruption.
Despite the many benefits of blockchain, there are still some challenges that must be addressed before it achieves mainstream adoption. That is why we have talked with Shuo Chen, a General Partner at IOVC, and a Faculty at UC Berkeley and Singularity University.
Prior to that, Shuo worked at Goldman Sachs in investment banking, where she worked with clients including Alibaba and Tencent, as well as representing the firm on the Board of Women in Finance. Before that, Shuo was at PwC, where she worked on Google’s $12.5 billion acquisition of Motorola and LinkedIn’s $119 million acquisition of SlideShare. Shuo has also co-authored one of the leading books on financial regulations published by Cambridge University Press in 2019 and sits on the Advisory Board of Forbes China, where she advises on content and awards for Asian Americans in North America.
Q: In your opinion, what are the main challenges and opportunities for blockchain mainstream in 2023?
In my opinion, the key challenges for blockchain technology include scalability, interoperability and regulatory / policy changes.
For example, scalability. As more people start using blockchain networks, the number of transactions increases, and the current infrastructure may not be able to handle the load
Interoperability: This is the ability of different blockchain networks to work together seamlessly. Currently, most blockchain networks operate in isolation, making it difficult to transfer value between them
The lack of clear regulation as well as the dissenting view of policymaking around blockchain and web 3 in different states across the US (and certainly across different countries globally) are can be barriers to blockchain adoption. Different countries have different laws and regulations related to cryptocurrencies and blockchain technology, making it difficult for businesses and investors to navigate the space.
Some blockchain platforms require a significant amount of energy to operate, which has led to concerns about their environmental impact. However, various industry reports have compared the energy consumption of blockchain / decentralized projects to those of centralized platforms and often concluded that centralized platforms actually consume more energy
On the other hand, there are key opportunities for blockchain mainstream adoption of blockchain technology, including improvements in hardware / compute, software/infrastructure and end applications/use cases.
Hardware / compute:
• Decentralization: Blockchain technology enables decentralized networks that can operate without a central authority. This has the potential to create more open and democratic systems in many different industries
• Power/influence over compute: Going forward, it will be important to closely observe who / which entities have the most ownership/influence over hardware and computing power, especially when blockchain is integrated with AI (which requires hardware computing to process data through AI algorithms to learn)
• Security: Blockchain technology is inherently secure, thanks to its use of cryptography and decentralized networks. This makes it well-suited for applications that require high levels of security, such as financial transactions and identity management
• Transparency: Blockchain technology enables transparent and immutable records, which can increase trust and accountability in many different industries
• Efficiency: Blockchain technology has the potential to streamline many different processes, thanks to its ability to automate and digitize workflows
• Innovation: Blockchain technology is still in its early stages, and there is still much room for innovation and new use cases. As the technology continues to evolve, we can expect to see new applications emerge in many different industries
End applications/use cases:
• DeFi: Decentralized finance (DeFi) is an area of blockchain that has seen significant growth in recent years, currently sitting at US$50bn in market cap as of today (data here). DeFi offers a range of financial services such as lending, borrowing, and trading, all without the need for intermediaries like banks
• NFTs: Non-fungible tokens (NFTs) are another area of blockchain that has seen significant growth in recent years, from startups and corporates alike. The market cap for NFTs currently sits near US$1bn as of today (data here). NFTs are unique digital assets that can represent anything from art to music to virtual real estate. Existing companies have increasingly leveraged blockchain technology – either on the infrastructure or consumer-facing side – to boost consumer appeal and enhance their tech stacks. Brands that do this effectively are able to attract a larger customer base and stay ahead of the curve as crypto grows in popularity. Crypto adoption by enterprises is on the rise, and a few examples of companies that have integrated web3 into their platforms in unique ways, including Tiffany & Co, Balmain, Nike and Starbucks to name a few.
Both Twitter and Instagram have incorporated NFTs into their platforms, with Twitter allowing users to use an NFT as their profile picture and Instagram announcing that they’re allowing some users to mint and sell NFTs on their platform.
Visa invested in a CryptoPunk for around $150,000 in August 2021.
• Web 3: Disney is actively investing in web3 startups and even created a “web3 experience” where users can explore popular Disney songs in an interactive virtual space.
• Payments: Many brands have said they will accept cryptocurrency as payment, including Gucci, Off-White, Philipp Plein, and Whole Foods Market
• Supply Chain Management: Blockchain can be used to improve supply chain management by creating a tamper-proof record of the movement of goods. This can help to reduce fraud and improve transparency in the supply chain.
Q: Are NFTs and Web3 going to become a more mature solution for creators, users and businesses?
A: NFTs and Web3 have already gained a lot of traction in the past few years, especially in the creative industry. While there is much room for improvement in technology and implementation for NFTs and Web3, there will absolutely become a more mature solution for creators, users and businesses.
NFTs provide a way for creators to monetize their digital works and connect with their audience on a more direct and personal level
Web3, on the other hand, refers to the decentralized web, which is built on blockchain technology and provides a more open and democratic internet experience.
Both are seeing increased adoption: NFTs and Web3 are gaining increasing adoption from mainstream businesses, such as luxury brands, sports teams, and even traditional auction houses. As more companies begin to experiment with these technologies, they will become more widely accepted and understood.
There is early data indicating that the current market cap for Web 3 companies are above US$27bn (data here)
• Both are seeing improved user experience: One of the main criticisms of NFTs and Web3 is that the user experience can be challenging, especially for non-technical users. However, efforts are already underway to improve the user experience and make it more accessible to everyone
• Both have growing infrastructure: There is a growing infrastructure being built around NFTs and Web3, which is making it easier for creators and businesses to create, buy, and sell digital assets. This infrastructure includes marketplaces, wallets, and other tools that are essential for the smooth functioning of these technologies
There is evidence of a steady increase in developer hours spent on various infrastructural platforms (you can find data on developer hours for specific NFTs and Web 3 platforms via industry reports, company publications, and developer forums)
Q: Are we going to find AI-based solutions like ChatGPT integrated in blockchain projects? If so, can you specify how?
Yes, there is a growing interest in integrating AI-based solutions like ChatGPT in blockchain projects, and there are several ways this can be done:
• Data analytics: Blockchain projects generate vast amounts of data, which can be analyzed using AI-based solutions like ChatGPT to extract insights and improve decision-making
• Identity management: Identity management is a critical issue in blockchain projects, and AI-based solutions like ChatGPT can be used to improve identity verification processes and reduce the risk of fraud. For example, platforms can do so via personal quirks in typing and cursor movement
• Smart contracts: Smart contracts are self-executing contracts that can be programmed to automatically execute when certain conditions are met. AI-based solutions like ChatGPT can be integrated into smart contracts to enable more complex and sophisticated decision-making processes, such as through better prompts to the end-user
• Decentralized Autonomous Organizations (DAOs): DAOs are organizations that are governed by smart contracts and operate in a decentralized manner. AI-based solutions like ChatGPT can be used to automate decision-making within DAOs and improve their efficiency and effectiveness
• Prediction markets/insurance/betting: Prediction markets, insurance and even betting are all markets that enable participants to bet on the outcome of future events (e.g. insurance is betting against yourself because you will get a payout in the case of a bad outcome). AI-based solutions like ChatGPT can be used to aggregate information from various sources and make predictions about the outcome of these events, which can then be used to inform bets. AI-based solutions integrated with high-performance computing can even further construct sophisticated models to simulate likely outcomes of future events
Q: What's the potential impact of the Metaverse in blockchain projects and vice versa?
The Metaverse is the internet + blockchain + VR/AR. It is a fully immersive environment where users can interact with each other and with digital objects, and it has the potential to revolutionize many different industries. There are several ways in which the Metaverse could impact blockchain projects and vice versa:
The Metaverse could open up new use cases for blockchain technology, such as creating digital assets and identities that can be used within the virtual world. This could lead to new forms of commerce, social interaction, and entertainment
The Metaverse could also lead to increased tokenization of assets, as users create and trade digital objects within the virtual world. This could provide new opportunities for blockchain projects to create and manage these assets
The Metaverse could also drive the development of interoperability between different blockchain projects, as users will want to be able to move their digital assets and identities between different virtual worlds
Regarding decentralized governance, the Metaverse could provide new opportunities for decentralized governance, as users could vote on decisions related to the virtual world and how it is managed
Challenges include scalability and interoperability. The Metaverse could also present new challenges for blockchain projects, such as the need to scale to handle the high volume of transactions that will be generated within the virtual world, as well as the need to integrate between different platforms.
Hernaldo Turrillo is a writer and author specialised in innovation, AI, DLT, SMEs, trading, investing and new trends in technology and business. He has been working for ztudium group since 2017. He is the editor of openbusinesscouncil.org, tradersdna.com, hedgethink.com, and writes regularly for intelligenthq.com, socialmediacouncil.eu. Hernaldo was born in Spain and finally settled in London, United Kingdom, after a few years of personal growth. Hernaldo finished his Journalism bachelor degree in the University of Seville, Spain, and began working as reporter in the newspaper, Europa Sur, writing about Politics and Society. He also worked as community manager and marketing advisor in Los Barrios, Spain. Innovation, technology, politics and economy are his main interests, with special focus on new trends and ethical projects. He enjoys finding himself getting lost in words, explaining what he understands from the world and helping others. Besides a journalist, he is also a thinker and proactive in digital transformation strategies. Knowledge and ideas have no limits.