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Blockchain in 2024: Key trends and opportunities

When we talk about Web3, there is a tendency by the media to overlook the distinct technologies that fall within the group. Cryptocurrencies, NFTs and blockchain are lumped together as all part of the Web3 ecosystem. In one respect, these technologies are interlinked. However, each of them are vastly distinct in their development, evolution and future application.

Of all the Web3 technologies, blockchain holds the most exciting potential. In its most basic form, blockchain is a database that holds significant advantages over traditional databases we see used across the private and public sector. Speed, transparency and security are achieved by applying a decentralised digital ledger system that records transactions across multiple computers. As transactions are recorded and lodged, blocks are created which are then linked and form a network.

Looking to the coming 12 months, 2024 is set to be a defining moment for blockchain in both its development and application. I detail the top three trends below.

Practical enterprise application

One of the challenges with Web3 and blockchain, is taking the theoretical principles and bold desires of the technology and demonstrating how it can be practically applied in a modern working context. Positively, even though a knowledge gap does persist, we are seeing more and more companies exploring how blockchain can be used to drastically enhance the means in which they operate.

If we take the principles of blockchain as a sophisticated and secure way of managing data and transactions, all sectors and industries stand to benefit. There are already a number of companies which offer blockchain-as-a- service (BaaS), creating bespoke asset tokenisation for both commercial and consumer applications. Aventus is one of the global leaders in this field, with experience creating blockchain solutions across energy, sport, logistics, finance, gaming and music. They allow enterprises to take full advantage of blockchain through seamless integrations.

This year, we will see more companies exploring the advantages of blockchains and actively looking for avenues of integration with existing Web2 protocols. As more and more companies take advantage of blockchain, it is likely to trigger more adoption, in turn addressing the knowledge gap that currently persists amongst leaders outside of the Web3 space.

Institutional adoption

There has been a marked shift in institutional interest towards blockchain technologies. Five years ago, there were questions surrounding its practical application. Now, regulators are taking an active interest to understand what frameworks can be put in place to support innovation while delivering the necessary protections.

The financial services sector is at the forefront of these developments. The digitalisation of financial instruments like smart contracts and digital assets means stronger connectivity links are formed between the various levels, products and assets that make up the financial services sector. One company making huge strides in this space in the Fnality. An international consortium of global banks focused on building a blockchain-based payment system to support the adoption of tokenised assets and marketplaces, 2024 was a monumental year for the company. It secured £77.7 million in Series B funding and processed live payments on its Sterling Fnality Payments System (£FnPS) with the Bank of England. As it continues to revolutionise wholesale payments between central banks, institutional interest in Fnality will continue to rise.

Blockchain continues to mature and address challenges, with more institutions likely to explore and integrate blockchain solutions into their operations. Ongoing collaboration between the blockchain industry, regulatory bodies, and institutional players will play a crucial role in shaping the future of this relationship – another trend set to define 2024.

A funding bounce

After a period of record-breaking and volatile valuations, investors have adopted a risk-averse approach to funding rounds. Their approach towards tech ventures is being driven by a focus away from so-called ‘hype investments’ to companies that generate revenue. Use cases and the practical application of technologies have become critical, ensuring resources are shifting away from just R+D to an actual demonstration of a viable market product or service.

In this respect, 2023 was a challenging time for Web3 startups. Statistics from Crunchbase revealed that Web3 funding in Q2 2023 dropped by 76% compared to the previous year. What’s more, only $4 billion was raised in H1 2023 – a $12 million drop on the figure recorded in H1 2022. It is not uncommon for industries to cycle between boom and bust periods, and while Web3 still has a long way to go, we could see a bounce back in funding for blockchain companies.

The reason for this stems from the rise of blockchain enterprise and institutional adoption. Unlike crypto-currencies and NFTs, blockchain is demonstrating its practical use in a business setting, increasing its accessibility and awareness outside of the technology industry. As this trend continues, it will encourage investors and funds to examine the companies in the sector leading innovation and growth.

2024 will be a monumental year for blockchain. With so much attention currently on AI, it will continue to evolve in the background, triggering a resurgence in interest as we see more adoption, integration and funding. For companies in this space, 2024 offers the window needed to solidify their market position and ensure they are able to demonstrate their value, while standing out from the competition.

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