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Ethereum, Polkadot, BinanceChain and More – Blockchain Technology Trends for 2021

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The current year was quite favorable for the blockchain development industry. The outcome of the passing year shows there has never been a better time to start a blockchain-based project.

This review presents an analysis of the most significant events in the crypto market and tells how this will affect the blockchain development industry. In this piece we will also share some predictions about blockchain technology for 2021.

Upcoming blockchain platforms

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A number of recently implemented tech approaches and upcoming blockchain solutions offer suggestions for blockchain trends in 2021.

Ethereum 2.0 launch

Questions regarding Ethereum enhancement have been circling crypto people’s minds for several years already. Comments and inconveniences were mainly focused on the issue of scalability, slow TPS and the amount of transactions allowed for one block – 12 is just so little for today’s blockchains.

The core concept behind the new Ethereum 2.0 version can be found here. The main focus of 2020 4Q was the launch of Phase 0. It stands for Beacon Chain adoption and the integration of the new Ethereum PoS which launched on the December 1, 2020.

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The biggest and long-anticipated update for 2021 will be the planned introduction of Phase 1 and integration of PoS and shard chains (expected in 2021 Q4).

The world has never seen a transition of such a big ecosystem. Therefore, the emergence of numerous doubts and uncertainties seems quite reasonable. Along with the future implementation of sharding, this will significantly improve network operability speed and increase transaction throughput. That is why this Ethereum transition will deservedly become one of the biggest blockchain trends in 2021.

Polkadot parachains

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“Polkadot is a sharded blockchain, meaning it connects several chains together in a single network, allowing them to process transactions in parallel and exchange data between chains with security guarantees”. – Polkadot lightpaper

In order to connect to the Polkadot ecosystem, or build your own blockchain within it, a user needs to link to Relay Chain which is a main blockchain for Polkadot. Until now five out of 100 parachain slots have been successfully connected. Although 100 was initially defined as the primary goal, there are some thoughts about voting to extend the number of allowed slots.

The biggest number of slots is expected to be added gradually over the next few years. In addition, a significant amount of projects previously deployed to Kusama testnet will start the transition to the Polkadot environment.

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This alteration will surely have a great impact on the crypto market because the overwhelming majority of projects built on the Substrate (Acala, Moonbeam, Halva, Edgeware, Centrifuge etc.) establish ​​joining Polkadot as one of the main goals.

BinanceChain break-In

BinanceChain has started its smart chain in the fourth quarter of 2020. The launch gathered a lot of attention and positive feedback among the community. Thus, it resulted in enormously fast development by the dedicated community environment and the start of very promising projects like PancakeSwap DEX.

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In addition, this chain is supported by Trust Wallet which is a very reliable player in the blockchain market. Their involvement was justified by one of the largest airdrops to support Binance and its smart chain a few weeks ago.

The total value locked in DeFi (TVL) started to grow and show very promising results at the end of December. Moreover, the cross-chain ecosystem of Polkadot, along with a renewed and scalable Ethereum 2.0, will surely make a real industry revolution.

Prediction for blockchain DeFi market

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The DeFi TVL is currently over $20 billion (according to DeFi Pulse). This is a strong base for the sector’s future growth.

The beginning of a decentralized financial market marks one of the greatest initiatives with proven potential to develop throughout 2021. However, such a promising market certainly attracts many unstable projects and scams. We expect the gradual downfall of DeFi hype in the coming year along with the survival of authentic, true projects that have a broad community and support from big authorities.

A list of factors (with Covid pandemic at the lead) have a big impact on today’s crypto market. First of all, due to the continuous accumulation of capital, the market became pumped and significantly oversaturated with liquidity. Therefore, we shall assume a big boom for small-to-medium-sized blockchain-based projects.

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On the other hand, the pandemic issue has raised the question of cybersecurity to the highest priority. As a result, the other boom covering decentralized projects will be the emphasis on security problem solving.

Blockchain technology trends to come in the 2021

Based on the continuous market research and analysis of the coming changes we are able to establish a few predictions about blockchain technology trends.

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Strengthening of Solidity language

The recent release of Solidity 0.8 brought a few major changes to the language structure, providing more ease for programmers. In addition, OpenZeppelin released Defender and renewed their contracts in the last quarter of the past year. Those new implementations and the adoption of more convenient toolsets pushed blockchain development towards Solidity even more.

Growth of Brownie development platform

However, on the other hand, Brownie is strengthening its position in relation to Traffle. This is justified by the fact that Viper is becoming more and more popular and, for example, Yearn Finance (the largest DeFi platform after several mergers) chose Brownie to host all development processes. From this perspective we can expect that more and more projects will choose Brownie as a primary smart contracts development framework or move to it.

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Higher demand for Rust programmers

As we have mentioned before, the upcoming release of Polkadot parachains will make a huge impact on the market. Polkadot Relay Chain is built on the Substrate framework with Rust. Moreover, Rust is the programming language of one of the main Ethereum nodes – Parity.

Therefore, the will of projects to connect to the multichain in the near future and further implementation of numerous advantages and protocol enhancements will push the demand for developers with great expertise in Rust.

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Decentralized identity management

The current issue with KYC and identity management, in DeFi in particular, builds a solid ground for development trends. The CEO of Blaize, Sergey Onyshchenko, shares the same view regarding this topic.

“In the KYC market there is the empty field for development opportunities. This is a very sensitive topic for decentralized exchanges in particular; therefore, sooner or later a big player will come here to offer a completely new approach to identity management.

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Another important thing that’s coming is the tokenization of assets from the real business sector such as real estate or art. Such projects as Centrifuge have already begun development in this direction and offer the introduction of tokenized invoices which enable you to take out a loan on the security of such an invoice.”

Conclusion

Drastic market changes along with the worldwide pandemic opened up many new niches and has boosted the development of alternative technologies. Last year was quite favorable for the blockchain market and fruitful in terms of newborn technologies and very promising projects. But the recent growth of main cryptos like Bitcoin and Ethereum show that it has not reached its limits.

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Mexican Company Launches Blockchain-Powered COVID-19 Test Certificates

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Medical services company MDS Mexico is using blockchain technology to prevent the forgery of fake COVID-19 tests in the Latin American country.

The COVID-19 crisis panic seems to be dissipating after almost two years; however, governments around the world are still searching for tools to control its expansion and allow their citizens to return to normal life.

A Mexican company is using blockchain technology to improve the reliability of COVID-19 diagnostic tests, using cryptography and the real-time auditability of the blockchain as a way to prevent counterfeiting and fraud.

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Fighting COVID-19 With Decentralized Technology

According to a report by Hispanic news outlet iProUP, medical services company MDS launched a rapid test application and interpretation service, as well as home PCR sample collection specifically designed to react to COVID-19. The results are delivered physically and digitally 24 hours later and will be certified with blockchain technology to guarantee in real-time the application of the test and the authenticity of the results.

Representation of a Digital Certificate protected with blockchain tecnhology. Image: MDS
Representation of a Digital Certificate protected with blockchain tecnhology. Image: MDS

As explained on its website, MDS produces a unique hash associated with the results of each test and generates a QR code that links to a digital certificate with personal information of the person who took the test, the results obtained, the physician responsible for administering the test and the date the test was taken.

To avoid the falsification of negative results, we began to certify the SARS-CoV-2 detection tests with blockchain technology and cryptographic signature, which protects the information in a unique, immutable, and unalterable QR Code that can be verified worldwide.

Mexico: Pro-Blockchain, Anti-Bitcoin

Mexico is one of the Latin American countries where the application of blockchain technology has known use cases that transcend the monetary.

As an example, the local Congress of Quintana Roo in Cancun, Mexico, experimented with the implementation of the Avalanche blockchain to digitize the records of the local public administration. The project was successfully implemented in March at the cost of 600,000 Mexican pesos (USD 290,000).

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However, the week the congress decided not to renew the contract on the grounds that the use of blockchain was “overqualified” for the needs of the Legislative Branch, i.e., the costs outweighed the benefits.

Similarly, the National Chamber of Commerce (CANACO) of Querétaro, Mexico, had already announced the availability of a digital vaccination passport issued in alliance with the blockchain company Xertify, which would allow locals to digitize their physical certificates issued by the authorities after a payment of about 400 pesos.

However, when it comes to finance, the use of cryptocurrencies – especially Bitcoin – does not enjoy the same support from the authorities.

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The country’s Central Bank has already stopped an initiative by the president of Banco Azteca to offer Bitcoin compatibility, and acted against 12 cryptocurrency exchanges for being linked to criminal cartels. Even last week, the country’s president even ruled out the use of Bitcoin as legal tender.

So, at least for now, in Mexico, the financial revolution and the blockchain revolution will walk two very distant paths.

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Benefits of Blockchain Technology to Businesses

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The year 2008 saw the introduction of bitcoin (decentralized electronic cash system). Since then, many more cryptocurrencies have been introduced to the market and turned doubters into believers. Those who had misgivings have slowly and surely embraced it as the future and alternative to fiat currency. Indeed, it is correct to say that the blockchain technology has greatly evolved and with it, a whole lot of benefits across industries (from finance to medicine).

Many businesses across different sectors are now looking for ways in which they can integrate the blockchain technology into their infrastructure. Without a doubt, it is correct to say that the future is here. We are firmly in the era of the blockchain technology and cryptocurrencies are slowly providing a paradigm shift to the way we view fiat currency and even transact. That said, how do businesses benefit from the blockchain technology?

If you thought that solutions brought about by blockchain are confined to the exchange of cryptocurrencies, you couldn’t be more wrong. Through its decentralized nature, businesses across various sectors and industries stand to benefit in the following ways.

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1. Increased And Greater Efficiency

As a decentralized digital currency, blockchain has fully done away with the need for middlemen especially when making payments or engaging in transactions of whatever nature be it in the real estate or any other lucrative industry. When you compare blockchain to conventional financial services, there is no denying that it’s faster, instantaneous, and its peer to peer decentralized nature made transactions to be more efficient.

2. Transparency

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If there is something that puts blockchain on a different level, it has to do with the fact that transaction ledgers for public addresses is accessible for viewing by pretty much anyone. This level of transparency and an unprecedented layer of accountability is one of the reasons why blockchain has become very popular with businesses. This greater transparency has in essence held businesses to higher standards and essentially made them to be more open and ascribe to higher levels of integrity in so far as their dealings with customers is concerned.

Source: Pixabay

3. Traceability

The beautiful thing about the blockchain ledger is that every single time there is an exchange of goods or a transaction recorded in the blockchain, there is an audit trail. This audit trail is instrumental in providing an irrefutable proof of ownership or simply to let a person know where goods came from. This improved traceability provided by blockchain is instrumental especially in industries or sectors where verifying authenticity of transactions or traded assets improves efficiency and customer confidence.

4. Security

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Where security is concerned, blockchain is way ahead of other record keeping systems. Why is this the case? Well, every new transaction is not only linked to a previous transaction but also encrypted. There are zero chances of a transaction being altered and this gives individuals a sense of security and trust. The decentralized nature of blockchain also ensures that individuals can transact without having to answer to central governments.

To sum it up, if you are a business in whatever sector, you cannot afford to wish away the key benefits of blockchain outlined in this post. If you are keen on being transparent, efficient, and keen on winning the trust of your customers through secure transactions, blockchain is the way to go. The future that was blockchain is now here with us.

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Private distributed ledger technology or public blockchain?

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Some people think that permissioned distributed ledger technology can perform better than open blockchain because it is tweaked to address the issues of the latter. Such systems are also called “permissioned blockchain,” as if blockchain is a high-level concept and “permissioned” is one of its variants. But this statement is controversial and down below, you will come to understand why.

Is “permissioned” decentralized?

There are a lot of other options to choose from in DLTs: permissioned, private, enterprise, federated DLT, etc. And frankly, sometimes, it is not easy to distinguish between them. Therefore, for this level of discussion, let us compare just DLTs vs. blockchain.

A permissioned DLT and the mentioned variety thereof are not decentralized. There should not be any fallacy around this, as it might be fatal for a project. While some opponents to this statement might claim that decentralization can have a degree, and of course, permissionless blockchain is more decentralized.

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Let us put it simply. If there is someone between two counterparties in a transaction, and you can do nothing about this, it is centralized. In a public blockchain, if an ordinary user does not want to rely on a miner for their transaction to be included in a block, they can draft their transaction, and mine a block themself. If the block is valid, the network will accept it. Of course, mining nowadays requires enormous computational resources, but there are no technical or formal barriers to it — you don’t need to seek permission to mine. In DLT, users of the network have different roles and authority, and ordinary users are not able to create and validate blocks. There is nothing wrong with having a centralized system; it is just a matter of understanding what you are dealing with.

Permissioned DLTs can be decentralized only from one perspective, i.e., by having a consortium of independent members (organizations, companies, etc.) running the network with the exclusive authority to create blocks. Having a few affiliated companies controlled by one beneficiary will not make it decentralized.

And keep in mind, any consortium structure with independent members can be decentralized but only for these members — it will always be centralized for all those outside of the consortium.

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Is DLT a cartel?

A consortium (private/permissioned) DLT can be considered a cartel. Sooner or later, an antitrust body may question this. A safe strategy would ensure that the terms and conditions of the consortium were built in compliance with the antitrust laws.

By the way, to be completely centralized system is much safer. But a centralized system will never achieve the same level of reliability and credibility that blockchain can. It will be vulnerable as any other centralized system is, and here is why.

A centralized DLT is not immutable. The ledger can be rewritten arbitrarily by the one (or more) who controls it or due to a cyberattack. Because of its open and competitive nature (mining, staking, etc.), any blockchain can achieve immutability and hence its records will be credible. Thousands of independent nodes can ensure an unprecedented level of resistance to any sort of attack.

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Usually, it comes next after the discussion about immutability. How to correct a mistake? What if you need to change your smart contract? What if you lost your private key? There is nothing you can do retroactively — alteration in the blockchain is impossible. What’s done is done. In this regard, the DLT is usually the opposite of an alternative to blockchain. You will hear that DLTs can be designed so that those who control the network verify transactions on entry and therefore, non-compliant transactions are not allowed to pass through. But it would be a fallacy to think that censorship in the network will ultimately exclude all mistakes and unwanted transactions. There will always be a chance for a mistake. Then what? A retroactive change as the last resort? But if you can alter history, you undermine the whole idea of blockchain. No other technology can ensure such a level of the immutability of data. It is not one of the advantages of blockchain — this is its distinguishing advantage.

Nevertheless, immutability is perceived as something that impedes its legal application. Say, your circumstances changed, and you need to alter the smart contact. The answer to this is the proper design of an application that does not undermine the immutability of the ledger. The smart contract should be designed in a way that the user can attach a new transaction to reflect a change toward the previous one. Blocks are firmly chronological and only the latest transaction will reflect the current state of affairs, while all previous transactions will be a historical reference. You don’t need to change history. The blockchain is a public repository of evidence for everything that happened. There are different methods of designing applications that address all possible legal issues; for example, this and this academic paper proposed solutions to manage property rights in blockchain registries. These issues are also discussed in the series of articles that I published last year.

Permissioned is not blockchain

If anyone questions it regarding your system, they will be right. Further discussion about why permissioned is not a blockchain can be found in this academic paper, but in a nutshell: Not every chain of blocks is a blockchain. Connecting timestamped chunks of data with hashes was invented by Haber and Stornetta in 1991. But nobody has ever called it “blockchain” because blockchain is more than just a chain of blocks. It is about how these blocks are created and validated. Blocks that are created are the result of an open, decentralized and uncensored competition. This is the definition of blockchain and this is what Satoshi Nakamoto designed. Hence, anything that is centralized (permissioned, private, etc.) is whatever but not blockchain.

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Unfortunately, anyone is free to attribute the word “blockchain” to any technology they want, as there is no legal copyright or any legal protection to this word. DLT proponents tried hard to erase the boundary between these concepts. But it is only a matter of time until a few high-profile knockdown hacks of private DLTs show the real difference between DLT and blockchain and dramatically change the situation. There is a big difference in how many nodes ensure the security of the network, i.e., a handful of known nodes in the DLT network, or thousands and anonymous nodes around the world in the blockchain network.

We can argue about this on the theoretical level, but when it comes to losing money due to vulnerabilities in the system, nobody will listen to enthusiastic speeches about DLT. People will start asking questions. If you use “private/permissioned,” you should be ready for this.

If you still want permissioned

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A safe strategy would be to use the word “DLT” in all communications. It might not address possible vulnerabilities, but you can then say: “We had never said it was blockchain.” By the way, ENISA (the European agency on cybersecurity) always uses “distributed ledger” instead of blockchain in their reports. Conversely, their colleagues in the National Institute of Standards and Technology in the United States used “blockchain” in their earlier report.

Do you want to create your own public blockchain network? It is not necessarily a good idea unless you have reliable technology and a robust plan. First, [permissionless] blockchain does not mean safe by default. To achieve a decent level of immutability and resistance to attacks (hence, credibility and a high capitalization of your coin), you need thousands of independent nodes all over the world. If you have enough resources to create your community on this hard path, your network will survive and you will reap the rewards. But what are the odds?

DLT economy

If you are still considering creating your private or permissioned network, think about how this infrastructure will be maintained. If this is solely your network, you can have a solution to this because its maintenance can be covered by the commercial applications that you develop on it. But you have to understand — the network maintenance is completely on your shoulders.

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If you have a consortium of members, how do they redeem expenses on infrastructure? In a blockchain, there is a native mechanism to this — cryptocurrency. Independent nodes compete to mine coins. This is how the whole infrastructure is created and maintained. Those who develop applications on the blockchain need to worry about fees, not infrastructure.

But how about your DLT? Is your DLT only for private use among the members of the network? In this case, the end must justify the means, so the reason why independent players on the market created their own DLT network must cover the cost they bear to create and support it.

Consider another story about DLT by members who develop a network for outside users. Inevitably, you will need to design a viable economic model for the network members. No one will spend their resources for nothing or the resources will be applied unfairly — you will end up with a common tragedy. A possible solution to this is to create a native token of the network — say hello to cryptocurrency.

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Private DLT o a blockchain?

Is a permissioned/private DLT better than a blockchain? This is not an appropriate question. They are different and their use depends on what you are trying to achieve. But it would be a fallacy to attribute the features of blockchain to a permissioned DLT.

Leading existing blockchains can provide you with reliable infrastructure for an application. The idea that immutability impedes the application of blockchain is a misconception. On the contrary, it is the major advantage as no other technology can provide such a level of credibility to records. Various methods exist to create mature applications without bumping up against the immutable ledger.

A solely controlled DLT is centralized and therefore requires as much attention to cybersecurity as any other centralized technology. A consortium DLT is decentralized for its members, but will always be centralized for outside users (if, of course, the DLT is designed for public use). At the same time, the use of such a DLT can be fruitful in a private application among independent members, but be careful with objectives as it can be considered a cartel and questioned by antitrust bodies.

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