Blockchain Hype Will Die Down by 2025, Research Says

When it comes to the crypto market, criticism has always hounded the Bitcoin side of things since it’s the most prominent cryptocurrency today. However, a new report from research firm GlobalData, titled "Blockchain - Thematic Research," has in its crosshairs blockchain tech itself.

Experts have praised blockchain for its ability to solve problems and streamline the operation of various businesses like the supply-chain industry as well as cross-border payments. But the report notes that this innovation will suffer a considerable setback in the next two years and have its popularity crumble come 2025.

The paper was written by Gary Barnett, the firm's chief analyst and a former software engineer. The report is quite extensive, taking Barnett the best of 18 months to interview hundreds of organizations that are involved in the crypto industry.

In an interview with Martechtoday’s Barry Levine, the analyst pointed out that businesses are better off using a database rather than adopt blockchain, which is complicated and resource-intensive to implement. This is because one of the main disadvantages of the technology is the amount of energy it consumes to conduct a single transaction.

The report points out that a single Bitcoin transaction is 5,000 times more power-exhausting than a single Visa payment. This isn’t to say that the crypto sphere isn’t doing anything about this. One of the things being carried out by this sector is the transition from a Proof-of-Work algorithm to a Proof-of-Stake one, which can significantly lower the energy consumption in verifying a transaction.

To put it simply, Proof-of-Work relies on a miner to calculate a transaction along with previous ones, essentially taking the whole block and melding it with the new one created. This process makes the chain longer, resulting in higher energy consumption. This is why scalability is becoming a problem for cryptocurrencies using this algorithm.

In a Proof-of-Stake system, block rewards aren’t the incentive for miners but are rather awarded by the transaction fees instead. Those who are chosen to verify the transaction are selected based on their wealth on the block, also called their stake. With this algorithm, all digital cash is created from the beginning, with the number never altered.

Barnett also mentioned the encompassing regulation released by the EU and how it will more or less influence the shaping of blockchain’s legal framework. Called the General Data Protection Regulation, the rules mean to protect individuals from companies harvesting information without their knowledge.

One of the aspects that are included in the regulation is the “right of erasure,” where people have the ability to request the deletion of their information from a certain company. However, given that blockchain is decentralized by nature, there’s no way for anyone to take the blame should a data breach occur and sensitive information is stolen.

All of these issues and contradictions will certainly affect the crypto market in the future. But they these remain a speculation, and time will tell how blockchain will adapt to the restrictions applied to it and the limitations imposed by its very nature.