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Our DLT predictions for 2021

Benjamin Nadareski — 04 February 2021
The confluence of evolving digital asset market fundamentals, a highly competitive landscape and accelerated innovation continues to establish DLT-based applications not as a promise of revolutionized business, but a reality here in 2021. Within SDX’s rapidly evolving global ecosystem, our corporate development team is uniquely positioned to see the breadth of these developments first hand, working with our word-class clients and partners in solidifying DLT-business as a commercial reality in 2021. My predictions below are a first-hand example of some of the major breakthroughs we expect to materialize in 2021.

Prediction #1: Central Bank Digital Currencies (CBDC) Continued Adoption

As central banks continue to roll out pilots and production grade test use-cases for CBDCs, 86% of central banks are now actively engaged in CBDC exploration whether through development or research with 24% of these projects now entering the development phase. CBDCs will continue to be selected for specific application launches primarily domestically with some already graduating to cross-border application use-cases. We expect not only these numbers to increase but for some of the first applications to begin hitting small test groups for live production roll out.

Prediction #2: Trillion-Dollar Digital Asset Markets

This prediction has already been hit, with trends including bitcoin investment, institutional adoption of trade execution and custody services for cryptocurrencies exploding in the early part of 2021. As this trend continues, we expect the cryptocurrency use-cases to be a spearhead for the breakthrough of global liquidity in non-crypto based digital asset use-cases (STO’s including private and publicly listed digital assets).

Prediction #3: Use Of Blockchain For Identity Verification Directly From National Governments

Enterprise blockchain’s use-cases continue to expand and governments and public entities continue to launch identity verification, tracking and registration systems for citizens. We expect digital identity use-cases, similarly to CBDC adoption, begin to hit retail use-cases in live test-group use-cases in 2021 as more projects graduate towards enterprise ready systems.

Prediction #4: Chain-Agnostic Solutions (Interoperability)

We continue to see start-ups and institutions alike designing DLT-based infrastructure and applications that are non-specific to the layer 1 technology deployed. This is crucial as global use-cases on leading blockchain platforms including Corda, Ethereum and Hyperledger continue to roll out enterprise grade cross-chain features, adapting to the growing trend. Just as with any financial market infrastructure system in use today, if it is only available for one specific use of technology protocols, widespread adoption and access will be highly limited by the siloes in which technology-specific protocols breed. In order to rebuild the systems of tomorrow, we must design them with the end goal in mind.

Prediction #5: Full Integration With Other 4th Industrial Revolution Technologies

Blockchain is not the only trend we expect to transform several corporate industries in 2021 with the likes of AI, ML and IOT applications starting to become part of common narratives for DLT-based applications. Within the SDX ecosystem, we are seeing a multitude of start-up’s and institutional partners already integrating solutions with these emerging technology stacks. This is specifically true for the financial market data applications where automated data flow at high volumes require high-powered and flexible analytical programs necessary for processing the data that is ingested. This market is ripe for deploying solutions that are competitive in several ways rather than simply innovating to the limits of a single technology stack.

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