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CasperLabs 2021 Predictions: What Enterprise Needs from Blockchain Technology in 2021

vmblog 2021 prediction series 

Industry executives and experts share their predictions for 2021.  Read them in this 13th annual VMblog.com series exclusive.

What Enterprise Needs from Blockchain Technology in 2021

By Mrinal Manohar, Co-founder and CEO of CasperLabs

The blockchain and cryptocurrency ecosystems have advanced significantly in 2020. Even during volatile market events - double digit drops in March and now bitcoin all-time-highs at the very end of the year - the progression, adoption, and integration of blockchain technology into both consumer and enterprise realms has continued. Among consumers, the most significant blockchain event this year has been the growing decentralized finance (DeFi) ecosystem. Among enterprises, however, 2020 has been a hallmark year, with notable announcements from Visa, Square, PayPal, Fidelity, CitiGroup, and more. As more enterprises invest in crypto and build solutions with blockchain technology, we anticipate a set of trends, expectations, and architectures to emerge to fit enterprise needs. 

1.     Enterprises will expect flexible and customizable privacy when building blockchain solutions.

Today's layer 1 blockchain platforms largely force enterprise partners to choose between two architectures: public or private/permissioned. Public networks, which by default submit all transaction history to a public ledger, are not ideal for enterprise adoption in today's ecosystem. With the exception of a few particularly innovative, crypto-first enterprises, most businesses do not wish for records of their transactions to be publicly available.

Private networks, on the other hand, have the tendency to box enterprises into stagnant, inflexible tech architectures. Enterprise solutions on private networks do not benefit from the security, immutability, or network benefits of public blockchains, and more closely resemble modern database SaaS offerings than game-changing blockchain solutions.

Enterprises will seek out and build on blockchain networks that can seamlessly support any permutation of privacy and confidentiality enterprises need now and in the future. Blockchain networks that support hybrid solutions - e.g. transactions happening on private networks and being ‘exported' to a public chain for security - will emerge as ecosystem leads for enterprise adoptions.

If this enterprise adoption roadmap forward sounds familiar, it's not a coincidence. SaaS providers delivered similar compromises when building the playbook that drove enterprise cloud adoption. Flexibility and security are key to realizing this vision of a blockchain-supported enterprise tech future.

2.     Enterprises will migrate to networks that support smart contract upgradeability.

Enterprises expect to have control over the code that powers their products and services. The vast majority of today's public and hybrid blockchain solutions do not enable upgradeable code; once a smart contract is deployed on a mainnet, it is immutable. If a new, updated contract is released, the community must collectively phase out the old smart contract. Blockchain platforms that support contract upgradeability enable enterprises to launch smart contracts into production with control over their code.

3.     Blockchain will emerge as a key component of the enterprise tech stack.

Enterprise adoption of blockchain technology is measured, slow, and evolutionary. Blockchain solutions that ask enterprises to replace entire portions of their tech stack will not find much product-market fit in today's ecosystem. Blockchain solution providers would benefit from specifically identifying portions in industry tech stacks and adopting a ‘horizontal' approach to blockchain integration. Enterprise adoption will continue with solution providers replacing one piece of a tech stack at a time rather than attempting to upturn the entire stack all at once.

4.     Enterprise blockchain investment and innovation will flow towards esoteric forms of debt.

Esoteric forms of debt are especially ripe for innovation and optimization with blockchain-based smart contracting. Take, for example, mezzanine debt. Mezzanine debt falls in between senior debt and equity. The management and execution of mezzanine debt are subject to a variety of trigger points, each of which could benefit from the automation of smart contracts. We anticipate businesses to continue building blockchain solutions with a focus on niche, esoteric financial instruments, particularly debt.

Overall, in 2021 we are confident the blockchain and crypto ecosystem will continue to attract innovation and investment from a growing number of enterprises across industries and geographies.

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About the Author

Mrinal Manohar 

Mrinal Manohar is the Co-founder and CEO of CasperLabs, the company behind the Casper blockchain. Prior to founding CasperLabs, he was a principal and the Technology / Media / Telecom sector head at a ~$1b long-only hedge fund, a private equity associate at Bain Capital in Boston, and an associate consultant at Bain and Company. He has an MS from Carnegie Mellon University and has been passionate about computer science ever since he began programming at age 11. He has been personally investing in the blockchain industry since 2012.

Published Thursday, January 21, 2021 7:46 AM by David Marshall
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