It’s coming on fast, but is the rapid expansion of blockchain technology happening appropriately?
If you attended CES 2022, either in person or virtually, you probably noticed a few recurring themes, with blockchain, cryptocurrencies, the metaverse and NFTs being some of the hottest topics of the year.
There were talks aplenty on blockchain and its related technologies at CES, with plenty of discussions on how NFT pioneers made their money and what’s coming, and plenty of blockchain-related startups were present pitching new products, too.
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As CES is a chance to take the pulse of the tech industry in general, it’s also a chance to get a glimpse into emerging technologies, like the aforementioned, and what’s to come from them. This year we definitely got a lot of news related to blockchain technology, but understanding it is another thing altogether.
CES showed us how blockchain will go mainstream
There’s no denying that NFTs have had a banner year, with huge sales netting millions of dollars, and several celebrities have been getting in on the action and endorsing NFT trading platforms, too. The end of 2021 brought another big buzzword in the form of the metaverse, and it’s these two technologies that Gartner Distinguished VP Analyst Avivah Litan sees as a key part of the mainstreaming of blockchain technology.
NFTs and metaverse adoption, Litan said, will in turn cause “blockchain-based user interfaces and experiences to dramatically improve, and retail cryptocurrency payments will naturally follow,” Litan said.
Litan predicts that NFT trading will at least double in 2022, and she said tech on display at CES, like the new Samsung TV that includes a Gaming Hub and extensive NFT integration that makes buying and selling them something that can be done from the couch.
With those sorts of features in mind, “we will now also see the accelerated implementation of surrounding services that make it easy for consumers to onboard to blockchain (via a user wallet) so that they can buy and trade NFTs,” Litan said.
Forrester VP and principal analyst Martha Bennett said she was struck, though unsurprised, at the degree to which NFTs were the focus at CES. As for new blockchain trends? She said there was nary a thing to be seen. “There wasn’t really a blockchain presence or theme as such. Some representation from the cryptocurrency/crypto asset side that wasn’t exclusively about NFTs, but nothing major or new,” Bennett said.
Bennett did give kudos to Samsung for the same reasons that Litan did: Its new smart TV with NFT capabilities and its Decentraland metaverse store. It’s still niche though, she said, and will need to do a lot of uphill climbing to attract those who aren’t already involved in the community.
“Don’t get me wrong: I’m not trying to belittle Samsung’s efforts—everything to do with NFTs is still in the experimental phase, and without experimentation we won’t see progress,” Bennett said.
The electric elephant in the room
The two big players in the cryptocurrency world, Bitcoin and Ethereum, both have a serious problem: Energy waste. Talking about NFTs is impossible without talking about Ethereum, which is the blockchain that most NFTs live on, which begs the question: Is wider adoption of NFTs, the metaverse, cryptocurrency and the blockchain environmentally sustainable?
Bennett said she was unsurprised that CES wasn’t the place for talk about the energy waste created by cryptocurrencies, but she also found Samsung’s smart TV announcement, when contrasted to the sustainability theme it had during CES, didn’t jive too well.
“Today’s NFTs are mostly on Ethereum, and Decentraland uses Ethereum. While not as bad as Bitcoin in its energy consumption, Ethereum’s energy requirements will be excessive until the network moves away from proof of work,” Bennett said.
Litan agreed that it’s proof of work that’s the energy waste culprit. “Ethereum is in the midst of shifting to Proof of Stake, which will solve most of this issue,” Litan said of the lesser of the two energy hogging cryptocurrencies.
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Litan noted that, however, Bitcoin isn’t going away, is the largest player, and still uses proof of work, so that’s where the energy concerns mostly lie. Even in the case of Bitcoin, however, some progress is being made.
“Bitcoin miners are already starting to use wasted energy at energy production sites in order to lower their own costs, and I think we will see that trend continue and accelerate in 2022, as energy costs continue to climb,” Litan said.
With Ethereum quickly taking the reins as the most practically used form of cryptocurrency, proof of stake may soon be the standard by which we think about cryptocurrency and digital tokens. “The jury is still out on how decentralized Proof of Stake will remain,” Litan said.