Sixteen years have gone by since conversations about blockchain first began, highlighting this technology's signature feature as an encrypted digital ledger that is both immutable and unfalsifiable. During this period, the financial landscape has been in constant flux. The world of blockchain keeps surprising us, with banks broadening their crypto offerings, companies increasing their use of the technology, the growth of decentralized finance, and the emergence of Bitcoin funds.
The names—and the history—of Bitcoin and blockchain are closely linked. Bitcoin was the first to implement the blockchain concept since this new form of currency is documented in a public, distributed ledger, known as blockchain. In fact, the field of cryptography provided a shortcut in the development of this technology. However, blockchain is much more than just Bitcoin. A blockchain, as it's known in English, is a decentralized and distributed database—an encrypted digital file that serves to maintain a shared public ledger for any kind of transaction, including, but not limited to, the exchange of Bitcoins. The blockchain itself is immutable and its structure cannot be tampered with, which reinforces user trust in the system.
Since it began gaining popularity in 2008 alongside Bitcoin, blockchain technology has consistently transformed everything in its path, especially the financial sector. Nearly 16 years have passed, and the transformation continues, a revolution that has uniquely taken shape in Switzerland.
A favorable regulatory framework has facilitated the creation of companies related to this technology and the development of what is known as the blockchain law (the DLT or Federal Law on Developments in Distributed Electronic Register Technology), which regulates book-based securities via blockchain. Additionally, Swiss financial institutions have begun using this technology to enhance the transparency, security, and efficiency of their operations.
In line with this, Switzerland has successfully managed to attract startups, many emerging from university campuses and focused on technological solutions. A study from the University of Lausanne, published last February, indicates that blockchain delivers the best returns among investments in cybersecurity startups. Moreover, research on blockchain is underway at several prominent academic institutions in the country, including the Swiss Federal Institute of Technology, the University of Zurich, the University of Applied Sciences for Business Administration, and, lastly, the University of St. Gallen. For instance, the University of St. Gallen has adopted the technology to prevent degree forgery.
Blockchain trends in 2024
1. Banks expanding their crypto portfolios
2. The rise of decentralized finance
3. New regulatory frameworks
In 2018, the Swiss financial regulator (FINMA) categorized tokens into three types (representations of digital assets): payment, security, and utility tokens. This brought certainty and confidence to the market, including BBVA Switzerland, driving business growth. In 2021, the Swiss parliament introduced a pioneering legal framework for distributed ledger technologies like blockchain. Switzerland's approach is to regulate the product itself rather than the underlying technology.
Since then, other countries and financial authorities have joined this regulatory movement. In June 2023, after years of discussion, the European Union implemented the Markets in Cryptoassets Act (MiCA) to regulate the issuance and provision of services associated with cryptoassets and stablecoins. This regulatory framework in the EU is expected to have a similarly positive effect on the cryptocurrency industry.
4. Bitcoin and exchange-traded funds
Earlier this year, the U.S. Securities and Exchange Commission, U.S., (SEC) approved Bitcoin exchange-traded funds (BTC ETFs). Through these investment funds, investors can gain exposure to securities related to this cryptocurrency without needing to buy or sell it directly.
Interest in this new Bitcoin-linked investment product has been exceptionally high since early 2024. According to data from Farside Investors, BTC ETFs drew more than $11 billion in investments during their first two months of operation, and over $18 billion by September 2024. This launch has been the most successful in history and has confirmed that the U.S. U.S., regulatory body, supports Bitcoin investments, even permitting them in pension funds. While ETFs have been listed in Europe for years, they have never been allowed in pension funds there.
5. Real-world asset tokenization
According to a survey by Ripple, nearly three out of four financial leaders worldwide believe that asset tokenization will become a standard practice in their businesses within the next three years. This process involves bringing any type of asset onto a blockchain, enabling it to be digitized and divided into smaller units called tokens.
Moving real-world assets to blockchain to make higher-value assets accessible to a broader audience is becoming increasingly common in sectors like real estate, marking a trend to watch in the coming years. One of the most prevalent tokenization processes continues to be NFTs (non-fungible tokens), which are unique and non-replicable cryptographic assets.
6. Increasing adoption of blockchain in enterprises
7. AI and blockchain
These two technologies are complementary. Artificial intelligence (AI) can enhance the speed of business networks that operate on blockchain while also boosting security. Example: AI can assist in more accurately diagnosing ailments, while blockchain ensures that medical data is protected, allowing it to be used and shared securely between medical professionals and patients. Moreover, artificial intelligence can help identify transaction patterns, enhancing the effectiveness of surveillance.
In summary, blockchain technology will continue to expand its horizons and revolutionize how we understand various types of businesses beyond just Bitcoin.
