Blockchain emerging technologies continue to be subject to significant hype. In particular, the metaverse, Web3 and cryptocurrency are three key innovations that have promise to deliver unique business benefits, but all are in varying stages of maturity.
We sat down with Avivah Litan, Distinguished VP Analyst at Gartner, to discuss the recently published Gartner Hype Cycle for Blockchain and Web3, 2022 and where each of these innovations lie on the curve.
Q: Overall, how quickly is enterprise adoption of blockchain technology progressing?
A: Blockchain technologies have matured enough to support many business applications, but we still have not witnessed ‘killer apps’ that have caught on in the enterprise. There is a need for innovations that enable better user experiences. Generally, enterprise adoption of blockchain is moving slower than consumer adoption, although this is historically the path that emerging technologies take.
Some innovations, such as blockchain wallets and smart contracts, are expected to reach maturity in less than five years (see Figure 1). However, other applications – for example, decentralized identity and non-fungible tokens (NFTs) – face technical, regulatory and interoperability challenges that are hindering business adoption. Overall, Gartner expects that the majority of blockchain innovations will reach maturity within two to 10 years.
Figure 1: Hype Cycle for Blockchain and Web3, 2022
Q: How long will it take for the metaverse to become reality, and what should enterprises do to prepare?
A: First, it is important to clarify how Gartner defines a metaverse: a collective virtual 3D shared space, created by the convergence of virtually enhanced physical and digital reality. A metaverse is persistent, providing enhanced immersive experiences. A complete metaverse will be device-independent, and will not be owned by a single vendor. It will have a virtual economy of itself, enabled by digital currencies and NFTs.
Metaverse will enable enterprises to expand and enhance their businesses in unprecedented ways. However, today’s adoption of metaverse technologies is nascent and fragmented. Gartner expects that it will take at least a decade before metaverse reaches mainstream adoption – the “Plateau of Productivity” on the Hype Cycle.
This is a time of learning and preparing for a metaverse with limited implementation. Enterprises can explore opportunities where metaverse technologies could optimize digital business or create new products and services, but it is still too early to determine which metaverse investments will be viable in the long term.
Q: What exactly is Web3 and how does it relate to the metaverse?
A: Web3 is a new stack of technologies built on blockchain protocols that support the development of decentralized web applications and enable users to control their own identity, content, and data. These technologies include privacy-preserving protocols, decentralized governance, and decentralized application platforms. These innovations will eventually support a decentralized web that will integrate with the current Web 2.0 we use every day.
Web3 enables new business and social models. For example, smart contracts run applications that eliminate intermediaries and administrative overhead of controlling centralized entities. Tokens, including cryptocurrencies, power the business models and economics of Web3, and are built into blockchain protocols. Web3 supports new business opportunities, such as the programmability and monetization of creator-owned and managed content in the form of NFTs.
The metaverse will require many features that Web3 enables. For example, the metaverse can benefit from Web3’s tokenization to store and exchange value in a purely virtual context. The metaverse and Web3 won’t merge into one entity, but they are complementary visions of a future internet.
Q: Will cryptocurrency reach widespread adoption? With increased adoption, what potential value do cryptocurrencies offer for businesses and consumers?
A: After years of fragmented adoption, cryptocurrencies are gaining increased attention from enterprises, particularly in the financial services space. Gartner has placed cryptocurrencies on the Slope of Enlightenment in this year’s Hype Cycle, expected to reach mainstream adoption in less than two years. The potential benefits could be transformational.
Cryptocurrencies create opportunities for different ways of doing business and new kinds of products and services. Without relying on a central government authority, cryptocurrencies generate new ways of transacting financial value across a shared network. They also provide mechanisms to accelerate and fund business transactions and thereby enable growth.
The future use of cryptocurrencies will likely depend on how well they can meet the needs of users compared with other electronic money transfer systems, such as credit card payments or existing electronic bank transfer systems. It will also depend on their ability to improve financial management, their safety and reliability, and existence within a compliant regulatory framework. The extent to which cryptocurrencies are adopted more broadly will depend on costs, incentives and convenience for users, including impacts from regulation. For any cryptocurrency payment or financial system to succeed, it needs to be secure, convenient, accessible and stable for both consumers and businesses. It must noticeably improve upon current financial infrastructure and processes.