In late July, Gartner unveiled its latest Hype Cycle for Blockchain and Web3 technologies for 2024. This cycle assesses the development stages of emerging technologies, and one key prediction is that technologies such as blockchain wallets, smart contracts, and stablecoins will reach a performance plateau within the next two years.
Key Technological Advances
The report from Gartner underscores significant advancements in several areas, including Tier 2 scaling solutions, decentralized finance (DeFi), non-fungible tokens (NFTs), and cross-chain interoperability. These technologies are heralded as some of the most promising in the blockchain domain.
A Closer Look at the Downward Curve
At first glance, seeing technologies like NFTs and wholesale central bank digital currencies (CBDCs) on the downward curve might seem surprising. Despite negative sentiment around NFTs and wholesale CBDCs, there is considerable excitement around real-asset tokenization (RWA). While much of the blockchain sector, notably the financial aspect, garners attention, Gartner explores tokenization across different industries, mainly for business automation. Within this context, the positioning of tokenization makes sense. Likewise, stablecoins appear on a downward curve despite reaching near-historic market capitalization highs, suggesting broader acceptance. Various new stablecoin initiatives and enhanced legal clarity also support this trend. However, Gartner’s broader outlook considers massive consumer adoption. Stablecoins remain closely linked with cryptocurrencies, which carry negative connotations for many, especially following the collapses of Terra and FTX. This negative sentiment has not significantly changed over the past year.
Web 2.5: Bridging Web3 and Web2
Gartner’s interdisciplinary approach introduces the concept of web 2.5, which blends web3 elements such as NFTs, tokens, or smart contracts within traditional web2 applications. Notable examples include large corporations launching NFTs and web2-style NFT trading platforms. Gartner identifies Franklin Templeton’s OnChain US Government Money Fund as a web 2.5 example. Other instances might include wallets and centralized crypto exchanges. While web2 emphasizes centralized user interface (frontend) usability, web3 represents a backend innovation impacting the product’s core. Currently, many web3 user interfaces range from subpar to poor.
A notable omission in the hype cycle is the wholesale CBDC, possibly because it is not considered part of web3, although other authorized applications are included. Retail CBDCs are present on the curve, despite many projects avoiding direct blockchain use. In contrast, wholesale CBDCs have seen a resurgence and are always based on distributed ledger technology (DLT). The latest BIS CBDC survey indicates that wholesale activity is surpassing retail CBDCs. This shift could significantly impact adoption as some projects aim to expand blockchain applications’ capabilities, including web3, such as Brazil’s DREX.
Transformational Technologies
Gartner also identifies technologies it considers transformational—those set to redefine industry dynamics. Technologies expected to become mainstream within two years include stablecoins, smart contracts, Tier 1 blockchains, blockchain wallets, and consensus mechanisms. Over the next two to five years, tokenization, cryptocurrencies, and blockchain interoperability are anticipated to gain traction. Although considerable progress has been made, the road ahead still presents significant challenges.
My name is Jay Skrantz, and I’ve been a freelance writer for 10 years, concentrating largely on investment brokerage, mutual fund investing, and financial analysis topics. As a reporter, I’ve written extensively for a wide variety of sites and publications like SeekingAlpha, MoneyShow, and MotleyFool. I’ve also done substantial freelance work for a number of financial publications, including MarketWatch, CIO Magazine, and TheStreet.
