April 27, 2020 5 min read Opinions expressed by Entrepreneur contributors are their own. In March 2020, IHS Markit Chief Economist Joel Prakken&n
April 27, 2020 5 min read
Opinions expressed by Entrepreneur contributors are their own.
In March 2020, IHS Markit Chief Economist Joel Prakken announced a popular consensus among economists that the financial stress stemming from the coronavirus epidemic will inevitably weaken 2020 economic growth. In just the past four weeks, over $4 trillion in household wealth has been wiped out in the public markets in the United States alone.
As retail investors and institutions brace for further volatility, there has been a consistent rise in the number of people looking to have more control over the situation. This includes personal finances, how their time is utilized, how to best assist people in need.
And in the midst of all this, there’s a trend of individuals and organizations disconnecting from centralized systems that may be doing more harm than good.
In a nutshell, decentralization can be defined as the transfer of authority from central to local government, organizations and even people. The Harvard Business Review predicts that the current economic situation around the virus will “hasten the progress to more decentralized global value chains.” As this expected macro-trend continues to progress, the impact on technology and entrepreneurship will provide many new opportunities for disruption. Below are five anticipated decentralization trends in 2020.
1. More emphasis on privacy and security
The market for data protection is expected to reach over $120 billion by 2023 and could increase even more as high-profile hacks continue to happen. Just last month, entertainment MGM was hacked and lost 10 million customer records as a result.
As data hacks continue to happen at a rapid rate, there will be a greater demand for decentralized solutions that allow both engineers and everyday people to secure their data and protect their privacy.
2. Decentralized cloud storage
Cloud storage options have made extreme security enhancements over the past decade, with various levels of security in place to protect data both at the user and company levels. These include two-factor authentication, end to end encryption and more. Despite this, data is typically still stored on remote servers that could provide vulnerabilities.
Thankfully, new decentralized cloud options are providing the opportunity to mask and store data in ways never seen before. One challenge in this space will be educating consumers to build trust when dealing with truly private cloud options.
Expect to see more rising technologies being applied to the data storage industry, including industries holding sensitive medical or financial records.
3. Decentralized marketing and advertising solutions
Each year, over $1.3 trillion is spent on marketing and advertising globally. Despite these figures, both industries are plagued with inefficiencies. For example, the lack of transparency and reliance on massive platforms like Google and Facebook have created a situation where digital spend is often opaque and hard to track, despite sophisticated tracking tools. Recently, Facebook was fined $40 million for overstating their advertising reach to paying ad buyers.
As decentralization trends grow, the advertising and marketing industry will be the beneficiaries of new technologies that give more power back to creators, while reducing common fees. Companies like SaTT are helping solve this issue by creating a transparent process that eliminates intermediaries by relying on technology. Thanks to the use of smart contracts and oracles, SaTT enables automatic payments to influencers based on transparent and accurate results.
Innovation in this segment will likely come from startups as large companies with advertising interests realize their market share is at stake and become hesitant to contribute to the new IP in marketing and advertising decentralization.
4. Technology and software decentralization
Technology has continued to evolve to be more flexible and user-friendly. SaaS business models, which represent a $150 billion market, are built off of fair pricing models that scale only with more usage. In the world of decentralization, large enterprises such as IBM and Goldman Sachs are exploring blockchain technology to help improve their current systems and build new business streams.
Lior Yaffe, co-founder and director of blockchain-as-a-service software company Jelurida, expects the big trend in the space to be permissioned applications on a public blockchain. Yaffe explains, “Existing blockchain-based business solutions face issues such as lack of token incentivization or regulation. Therefore, I expect a hybrid multi-chain model where a parent, public permissionless chain serves as a decentralization layer for multiple child chains which in turn can be permissioned for a specific application domain.”
5. Reformed financial services
With the recent coronavirus epidemic, global markets have tumbled and have wiped out billions of dollars from both retail and institutional investors. While conventional investment wisdom relies on playing the long game with market cycles, more and more retail investors have expressed interest in gaining more control over their portfolios.
Robo-advisors have gained massive popularity due to their DIY flexibility, but many still lack the ability to invest in emerging asset classes like digital assets. As decentralization trends in the market grow, expect to see more innovation. For example, iTrustCapital allows people to invest gold and digital assets into a compliant, tax-advantaged and low-cost IRA. For the first time, investors can get exposure to new asset classes in a traditional retirement account.
This article is from Entrepreneur.com