From the ‘untraceable’ Bitcoin to non-fungible items, from smart contracts to supply chain management, all these buzzwords leverage some form of blockchain technology. However, in simple terms, blockchain is a decentralised, distributed database where everyone involved has a copy, to promise the authenticity of the data, like we discussed in this blog.
The true value of blockchain lies in both the authenticity and irreversibility, avoiding the administrative process of establishing trust. There are a few industries that may see an even wider use of this technology:
One of blockchain’s application is NFTs (non-fungible tokens), which have become the next big thing in the world of art. With the popularity of digital artworks growing, the need for authentication and the value of owning a ‘first print’ is enormous, as evidenced by the $69million auction price of Beeple’s artwork The First 5000 Days two months ago. NFTs are a fraud-proof tool that assists buyers and sellers to do the easy verification.
There is already an app called Foundation that helps artists mint (or ‘create’ in plain English) their digital artworks as NFTs on the Ethereum blockchain. In the future, the NFTs-enabled art market will continue to grow and potentially expand into more types of art (e.g., the physical masterpiece from Van Gogh).
Akin to what’s happening in the art world, NFTs are also leveraged to monetize some of the greatest moments in sporting history. NBA has started a whole new marketplace called “Top Shot”, where fans or collectors can buy a moment that matters to them. Once purchased, the non-fungible tokenised moment can be interpreted as the intellectual property rights to that moment, and value is generated by creating and replicating more fungible tokens.
To evidence the wide adoption of NFTs in sport, Michael Jordan’s viral video of breaking up a fight in a parking lot is to be sold for more than $348k (live auction is still going on!). I can see this blockchain/NFT technology being used in all kinds of sport, such as the Olympics, Football and so on.
Blockchain technology has a plethora of use cases in the finance industry. The most commonly known one is bitcoin (amongst all other cryptocurrencies) with one bitcoin = £22,000+ at the time of writing, which ultimately led to a booming market of other cryptocurrencies. The underpinning principals of these currencies are common: immutable and secure, private/hard-to-trace, and instant.
The most used blockchain programme “Ethereum” has helped shape the adoption of blockchain in the financial services industry from trading to cross-border payments. Apart from these front-office applications, by removing the need to purchase and maintain central databases in a financial institution, blockchain technology can equally be leveraged in back-office finance operations of the future. The nature of DLT (distributed ledger technology) would ensure integrity and security of the data flow end-end, reducing the costs (and pain) in managing data quality.
Similar to smart contracts in finance, blockchain technology in healthcare aims to reduce as many middlemen as possible, improving the efficiency of the supply chain. Speed and efficiency in the healthcare industry is vital, as evidenced in the roll-out of the COVID19 vaccination. One of the greatest challenges in the race to vaccinate mankind, however, was global coordination and the sharing of information between pharmaceutical firms and their complex global supply chains. Imagine blockchain technology being widely adopted in the supply chain, where data cannot be counterfeited but instead there is instant and secure transfers between different market participants across the globe. Speed to market would certainly be expediated.
Medical record keeping is another potential revolutionary application. If we can house all documents and records in the same place, doctors from anywhere in the world can access the same information for diagnostic intelligence, it would be a game changer for the public health system.
These four industries are only the tip of the iceberg for the future of blockchain. Some say that blockchain could be the key force of the fourth industrial revolution, however, with all the regulatory and environmental considerations, the jury is still out.
Isn’t bitcoin, the cryptocurrency in which the payment was made, supposed to be untraceable? Actually, no. Bitcoin is anonymous, but it’s far from private—an important but often overlooked distinction. The Justice Department recovered more than $1 billion in bitcoin in various investigations during 2020 alone.