- Since last year, blockchain technology is being employed across the world in a variety of industries to make life easier, safer, and more convenient for businesses and individuals
- This year the technology would widely be used for more transparent supply chains, central bank money, NFTs, and BaaS
Blockchain first entered the mainstream in 2008 when a whitepaper was released by developers, ostensibly working under the pseudonym Satoshi Nakamoto, established the model. It expanded from there and, in 2009, blockchain was turned into a public ledger for the first time for transactions relating to cryptocurrency. In 2021, blockchain as a concept is expected to be more widely used in industries beyond cryptocurrency all over the world for a variety of purposes.
Both before and since the pandemic, organizations and individuals have come around to the many uses of blockchain beyond cryptocurrency, from making transactions online easier and safer to making transportation of goods more streamlined, and even making the food we eat safer for us. In a nutshell, blockchain is valuable for any sort of transaction where values and timestamps need to be securely recorded, so it is of particular interest to financial services companies. However, it’s also potentially useful for any processes that involves tracking the movement of data between parties, so it has applications across trading, supply chain, logistics, and provenance.
Supply chain optimization
There are many hurdles within the supply chain industry, especially in the area of goods flow and logistics. These sectors are known for their paper-heavy processes and tussle with many challenges in day-to-day operations. Optimized supply chains are not just the cost-optimized shipment of goods or raw materials from destination A to B. With digitization and the desire for transparency across the entire supply chain, a uniform system is needed that can map each good as a digital twin and store it permanently in a trustworthy, distributed database.
That said, long distances, numerous parties, large volumes of documents and data, and mutual trust can be optimally mapped digitally with blockchains. As a distributed ledger, the technology is ideally suited to recording and storing large volumes of data and granting access to every single detail to a predefined target group. All transactions that take place are stored on the central ledger, which is not stored centrally anywhere. The integration of distributed ledger technology in supply chain management is one of the top blockchain trends this year, according to experts, because on the one hand, the consumer’s need for transparency is growing and on the other hand, the barrier-free supply of goods across all borders ensures greater security and economic stability.
Introduction of Central Bank Digital Currencies (CBDCs)
Digital central bank money was already a big topic in 2020 and while China wants to play a pioneering role worldwide in central bank money, Europe and the UK have so far taken a rather cautious approach to the issue. To date, China already has a digital e-yuán controlled centrally by the government. The technology best suited to present CBDC is obviously distributed ledger technology. While the central bank would control the issuance of CBDC, the network would jointly validate transactions. This allows transactions to be processed even when individual operators or nodes are down, including the central bank. The blockchain would record all transactions immutably and ensure the integrity and robustness of the network.
The as-a-service model of distribution has been key to the rapid adoption of technology trends, including cloud computing, the internet of things (IoT), and artificial intelligence (AI). Blockchain is likely to be next, with companies including Amazon, IBM, and Microsoft all offering or developing tools and platforms enabling businesses to leverage the technology without making up-front investments in infrastructure and skills.
BaaS – a cloud-based service that allows users to develop their own digital products on the blockchain – saw a huge significance in 2020 and is being used by many startups and enterprises. Digital products can be smart contracts, dApps (decentralized applications), or other services that can work without setup requirements of the blockchain-based infrastructure.
The rise of NFTs, AKA Non-Fungible Tokens
NFTs are the current trending topic at the moment. Non-fungible tokens are essentially digital assets (pictures, music, source code, contracts) that reside on a blockchain and therefore can be said to have value due to their uniqueness. Known as “digital collectibles” to some, they can’t simply be duplicated and copied, bringing the economic principle of scarcity into play for the first time in the domain of digital assets. Think about it this way: if bitcoin tokens are like blockchain-verified dollar bills, then NFTs are like blockchain-verified artworks.
In the short term, NFTs are creating new ways for some industrious people to make a lot of money. An example would be, the musician Grimes who sold artwork as an NFT for US$6.6 million, and the NBA which has generated US$230 million in sales of baseball video clips across its Top Shot marketplace. Even Twitter’s Jack Dorsey sold his first tweet for US$2.9 million. To date, most NFTs are attached to collectible items like digital art and virtual goods in video games, but they could expand to include more digital assets. Real estate, event ticketing, brand licensing, and even tokens of real-world assets are also all possible use cases being explored.