Blockchain adoption has expanded tremendously in the last three to four years, and every industry is exploring different use cases for this technology. There are multiple aspects of blockchain – from business to technical, among others – but with how the industry grows, it’s really hard to understand.
It is best to divide the blockchain topic into two broad categories to understand the development of the ecosystem and the main benefits and innovations it provides. One is a cryptocurrency, covering sectors such as financial services, insurance, and capital markets, including operations through private equity and venture capital. Then there is the enterprise world, which is about applying blockchain as a technology in different sectors.
Last year https://essayswriter.org/ published our “Time for Trust” report, which covers the top five use cases for blockchain technology: provenance, payments and financial instruments, identity, contracts, dispute resolution, and customer engagement. These use cases will significantly impact a country’s GDP and the global economy.
Traceability or provenance
In the future, with the decentralized technological revolution and evolution, it will be necessary to understand and provide full transparency to consumers. For example, if you buy cancer drugs with a very high price tag, you will need to know that they are authentic. And this is where we have a technological solution provided by blockchain technology. It’s the same as buying expensive haute couture clothing, cars, etc. Consumers who pay a lot of money need to be sure they are buying authentic items, so those supply chains could be a critical use case for blockchain, especially in the next decade.
Related to peer-to-peer trading
But how are P2P trading and supply chain related? It has to do with the logistics market. Let’s say, for example, a company wants to ship a container from Amsterdam to Australia. It has to approach a shipping company, which will transfer a container to a ship, among other processes. There are also transport providers on the other side of the road, and they do the same thing. They unload the container and take care of shipping it to the importer. But what if there was a marketplace or platform where you could see how many ships would travel in the next day or hour? And if there is a space available, you could directly place yourself in the container you want to ship, which means you don’t need a middleman. That’s what the future looks like with this kind of decentralized technology.
Revolves around document exchange
How can you digitally store all the bills of lading, letters of credit, and certificates? Currently, it can be done with a cloud solution, but it’s easy to hack a PDF. And there have been cases where shipping companies have faced fraud in the millions and even billions of dollars, forcing them to stick with paper documents because then they know that paper is accurate proof. They have something tangible in their hands. But with blockchain, you can add a timestamp and completely track how a document is being generated, where it came from, who opened it, who edited it, and who altered it.
You can do complete tracking, which is something that is also quite time-consuming. There have already been many such business cases. For example, if you only put one shipping receipt, you store only one document on the blockchain. And you also save a hundred dollars per container. So you can multiply that by the number of containers shipped per day, and that business case is worth billions. There’s huge potential in this use case. So it’s possible to look at these three aspects related to the supply chain.
Mixed feelings about blockchain
But now the question is, what is the current state of affairs? There’s a mixed feeling on this topic. First, because blockchain technology is extremely complex, it is not comparable to the internet of things. With IoT, “Well, this is my device, which is now a digital version. This is what IoT does.”
But what does blockchain do? It’s behind-the-scenes technology. That’s why people have a hard time understanding it: understanding that it’s kind of like the Internet protocol. You don’t really go into detail about what HTTP does and how it works; you just open the web page and do whatever you want. This is what we’re talking about. This is really the issue.
The second issue is a lack of information and comprehension of blockchain, which has five components: immutability, encryption, distribution, tokenization, and decentralization.
Those are the five aspects, and blockchain technology’s immutability, encryption, and distribution are well established. Enterprises need to make a big leap toward decentralization and tokenization. It is critical that companies understand the tokenization model and how they can incorporate it into their current business model. In addition, companies need to really understand the use of fungible, non-fungible, and security tokens.
The only recommendation to companies is to educate themselves more and more deeply on this topic and get into the details of how it relates to their business and what kind of problems it solves rather than just superficially exploring the technology.
What’s ahead, and what’s next year?
Most important theme is interoperability. The landscape in the last five years has literally exploded. If you look at how the Internet has evolved, we had VPNs in the 1990s, then the Internet blossomed and became popular. Today, some businesses still use VPNs, while others use the internet, and the difference is negligible. That is how we see private, and public blockchains interacting So there is no debate: public blockchains will triumph over private blockchains. And this issue of interoperability is really in the market, but there’s a tremendous amount of work to be done. This is what companies and solutions will be coming up with over the next five years.
How can we integrate with other technologies because blockchain is a back-end or behind-the-scenes technology? That’s why it’s very important. At the same time, it’s super strategic because it involves multiple companies, but it’s still a backbone technology or core segment. And it doesn’t mean that because you have blockchain, it will solve everything in your company. So I think companies have to understand how to integrate it as a form of digital transformation. We have to look at how these technologies will integrate with the existing environment. This is a very, very important issue. Without it, nothing will work. It is undeniably a problem that must be addressed.
And about governance: blockchain governance but also supply chain governance. This addresses the question of how we manage the supply chain stakeholders involved in the ecosystem. This topic also goes hand in hand and is something we must develop.
The last topic revolves around the business model because, ultimately, companies forget that you have to make money from it and also save money. Sometimes blockchain solutions don’t fly because they’re not able to do that. How do we enable paperless business models? And how do we get revenue from it? How do we share it with our different partners if we get revenue?
I see these as the main issues that will be key in developing the blockchain ecosystem in the next five years and will help it reach the next level. This technology will gradually gain broad popularity, and its implementation is a wise strategy that will allow organizations to remain at the forefront of the digital economy and the future of business.