Blockchain provides great efficiency, which is the main reason it will remain majorly prevalent in the coming decade. In the last three to four years, blockchain adoption has grown tremendously and it seems like every industry is exploring a variety of use cases for the technology.
There are many aspects of blockchain ranging from business, technical, to much more. However, as the industry continues to explode, it becomes quite challenging to get it right. It is advisable to divide the blockchain topic into two main buckets to understand the development of the ecosystem and the primary benefits and innovations it offers.
One of them is cryptocurrency, which covers other sectors including financial services, insurance, and capital markets like deals through private equity and venture capital. Then we turn to the enterprise world that is about how to apply blockchain as a technology in various industries.
In 2021, the “Time for Trust” report was published covering the top use cases for blockchain technology. They include identity, customer engagement, provenance, contracts and dispute resolution, and payments and financial instruments. These use cases present considerable effects on the GDP of a nation and the global economy.
The top use case is provenance or traceability. In the future, with the current decentralized technological evolution and revolution, you have to understand and give full transparency to your clients. For instance, in case you are buying medicine for cancer, which is quite expensive, you will have to determine its authenticity.
That is where a technological solution benefits considerably from blockchain technology. It is the same case with buying haute couture expensive clothes, cars, and other items. These consumers who pay lots of money need to be sure that they are buying authentic items. Hence, all these supply chains must constitute a killer use case for blockchain technology, mostly in the coming decade.
The second use case comes in the field of peer-to-peer trading. But many wonder, how does P2P trading make some sense within the supply chain? It comes around the logistics space. For instance, a firm might want to send some luggage from Australia to Amsterdam. It has to involve a transport company in case the items fill a container.
Transport companies move the containers onto a ship which then transports the items to their destination. Notably, other transport service providers on the other side do the same. Once the luggage/container reaches its destination, the transporters offload the items and ensure that they are shipped successfully to the importer.
But, what if there is a platform where you can readily see the number of ships that are traveling to your destination in the next hour or day? And in case there is a space available, you can directly place the container that you wish to ship by yourself, hence eliminating the middleman. That is what the future seems to be with the introduction of such kind of decentralized technology.
The third and final use case in this group is document sharing. How is it possible to store all bills of lading, letters of credit, and certificates in a digitized manner? Today, it is possible to do that with a cloud solution. However, it becomes quite easy to hack a PDF.
There have been incidents where transport firms have encountered millions and billions of dollars worth of fraud, compelling them to stick with paper documents since then they know that their paper is exact proof, and they hold something tangible in their hands.
However, with blockchain, it is possible to add a timestamp and fully track how a document is being generated, where it is originating from, who has opened it, who has edited it, and who has changed it. You can entirely track that, and that is also quite a lot of time. There have been many business cases already.
For instance, in case you just put a bill of landing, just one document is saved on the blockchain. It also saves a hundred dollars per container. Thus, you can multiply that by the number of containers that are shipped per day, and that is already a business case worth billions. There is a massive potential in this use case. These three buckets exist in the supply chain.
A Mixed Feeling about Blockchain
But now the question comes, what is the status quo for now? This topic brings up some mixed feelings, first since blockchain technology itself is super complex; it is not like the internet of things. With IoT, it is:
“Okay, this is my device, and this is now a digital version of it. This is what IoT does.”
But now the question comes; what does blockchain do? That is the technology that exists behind the curtain. That is why most people are having a challenging time understanding what it is all about- understanding that it is something like the internet protocol.
You never have to go into detail about what HTTP is doing and how it works, you only have to take your site and then do whatever you want to do with it. That is the same thing that happens in the blockchain world. Eventually, it becomes the real topic.
The second thing worth noting is the lack of awareness and understanding of blockchain, which comprises five different aspects, namely distribution, immutability, decentralization, encryption, and tokenization. These five aspects, together with the encryption, immutability, and distribution provided by blockchain technology have been well established.
What various firms now need is to make a huge jump toward tokenization and decentralization. It is important for businesses to understand the nascent tokenization model and how they can incorporate it into their current business model. Furthermore, firms have to understand the use of tokens whether nonfungible, fungible, or security tokens.
The only recommendation to businesses is to have more and in-depth education on this topic, to get into the details of how it relates to their business and what type of problems it solves; instead of just studying the technology on the surface.
What Comes In The Next Year And The Future?
The first thing to consider is the topic of interoperability. This space in the past five years has exploded massively. If you consider how the internet has developed, there were VPNs in the 1990s and then the bubble boom which made the internet quite popular. Currently, some of the businesses are still using VPNs while others are using the internet and nobody sees the difference.
That is how we see the private and public blockchains working together. Thus, there is no debate: both of these blockchains will prevail eventually once the space reaches maturity. That interoperability topic is dominating the market. However, a huge amount of work has to be done. That is what firms and solutions will be coming up within the coming five years.
The second topic that comes in this category is about how we get to integrate with other technologies since blockchain is just a back-end technology. By description, back-end technology is the type of technology that operates behind the curtain. That makes it quite important.
Simultaneously, it is super strategic since it infuses many firms and sectors, but it is still a technology that is a backbone. Also, you need to know that it is not important since when you have it you get all solutions to the problems that affect the operation of your company.
Companies must know how to integrate the technology correctly into their systems to enjoy what it has to offer as a form of digital transformation. What we have to do is to examine how the new technologies will integrate with the existing landscape. That is a major topic of consideration.
Without the technology, nothing might work correctly in the future. Thus, it is a topic that needs to be addressed thoroughly.
The third futuristic topic surrounds governance: supply chain governance and blockchain governance. This issue addresses the question of how users manage the supply chain stakeholders involved in the ecosystem. That goes hand in hand and it is something that experts say needs to be developed.
Business model is the fourth topic of discussion since eventually, businesses forget that developers need to make money out of blockchain and also save money. At times, blockchain solutions do not fly since they cannot do it. How is it possible to develop paperless business models? And how does it generate revenue out of this technology?
If developers are making revenue, how do they share that money with their different partners? Those are the major topics that will be critical in the development of the blockchain ecosystem in the coming five years and will boost the technology to help it reach the next level.
The technology will, step by step, reach a level of mass adoption, and then incorporate it as a smart strategy to enable companies to be the front-runners in the digital economy and the future of the business world.