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Blockchain for business: Beyond crypto and bitcoin

The 2022 NFL Super Bowl LVI represented the peak of popularity, or at least widespread awareness, for blockchain technology which is at the heart of nearly all cryptocurrencies

Published: Sep 5, 2022 11:00:19 AM IST
Updated: Sep 5, 2022 11:40:15 AM IST

Blockchain for business: Beyond crypto and bitcoinMatt Damon encouraged crypto investment in a commercial for Crypto.com that has been seen nearly 18 million times on YouTube.

The 2022 NFL Super Bowl LVI represented the peak of popularity, or at least widespread awareness, for blockchain technology which is at the heart of nearly all cryptocurrencies. With the catchphrase “Fortune favors the brave,” Matt Damon encouraged crypto investment in a commercial for Crypto.com that has been seen nearly 18 million times on YouTube.

But with cryptocurrency reaching 16-month lows just four months after the big game, investors watched hundreds of billions of dollars disappear in a sell-off. And the celebrities who had put their names and faces behind crypto exchanges, including Damon, Reese Witherspoon, Gwyneth Paltrow, and LeBron James, started being criticized for hyping virtual currency without highlighting the risks.

Most celebrities associated with crypto declined to comment except Jeff Shafer, ad director for FTX’s Super Bowl commercial starring comedian Larry David. Shafer spoke to the New York Times and shared: “Unfortunately, I don’t think we’d have anything to add as we have no idea how cryptocurrency works (even after having it explained to us repeatedly). We just set out to make a funny commercial.”

Also read: Web 3.0: The next big enabler to increase India's GDP growth

Crypto’s instability may underscore a basic problem with celebrity marketing. Perhaps more importantly, it also reveals a widespread lack of understanding of crypto and blockchain, the technology that enables its existence. But those business leaders who understand the technology still expect the blockchain to have a bright future.

Is this a natural rocky period for blockchain technology?

Although the implosion of the crypto market has shaken investors and caught the attention of regulators, where some see a setback, others see signs of a maturing industry.  
Some experts believe the shakeup will reveal viable blockchain projects versus those that have been sustained on marketing hype.

Others compare what's happening in crypto and blockchain to the tech industry in 1999-2000. In 2000, at the height of the tech stock boom, Nasdaq’s initial public offerings (IPOs) raised $54 billion. Between 1995 and 2001, 439 dot-com businesses went public. But in 2002, the dot-com speculation ended. The Nasdaq, which rose five-fold between 1995 and 2000, saw an almost 77% drop, resulting in a loss of billions of dollars and the demise of many startups.

Triggered by the rise and fall of technology stocks, the tech bubble burst, and the overvaluation of tech stocks was massively corrected; however, tech-driven businesses certainly didn’t disappear.  

The growth of blockchain technologies has also been fast. The blockchain or public ledger for Bitcoin, the first cryptocurrency, began in 2009. Since then, the field has mushroomed to more than 10,000 cryptocurrencies.

Mark Cuban, who made his first fortune in tech during the 1990s, compares today’s climate to the dot-com boom in the 2000s. He explained in a tweet: “After a recent surge of “exciting” blockchain-based innovations in the crypto space—including non-fungible tokens (NFTs), decentralized finance (DeFi), and play-to-earn applications—there’s been an “imitation phase” where new blockchains copy popular, existing applications and bring a variation of the same thing to market.”

Also read: Crypto crash: A wake-up call

Cuban told Fortune magazine that he thinks we’ll see a “consolidation phase next,” where copycat blockchains will die out.

Blockchain potential: Beyond currency

While Bitcoin, Ethereum, and other cryptocurrencies or altcoins grew intensely popular among the general financial and investment worlds, blockchain technology is still full of potential for companies across many industries. Blockchain technology may ultimately be the most useful innovation to emerge from the cryptocurrency boom.

Blockchain technology, the system for recording transactions across a global network of computers, is sometimes described as a shared digital ledger. Enticed by the promise of safer, more efficient, unregulated transactions, the financial services industry led the way in leveraging blockchain and other Distributed Ledger Technology (DLT). But they are not alone.

As the potential emerges for blockchain and other DLTs to bolster the efficiency of business operations and create new ways of delivering value, many forward-thinking companies in other industries have started integrating these technologies into existing infrastructures.

Also read: Cryptocurrency to NFTs: Should you put money into digital assets?

In fact, the vast majority of participants in Deloitte’s 2021 Global Blockchain Survey (80%) say their industries are set to see new revenue streams from blockchain, digital assets, and/or cryptocurrency solutions.

Blockchain technology: How does it work?

Business runs on information. The faster it’s received and the more accurate it is, the better. That’s the power of blockchain. Industry leaders use blockchain to drive greater transparency and veracity across the digital information ecosystems, to remove friction in business activities and interactions, build trust, and unlock new opportunities for value.  

  1. Definition: Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. All network participants have access to the distributed ledger and its immutable (or unchangeable) record of transactions. No participant can change or tamper with a transaction after it’s been recorded in the shared ledger. To speed transactions, a set of rules or programs — called a smart contract — is stored on the blockchain and executed automatically.  
  2. Assets: An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network.
  3. Data block: As each transaction occurs, it is recorded as a “block” of data. Those transactions show the movement of an asset. The data block can record the information of your choice: who, what, when, where, how much, and even the condition — such as the temperature of a food shipment.
  4. Blockchain: Each block is connected to the ones before and after it. These blocks form a chain of data as an asset moves from place to place or ownership changes hands. The blocks link securely together to prevent any block from being altered or a block being inserted between two existing blocks.
  5. Irreversible chain: Each additional block strengthens the verification of the previous block and hence the entire blockchain. This removes the possibility of tampering and builds a ledger of transactions you and other network members can trust.
  6. Public: A public blockchain is one that anyone can join and participate in, such as Bitcoin.
  7. Private: A private blockchain network, like a public blockchain network, is a decentralized peer-to-peer network. However, one organization governs the network, controlling who is allowed to participate.
  8. Hyperledger: A hyperledger is a global enterprise blockchain project that offers the necessary framework, standards, guidelines, and tools to build open-source blockchains and related applications across various industries.

Business opportunities and applications

Financial services have been leading the way in leveraging blockchain, but the benefits extend far beyond. Benefits include increased transparency, accurate tracking, a permanent ledger, and cost reduction. Possible uses include energy markets, digital identity, supply chain, and health care.

Examples of companies using blockchain to make the Internet of Things (IoT) safer and smarter include:

  1. HYPR thwarts cybersecurity risks in IoT devices with its decentralized credential solutions. By taking passwords off a centralized server, and using biometric and password-free solutions, HYPR makes IoT devices virtually unhackable.
  2. Insurwave, a joint project between consulting firm EY and blockchain company Guardtime, delivers a blockchain platform aimed at marine insurance.
  3. BurstIQ, a Denver-based startup, was the first health-related blockchain company to successfully develop and commercialize a blockchain-based big data platform that enables large, complex data to be stored, managed, shared, analyzed, and monetized on a secure, HIPAA-compliant blockchain.
  4. Daimler has partnered with Singapore-based Ocean Protocol, a decentralized data exchange, to explore how blockchain can help share supply chain data among manufacturing hubs and partners.
  5. Amsterdam-based construction company HerenBouw used a blockchain to document transactions over the course of a large development project in the city, creating a more accurate, auditable record of the orders placed and paid out.

What’s next for blockchain?

Mark Cuban may lead the charge, but many investors and global business leaders remain bullish on blockchains. Cuban has stated that the biggest opportunity for crypto companies and blockchains is using Smart Contracts, the collections of code that execute a set of instructions on the blockchain. In a tweet in May 2020, Cuban said:  

“What we have not seen is the use of Smart Contracts to improve business productivity and profitability. That will have to be the next driver. When business can use Smart Contracts to gain a competitive advantage, they will. The chains that realize this will survive.”

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[This article has been reproduced with permission from Knowledge Network, the online thought leadership platform for Thunderbird School of Global Management https://thunderbird.asu.edu/knowledge-network/]

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