While the market sentiment may be bearish, these times become an opportunity for builders and innovators to focus on how to drive meaningful progress with blockchain technology.
Although NFTs amassed USD 14.1bn over the last year, there remains great untapped utility for tokenization beyond a JPEG or spreading meme culture. An example is tokenizing real estate to enable millennials to access the exclusive market, or tokenizing carbon credits in a move to combat climate change and create meaningful social and environmental impact.
This is just the tip of the iceberg, as there are various other applications of blockchain technology — while not all of them are new, we are seeing more progression of the use cases in collaboration with regulatory and government bodies. However, further education and simplification are essential to bringing about a perception shift to maximize their effectiveness, real-world utility, and impact as they pick up more traction.
So beyond the speculation and hype, where exactly are real-world use cases of blockchain being developed? From disrupting real estate to reducing ecological footprints of trade through 3D printing, here are some of the key examples of how blockchain for enterprise is faring as Web3 becomes a reality of our future.
NDAs, land rights, tenancy agreements, and other legal documents are often shared in print form to ensure confidentiality and immutability. As tokenization allows any asset to become accessible and tradeable on the blockchain, this makes the recording of data far more secure than existing systems. Through blockchain notarization, businesses can utilize tokenization while ensuring stronger digital security and safe transferring of data.
A digital fingerprint or hash of data can be created and stored on the blockchain for immutable proof and verification with an unforgeable timestamp. This offers rights or value in a secure and validatable way without requiring an intermediary, be it in the form of digital claims, certificates, or proof of ownership.
Individuals and firms lacking financial resources are now less disadvantaged when preserving the originality of their work, like when creatives may simply want control over their own work, rather than a studio. This transforms the management of copyright and IPs, as fees for establishing proof of ownership in long, drawn-out cases can be prohibitively expensive.
While experimenting with the blockchain ledger as proof was done as early as 2019, various countries and regions have different policies governing digital records on being legally binding. Thankfully, adoption is gaining traction as more innovative ways to convert the complex underlying technology into easy-to-use apps provide a seamless user experience.
Nations such as China have established new policies embracing blockchain to help legal courts deal with piracy and copyright infringement cases. This is a glimpse into a future where accessibility and affordability can be improved, but blockchain companies need to work together with governments and regulatory bodies to find the most effective ways to implement the technology.
With rising inflation rates and cost of living, countries like Hong Kong, the United Kingdom, and Switzerland have emerged as some of the most expensive places in the world to acquire real estate.
As the sale and purchase of property often take a long time, this illiquidity traditionally limits it to an investment option for the wealthy, and registration and intermediary documentation processes further lengthen and complicate things.
Tokenization speeds up the process, removing geographical boundaries and providing cost savings, as proof of ownership via digital tokens replaces traditional intermediary processes, and timestamps for transfers provide a time record that is immutable.
Investors can also choose to buy into a portion of a property with the digital tokens, instead of having to purchase the entire property. Cash-positive properties can also tokenize and sell their future revenue, allowing investors to have a share of the relatively safe revenue generated from rental or price appreciation in property value.
While all this has the potential to revolutionize real estate, there are many roadblocks before it can function at the industry-grade level. There needs to be more education to improve understanding of blockchain to demystify and resolve the lack of understanding of the technology.
Currently, nations either view tokens as nothing more than code with no underlying value and insufficient legal basis for ownership, or are overly strict in regulating them as securities. These extremes need to change as they result either in security concerns, or make the technology inaccessible or unfeasibly expensive due to red tape and taxation.
While it may seem paradoxical, some elements of centralization will help to mitigate the potential abuse of blockchain technology and larger-scale applications, allowing the necessary stress tests for scalability and troubleshooting for mainstream adoption and legitimacy.
Since the onset of the pandemic, production and transportation facilities have faced even more difficulties and disruptions due to natural disasters and congestion.
In 2021 alone, there were 10 such disruptions, with one of the most prominent being the blockage of the Suez Canal. Accounting for 12% of global trade alone, any similar disruptions have amplified consequences, with the backlog lasting for months after.
Instead of having assets stuck in different locations, having them tokenized into digital certificates with proof of ownership allows companies to trade these assets for others closer and more accessible to the target supply location — with the development of digital barter economies.
In essence, this helps meet logistical needs and reduce delays. While the assets do not move in physical geography, the ownership can be traded – and can be almost thought of as teleportation via the blockchain and a “location swap”, which can aid greatly in mitigating supply chain blockage.
The process is also mutually beneficial, as the company storing the tokenized assets onsite can profit on otherwise idle goods, while the company seeking to originally transfer the assets mitigates losses from transport delays and failure to meet production needs.
While still relatively experimental, projections state the total tokenized asset market is worth under USD 20bn, while the total size of the digital asset market is up to USD 350bn, highlighting the tremendous room for growth. However, for this to be achieved, more efforts between companies need to be done to develop the necessary infrastructure, and awareness of the technology.
More organizations like the Interreg Europe initiative also need to be established to build a network of trust among government, citizens, corporate and industry bodies in blockchain technology and applications.
The perception of the technology needs to change from one harboring fear of the unknown to an appreciation of its utility, but also an understanding of the dangers. As the global economy recovers, more efforts need to be placed into blockchain education for companies and users to properly recognize the benefits of tokenizing assets for a global market – and also in building supporting infrastructure and regulation for it to be accessible. Only then will enterprise blockchain be able to truly maximize its potential.