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5 HUGE benefits of blockchain technology.. and they are coming your way.
Blockchain is already revolutionising many parts of businesses and the way society is being organised. These are things that we may miss even as we make our daily commute around or continue to Work From Home (WFH), and while we may not recognise or be aware of its existence, it is changing the world in many more ways than we can ask or think.
Here are the 5 HUGE benefits of the blockchain, all of which many people in this world are passionate about solving.
1. Serving the Unbanked
Did you know that as of 2017, the World Bank reported ~1.7 b adults who are unbanked?
This means that they do not have an account with a bank or an intermediary. This typical individual is from a developing economy. By having the blockchain in place, this can help to create jobs and in so doing, eliminate poverty. Imagine being able to tap into talent from across the globe and paying them via cryptocurrency rather than going through the traditional bank route – getting your local currency exchanged to a foreign currency, or having your cheque verified and wasting unnecessary verification fees along the way with agents who are just rent-seeking in nature.
Right now, there is a blockchain company in Myanmar allowing farmers to use their livestock as collateral and also allows them to access financial services like loans and insurance. With this, the local farmer that does not have access to a traditional bank and may even have loans rejected, can use micro-loan services with blockchain technology.
In Asia, Zilliqa has broken through into part of Indonesia and DeFi projects built on its platform will serve one of the most populous countries with over 200 ethnic groups, many of whom are unbanked.
2. Protecting the climate and reducing wastage
With blockchain tech, innovation for efficient allocation of water and energy can be done. Carbon credits can be issued in crypto-tokens built on altcoins like Zilliqa, Solana, Cardano. Sustainability reporting, energy trading, reducing food waste as well carbon emissions can all be resolved with the blockchain.
The ledgers stored, smart contracts will eliminate redundancies and significantly increase efficiency in allocation.
3. Improving time lag inefficiencies in finance
Did you know that employing smart contracts, you can easily address the issue caused by the time lag between current and future cash flows? The smart contract can allow for the pledging of capital which can then be transferred in divisible regular payments. What is the advantage in this? Well, by doing so, a company may not need to issue bonds at all! The issue will be resolved by the smart contracts. Costs are saved and in that sense, shareholders can be rewarded with these saved costs resulting in greater profits.
Once value transfers are digitised on the blockchain network, a greater portion of the economy can be net-settled rather than gross-settled. This translates to huge economic gains. For example, Ripple estimated in 2017 that about $5 trillion of capital is stored in bank accounts to fund the conduct of international business (https://ripple.com/ripple_press/ripples-blockchain-network-now-100-strong/). Imagine the unlocking of unnecessarily stored capital to do something else and generate greater returns!
4. Fractional ownership
Did you know with blockchain, if you would like a piece of real estate or art that is too big to be owned wholly by you, you can own a part of it like a share? This form of “fractional ownership” is made possible by the blockchain. The blockchain and the distributed LEDGER allows every one on the chain to know how much of a piece of art or real estate is owned by you. This is the same concept as say, buying 0.1 of a Bitcoin, if you cannot afford a whole Bitcoin.
5. Open-platformed businesses
Let’s just think about the FAANG stocks for now. Facebook, Netflix, Amazon, Apple, Google etc. They are founded on the traditional Internet model of a closed platform – where there is content generation, having users on board their platform and then revenue models generated through utility and exchange. Now, with a blockchain, open-platform model, users, value creation and rewards from participation can be done simultaneously to foster growth.
Think about BitClout, which is the first blockchain Twitter that is rather controversial (we will leave that topic for another day). It is built on its own blockchain called BTCLT, basically BitClout in short. With its platform in place, another business that wants to reach out to influencers can build an API on its blockchain to pull together data on the profile of each influencer and then get them ranked before determining who is good to be reached out to for a particular advertising influencer campaign.
Where does crypto play in all these?
Traction is being built as we speak by the entire crypto world in advancing projects that will snowball and emerge as traditional business model killers. Disintermediation of financial institution practices, efficient allocation of resources, reduction of waste, come into play.
The cryptocurrency that has utility and projects built on is blockchain technology is likely to see greater build-up and price increases as it is being utilised, staked, burnt.
We cannot help but emphasise the importance of utility as crypto evolves to its next phase of growth with tokens coming in onto the altcoin territory. Many tokens are probably useless in and of themselves if there is no place of switching them out for other crypto or fiat. Altcoins that do not have value other than gamblers shouting “MOON!” will also fade away in time to come. If Elon Musk decides to abandon the Dogecoin, it will collapse and the day of reckoning will come for other altcoins/tokens that lack real-use cases.
Yours,
Chief Editor
BBA Market Perspectives
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