Blockchain technology, which first appeared in 2008 with the creation of the Bitcoin cryptocurrency, has recently been viewed as a disruptive technology that has the potential to transform the financial industry. By some people, at some point, the introduction of blockchain was believed to have a similar impact as the introduction of the Internet. We can even see some similarities in the emergence of new business models and their verification in the global markets (dot-com bubble vs current crypto slowdown). According to the Harvard Business Review article, the blockchain solution could do for finance what the internet did for media. However, as the technology matured, it also transformed, and new applications were created that could be further adapted to more industries.
Only 38 percent of the worldwide blockchain market share went to financial services according to the report by Grand View Research, followed by healthcare, government, retail, and logistics industries just behind. Furthermore, the report points out that the recent value of the market equaled $5.92 billion in 2021 and is estimated to grow at a compound annual growth rate (CAGR) of 85.9% and reach $1,431.54 billion in 2030. Such impressive growth may pose a question: what will cause it? As previously stated, we may have recently witnessed the emergence of new business models and applications based on the blockchain environment.
Let’s learn more about those and see how they might help the company do better or create new ways to make money.
Introduction to blockchain technology
There are now dozens of digital currencies known as cryptocurrencies. They have altered the possibilities for monetary transactions. Prior to Bitcoin, there were only two forms of monetary transactions: direct cash payments and transactions mediated by a third party. However, governments and central banks centralize or regulate these transactions. This indicates that the value of our money fluctuates owing to external pressures such as inflation. Other dangers are associated with cash payments and third-party transactions. Account information can be compromised. Furthermore, doing transactions through a third party exposes the transaction to observation. You may not always be aware of who is now gaining access to information about you and your transactions. Cryptocurrency gets around all of that by allowing users to save, transfer, and receive money through decentralization and a secure mechanism.
A blockchain, also known as Distributed Ledger Technology (DLT), is a continuously expanding list of entries that are safely connected to one another via encryption. Several cryptography techniques, including digital signatures and hash functions, are used in this approach. To ensure integrity, each node has its copy of the code and the blockchain network must algorithmically validate any new blocks that are added to the chain. It is not uncommon for a peer-to-peer network to maintain a blockchain. As a result of the adoption of the same protocol, all peers connect with one other and generate blocks in the same way. A block of data that has been recorded can no longer be easily modified once it has been validated.
By design, blockchains are secure. Keeping a precise record is critical when using blockchain technology. The asset is decentralized, making it accessible to the public in real-time and providing complete transparency. Blockchain’s security safeguards and public ledger make it an ideal technology for nearly every industry. Medical records, identity management, and payments are all examples of where blockchain platforms can be put to use.
Although the first NFT was minted in 2015, it gained widespread popularity at the beginning of the 2020s, and now most people have at least heard the buzzword without knowing what it exactly means. For those who don’t know, NFTs is an abbreviation for Non-Fungible Tokens. Another hard-to-understand buzzword, huh? To clear it up, “non-fungible” means that it cannot be easily exchanged. The best example to understand is the 1 euro coin, which is a fungible asset, which means that 1 euro coin can be easily exchanged for another 1 euro coin as they have the same value. The core of NFTs is that each of them can have its value. But how can they be further applied to the business perspective?
For example, Chiliz uses the NFT technology to tokenize the sports and entertainment sectors. They do so by creating a fan engagement platform that allows the team to gamify the team management. They use NFTs to create collectibles for partner clubs that they can later sell to their fanbase.
Another example is the use case in the fashion industry that was first introduced by Dolce & Gabbana. They released a new collection that included five NFT products with their physical equivalents and four fully digital products. From the sale of this collection, they generated revenue of $5.7 million.
Yet again, another use case that might be implemented by enterprises is the use of NFTs as a representation of physical assets. One example is the solution created by Koinearth that allows them to create products as NFTs that later allow them to track them across their supply chains.
DAOs (Decentralized Autonomous Organizations) are organizations that are brought to life by blockchain technology and smart contracts. They are another example of how this technology might be used. The basis of this business model is the creation of organizations where most of their workflow is managed through smart contracts that are executed based on predefined conditions that eventually execute proper entry into the blockchain ledger. The decisions in such an organization are democratized, meaning the users of a network may vote on the specific action and smart contracts are responsible for executing it. Most of the DAO’s uses are investment projects, where users can raise capital and then mutually invest in various other projects.
ConstitutionDAO is a well-known DAO. Its goal is to get enough money from contributors to buy an original copy of the United States Constitution. Although DAO raised 47 million, it fell short of its goal due to a slight loss in the auction to another bid. However, it demonstrated the potential to change how people crowdfund and purchase items via DAO.
Another example worth mentioning is VitaDAO, whose goal is to collect funding for early-stage research projects related to longevity that can later be transformed into biotech companies. Through DAO architecture, they can collect funds and collectively decide upon which projects should be funded. The intellectual property of the research can be further monetized, generating income for contributors or a base for the next research funding. As of today, they have raised over $2 million in funding and identified over 200 research projects.
dApps are nothing more than decentralized applications. As with regular applications, they are built from the frontend interface. However, the backend side is composed of smart contracts connected to a particular blockchain like Ethereum or Solana. The main difference between centralized applications and blockchain is that blockchain’s code doesn’t run on centralized servers but rather in a more decentralized way. Aside from the benefits that come from the blockchain itself, some of the benefits of dApps include higher uptime because they are more protected from DoS attacks, privacy, and resistance to censorship.
One example of a dApp is Chainlink, which serves as a middleware software for Oracle networks that provides tamper-proof inputs, outputs, and computations. Currently, the solution is being tested by Google as a use for a BigQuery PaaS data warehouse.
Another example is Brave, a web browser with almost 9 million users. It attempts to disrupt the online advertising model by giving power back to consumers through measures of consumer attention rather than clicks or views. Thanks to the blockchain-based backend, it aims to give more control and privacy back to users, which is becoming a rising trend after the rollout of GDPR.
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Developing your blockchain technology project
Fintech, supply chain management, and real estate are all being transformed by blockchain applications. It’s essential keeping up with the revolution that’s happening. What is the most important when you build a blockchain app, is the focus on security and blockchain developers’ experience in creating smart contracts. Our blockchain app development services combine top technical expertise with industry partners’ knowledge to provide you with the best possible result. Check out Applover’s recent case studies – the platform for settling cryptocurrency transactions as well as the crowdfunding platform that empowers individuals with benefits through LUCA coins.