Taking Blockchain beyond crypto

Blockchain technology lies at the heart of cryptocurrencies. Coins and tokens are built on a shared and immutable ledger that facilitates transactions and tracks the balances of assets.

For many people, blockchain and cryptocurrency have become synonymous terms, but the two aren’t interchangeable. Cryptocurrencies are just one of many potential applications of blockchain technology.

A blockchain can be used to create or track any type of asset, both tangible and intangible, physical and digital. That’s prompting more businesses and sectors to consider the technology and develop new use cases, to create new efficiencies, develop new products and services, or reach a global customer base.

A blockchain is essentially a data storage technology that organizes data into blocks linked to one another in chronological order to create an irreversible chain.

Blockchains are often referred to as distributed ledger technology (DLT). A blockchain can be private or public in nature.

Private blockchains have a centralized operator that sets the rules for who can join and transact on the network. Public blockchains are decentralized and permissionless.

The most effective way to understand blockchain technology is to learn how it is used in real life. Here are examples of how financial institutions and corporations are using blockchain tech in 2024:

In June 2024, English football club Watford FC announced plans to sell 10% of the club to investors in the form of digital tokens.

According to the club, the main reason for offering Watford FC shares in the form of tokens on a blockchain was to reach “a far broader range of investors.”

Traditional fundraising processes like initial public offerings (IPO) and venture capital funding are either restricted by geographies or are not accessible to everyone.

Benefits of Using Blockchain: Watford FC was able to raise funds from investors all across the world.

Tokenization of real-world assets (RWA) is one of the biggest value propositions of blockchain technology.

In March 2024, BlackRock – the world’s largest asset manager – released its first tokenized fund, BUIDL, issued on the Ethereum (ETH) blockchain. BlackRock’s BUIDL token represents a fund that invests 100% of its total assets in cash, U.S. Treasury bills, and repurchase agreements.

Benefits of Using Blockchain: By tokenizing a fund on the blockchain, BlackRock’s BUIDL token fund can be traded 24/7 globally. Traditional financial markets operate only on weekdays during business hours.

Blockchain is touted as a game-changing solution for the logistics industry. Its transparent and immutable properties allow businesses to interact with intermediaries in a supply chain in a secure manner.

In this regard, global logistics company DHL has collaborated with tech company Accenture to develop a blockchain-based serialization prototype system that helps track and authenticate pharmaceuticals along the supply chain.

DHL has also partnered with Hewlett Packard Enterprise to develop a blockchain-based invoicing system to streamline supply chain operations.

Benefits of Using Blockchain: By using blockchain technology in supply chain management, DHL was able to improve transparency, traceability, and efficiency in logistics.

Are blockchains secure? Can blockchains be hacked? These are some questions on the minds of those new to the technology.

Unfortunately, the answer is yes. Blockchains can be hacked and compromised. However, in reality, several factors come into play that can make one blockchain impregnable and the other vulnerable.

Let’s take Bitcoin (BTC), for example. Bitcoin is a public blockchain. Public blockchains like Bitcoin are permissionless and decentralized, which means that anyone can use it.

Bitcoin is powered by thousands of computers called miners that are distributed all around the world. Miners validate transactions and add new blocks to the Bitcoin chain. For an attacker to hack a public blockchain like Bitcoin, they must control 51% of the network’s hashing power.

Once an attacker has acquired 51% of a network’s hashing power, they can alter past transactions and create new transactions at their will.

As Bitcoin has a large, diverse, and global community of miners, it is practically impossible for attackers to collude together to hack the Bitcoin chain. Studies also suggest that attempting to hack the Bitcoin blockchain is unprofitable for hackers. Reports estimated that conducting a 51% attack on Bitcoin will cost over $20 billion per hour.

So, whether blockchains can be hacked ultimately depends on the particular blockchain in question.

Blockchain technology often gets a bad name for its association with the crypto industry, which has seen its fair share of hacks, scams, money laundering, and dark web use in the last decade.

In order to prevent misuse of crypto and blockchain tech, governments across the world are coming up with new legal frameworks aimed at regulating cryptocurrencies.

Upcoming crypto rules and regulations will affect how blockchain technology is used in the future.

Stricter regimes may result in blockchain tech being used in a private, permissioned, and compliant setting for supply chain management, accounting, and identity management.

Meanwhile, crypto-friendly laws will help decentralized blockchains like Bitcoin and Ethereum flourish.

Lawmakers are still working on how to regulate cryptocurrencies. In May 2024, the U.S. House of Representatives approved a crypto bill – FIT21 – for the first time ever.

The FIT21 bill aims to clearly define cryptocurrencies and decide which government body regulates them.

The blockchain industry is seeing rapid innovation. New cryptography technology, such as zero-knowledge proofs(ZK), has emerged, which will make blockchains more secure. The industry has also seen a move away from monolithic blockchain architecture, with the concept of modular blockchains gaining in popularity.

Developers are addressing the scalability limitations that plague many public blockchains by experimenting with layer two (L2) blockchains and sharding. If successful, public blockchains will be able to compete with traditional payment network processors Visa and Mastercard in terms of throughput, cost, and reliability.