Use the word “blockchain” in a conversation and the topic will likely gravitate to one of a handful of topics prominent in the news, like cryptocurrencies, the metaverse, and Web3.
Theoretical, next-generation technology trends tend to dominate technology discussions. Blockchains have spawned entirely new asset classes for investors in cryptocurrencies and non-fungible tokens (NFT), and they will power a new generation of innovations built on nebulous concepts like metaverse and Web3.
But the real power of blockchain will first be felt in more conventional areas, according to Kieran James-Lubin, CEO of BlockApps. BlockApps is a blockchain technology firm focused on real-world implementations of the technology to help businesses run more efficient and secure processes.
“You hear something different from most blockchain people. Maybe it’s a personality thing, but I think the greatest promise for blockchain technology is in improving the world as it is today,” said James-Lubin. “It’s less about creating a whole new world on a blockchain for all of us to inhabit or all of these interesting new asset classes.”
Practical applications of blockchain already
BlockApps looks for transactions where there is insufficient trust and transparency. To start, James-Lubin has found particular opportunity in the food industry, where there’s increased focus among consumers and restaurants on knowing where food comes from.
Using a blockchain, BlockApps can help food producers and consumers track where their food has been and what processes it has undergone, from seed to table.
“We’re starting to see more demand from the consumer side for transparency into what’s happening in supply chains, and this phenomenon started with food,” James-Lubin said. “In the grocery store, you may see labels saying things like product from Argentina or Australia, or organic, and people used to take the retailer’s word for it. Now they want to know what it actually means – which farms did the food come from, what has happened to these products along the way.”
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BlockApps provides similar services for environmental and social governance (ESG), offering a blockchain application that helps track carbon footprints and offsets throughout a value or supply chain.
In yet another application, BlockApps uses blockchain to help the city of Reno, Nevada, track and maintain information on historic properties.
“In some cases, they had been using sort of an all-email system to keep track of all of this, but now they’ve digitized all of their information and on the blockchain the record is immutable,” James-Lubin said. “It’s an interesting use case that impacts their day-to-day operations.”
James-Lubin points out that there are a couple of trillion blockchain-native assets in the crypto space, but over $500 trillion in traditional assets are still waiting to be tokenized.
Future applications of blockchain in crypto
James-Lubin knows cryptocurrencies are an important innovation of blockchain technology.
“They’re amazing,” he said. “One slightly cynical way to look at it, though, is that if you remove regulation as a barrier, even for a few years, and allow programmable financial services, you end up seeing a lot of rapid innovation – some of it unsavory, some of it fascinating.”
NFTs, though not precisely an asset class, are another useful blockchain innovation, according to James-Lubin, as they may allow for new business models involving long-running residuals to artists, creators and publishers.
Near-term applications of blockchain
Eventually, much of the world’s wealth will reside on, or be tracked by, blockchains, but one of the first areas to be impacted will be real property, according to James-Lubin.
“Most of that wealth will be land, land titles and real property,” he said. “If you think about the experience of purchasing and owning a home, the way we manage those records on a municipal and state level is archaic. There’s a sense of urgency to apply a more transparent, real-time system to these assets, and blockchain solves a lot of those problems.”
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Blockchain also creates a useful settlement layer on which to trade traditional assets more efficiently. While publicly traded stocks and some bonds are already easily and efficiently traded, other assets such as private securities and other forms of debt are often traded in opaque and inefficient manners.
Furthermore, the process to invest in private funds and securities is often time and resource consuming, a process blockchains can help facilitate via automation.
“Right now, public markets work pretty well. In the long term, blockchain will be applied to them. But in the nearer term, there are certain niches where there isn’t good market infrastructure, and that’s where the technology will take hold first,” said James-Lubin.