Blockchain’s key value propositions are security, workflow simplification, cost reduction and control over how data is leveraged over the extended enterprise. It reduces costs by eliminating the need for a trusted third party service provider and for automating labour-intensive manual verification processes. In 2018 we have seen the adoption of blockchain in digital payments, international remittance, provenance and track and a trace of documents, products and packages. Smart notaries and digital KYC is driven by blockchain-enabled multi-point authentication including biometrics are going to be very popular from 2019.
Permissionless blockchain based cryptocurrencies peaked in 2017 and have been losing ground ever since. It is now time for government-driven cryptocurrency initiatives, which are likely to succeed and bring blockchain back to life. Outside this government regulated cryptocurrency space, only blockchain applications that promise to deliver topline advantages to corporations and have use cases with clear bottom-line benefits are only going to succeed. There is no way to predict the way cryptocurrencies without any real assets backing them are going to go in the immediate future.
Global acceptance of blockchain
It is safe to guess that blockchain adoption will proliferate in international trade and commerce, money transfer, policy management in the insurance sector, fraud detection and document management and approvals in any business with geographically dispersed stakeholders. In order to bring blockchain to a broader audience, it has to be endorsed and adopted by the government to enforce regulatory frameworks in digital payments, banking, insurance, pharma, etc. Several countries like Sweden, Denmark, Estonia, Malta, Netherlands, the USA, Thailand and Canada are adopting blockchain technology integrated with artificial intelligence as part of their digital transformation initiatives. Swiss Postal Service and Telecom, Thailand VAT payments, the Dubai government’s credit bureau’s digital payment system are all on blockchain now. The government of Denmark is in process of utilising AI and blockchain into digital identity, healthcare, business support and its citizen welfare system. Sweden is the most digitalised economy in the world with AI and blockchain slowly becoming mainstream in all government functions. The objectives of all these initiatives are to create an environment for economic growth facilitated through the development of high-quality digital solutions delivered on blockchain-enabled user-friendly smartphone devices where everyone has the comfort of security and confidence and AI- or ML-based systems.
Security Token Offerings
Cryptocurrency safe havens like Malta are under strict scrutiny of US and European regulators as they are becoming a hub for bringing embargo affected Iranian and illegal Russian investments into the mainstream. The craze behind ICOs has disappeared by quite a bit and a new STO (Security Token Offering) is emerging as a viable alternative to crowdfunding. Security tokens are real assets that are “tokenised” and the digital equivalent represented, traded and invested on a blockchain. These are very different from utility tokens, where security tokens are subjected to securities regulations, like stocks, bonds, and other types of securities. Security tokens are much safer alternatives backed by real assets like balance sheets tied to profit margins, valuations and rewarded through dividends and bonuses. Loyalty points from retail purchases, frequent flyer miles, credit card cash back, and entitlements from telecom and utility providers will all be tokenised and available as an alternative to real cash. We will see STOs backed by such tangible and intangible assets of real value soon in the global digital marketplace this year. As soon as the STO processes stabilise in Europe and the US with regulatory concerns addressed, several STO projects will succeed in raising capital in 2019, with more liquidity coming in early 2020.
Nasdaq, London Stock Exchange and the Swiss Stock Exchange are developing digital asset platforms and market infrastructure will be available by the end of 2019 to compete with existing established crypto exchanges. Global economic indicators are showing a possibility of a global slowdown later in 2019 and investors are likely to jump into alternative asset classes showing promise. STOs cannot give 10x returns but will yield reasonable returns with much lesser risk. We will see a lot of existing well-established companies with real revenue of more than $100 million and healthy small and medium enterprises (SMEs) and Real Estate Assets coming out with security tokens. Well-performing assets and companies with significant IPs that previously lacked liquidity will be tokenised to enable future growth and valuations that will potentially yield robust returns. So there will be a unique opportunity for companies with significant assets like patents, infrastructure collaterals but not in a position for an IPO to get capital infusion through STOs. This will help them scale and become global businesses of billion dollar revenue global businesses. This is significant as ninety percent of global businesses are still SMEs waiting for creative strategies to raise funds without onboarding nosy and controlling institutional investors.
Beginning of a decentralised ecosystem in 2019
It is possible for blockchain-integrated AI-, ML-, social media- and robotic automation-driven technology companies emerging with truly multinational B2B2C business models that are purely data-driven and can challenge established local and global marketplace providers. As ecommerce created disruption in the nineties, there is a huge potential for decentralised P2P marketplace, which can bring the power of data to local SMEs and benefit consumers. This can be achieved by smart contracts powering revenue and margin sharing and automating access to consumers with a decentralised marketplace where data is owned by one global entity. New business models will emerge, which will encourage cooperative competition with potential competitors coming together to with decentralised ecosystems that interconnect stakeholders managing product lifecycles and end-to-end delivery cycles.
There will be lots of experiments in 2019 in creating a decentralised ecosystem for enabling digital token based digital payments and commerce worldwide. The true winners of 2019 will be the ones that are able to bridge the crypto and fiat worlds through the deployment of public and private blockchain driven enterprise software solutions and services.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)