Cryptocurrencies are one of the trending themes of our time. They are seen as transparent, safe from manipulation and not subject to state control. But what is actually behind these cyber-currencies? The digital coins are generally based on something called blockchain technology. These are cryptographically chained blocks which contain all the transaction data. The special feature here is that the data is not stored on a single central server, but is distributed over all the computers in the network. Consequently, all those participating in the blockchain have an insight at all times as to which transactions are taking place or which asset is to be attributed when and to whom.
However, the blockchain is not only used for cryptocurrencies, since the technology offers plenty of potential. All possible forms of documents, and even goods, can be stored and organised in the distributed network. Thus, amongst other uses, people in the supply chain field are increasingly working with blockchain in order to optimise the flow of goods over the entire value-added chain. Using it enables those involved to have an insight into the processes practically in real time. In addition, the “chain” allows for seamless traceability at all times and provides continuous transparency from the raw material to the end-product, for instance in the manufacturing sector.
According to the experts at MarketsandMarkets, it is precisely such supply chain management applications, together with the need to simplify all kinds of business processes, which are driving the whole blockchain market. The market analysts believe the size of the global blockchain market, estimated at USDbn 3.0 in 2020, is set to expand to USDbn 39.7 by 2025. That represents an impressive compound annual growth rate (CAGR) of 67.3% over that period. The lion’s share of the market is likely to be in banking and financial services. Various factors, such as the rise in cryptocurrencies, together with speeding up transactions and reducing overall costs, are set to fire up the segment, according to forecasts.
Countless potential uses are being ascribed to blockchain for the future. These include, for example, smart electricity management or fraud-proof, electronic voting for elections. However, the “next big thing” could be non-fungible tokens, or NFTs. These are currently being used primarily in the art world. The initial impetus for this came from the digital artwork by Beeples, which achieved a price of USDmn 69 at auction. The NFTs guarantee security against forgery as quasi-digital certificates of authenticity backed by the blockchain. Even old artists such as Picasso are no longer safe from the new technology. With the aid of blockchain technology, the Swiss-based Sygnum Bank, together with the art investment firm Artemundi Investoren, recently facilitated the purchase of shares in the Picasso artwork “Fillette au beret”. Tokenisation allows the painting to be traded as a security. Such a procedure can be applied beyond the art sector, and early initiatives involving blockchain have also appeared in the real estate sector. These enable investors to invest their money easily and conveniently in real estate without the expensive and time-consuming involvement of a notary. The scale of the hype around the token is revealed in a new funding round for the OpenSea marketplace, where the start-up is being valued at a hefty USDbn 1.5.
Source: MarketsandMarkets
View more information on investment solutions on the topic “Blockchain: Strong-growth digital chains”
