Blockchain: A Neat Example of the Ingenuity of Contemporary Fintech Solutions

Saying that blockchain is a universal technology would not give an actual idea of the scale: the chain technology has already been implemented successfully in completely different domains and is currently used in over 40 areas ranging from communications and political strategies to international supply chain management and healthcare.

I am happy to see blockchain dynamically penetrating Ukraine as well. For instance, last year our country became home to the first real estate transaction based on the chain technology. Michael Arrington, founder of the well-known newspaper TechCrunch focusing on high tech and startups, purchased an apartment in Kiev using Ethereum, the second popular cryptocurrency, as the payment method. As soon as the extract from the register specifying the new owner was uploaded on the blockchain platform Propy, the seller received crypto money – an equivalent of $60,000.

In June 2020 Verkhovna Rada registered a bill titled “On Virtual Assets”. And the Ministry of Digital Transformation established to digitalize the country has already developed a roadmap for digital assets. In my opinion, Ukraine recognizing blockchain transactions means showing the world its Fintech ambitions. Furthermore, this is an efficient means of raising foreign investments: cryptocurrency holders are looking for ways to convert it into tangible resources.

The technology which is a chain of “blocks” linked into a transaction within a special distributed ledger transforms the conventional idea of process security and transparency.

The corporate, public and private sectors are flagship users of blockchain, next to cryptocurrencies and digital finances. This is quite logical from my point of view: stepping into the era of digitalization and commercial space flights, it was impossible to keep up the old fashion of putting down everything on paper and maintaining tons of physical archives. I would not call blockchain environmentally friendly because for instance a MasterCard credit card transaction requires a mere 0.0006 kW of energy while a single Bitcoin transaction consumes 980 kW. This amount of energy is sufficient to power an average Canadian home for a period of three weeks. Nonetheless, technology investments are forecast to reach $25 billion by 2025 according to PricewaterhouseCoopers.

As a rule, high tech companies pioneer innovations. Transnational giants effectively cater to their internal accounting and auditing needs, as well as IT and information optimization processes through blockchain. According to Gartner statistics, 14% of corporate projects moved to the commercialization stage in 2020, against just 5% in 2019.

At the beginning of 2021 Forbes revealed the top 50 global giants with the income or capitalization exceeding $1 billion annually which apply corporate blockchain. The list included Ant Group, a Chinese technology company, Daimler, the automobile concern, and corporations Boeing, IBM and Microsoft. Oracle, PayPal, Samsung, Saudi Aramco, Visa and Walmart were among the companies actively implementing the “chains”. Industrial and Commercial Bank of China, one of China’s major banks, and Chicago Mercantile Exchange which launched futures on Ethereum also hit the list.

According to International Data Corp, the aggregate blockchain expenses of corporations and governments in 2019 amounted to $2.9 billion – an 89% increase against the previous year, and are predicted to reach $12.4 billion in 2022.

There are also impressive cases in the food industry. The international network Walmart and Nestle joined forces with other companies to incorporate IBM Food Trust which engages in developments in the area of integrated supply chains. These practices enable quality-focused tracking of product movements in all stages, from raw materials to finished goods.

Blockchain-based military technologies are also gathering pace. For example, Russia is developing a defense laboratory designed to trace and prevent cyber threats using blockchain technologies. The globally known tire manufacturer Goodyear announced in 2020 the launch of a blockchain system supporting components delivery for the military. It is hard to overestimate the potential of “chains” in the military sector – the defense industry can easily become a pioneer in the domain and serve the best interests of the society.

Asia Pacific region, forward-looking as always, is the fastest implementer of the chain technology in the world. And how exactly does it achieve this? By implementing solutions in the public sector where the technology is meant to simplify complicated processes and consolidate hi-tech solutions which integrate web design, cloud storage and proprietary API.Take China for instance: 140 government services are already provided on the basis of blockchain. 

PwC consulting company predicts that China will acquire the status of a blockchain state, and as of now the forecast stands true: the country boasts the greatest number of blockchain projects globally.

The EU’s treatment of the blockchain is still quite cautious, showcased by the creation of initiatives governing the technology within the Union. However countries like Malta, Switzerland, Estonia and Great Britain are well-disposed to blockchain and support its global implementation in a number of ways. 

I believe that the goods and services supply chain tracking along with information technologies and data transfer are the most successful blockchain implementation areas in the USA besides the Fintech sector. In the post-pandemic times these areas possess the strongest economic potential which is appraised by PwC experts at $962 billion.

With the pandemic in mind, I should note the importance of the chain technology for the healthcare sector where it enables tracking vaccination stages worldwide. A vaccine distribution network based on the IBM Blockchain provides manufacturers with tools to proactively monitor side effects and improve the efficiency of vaccine recall management. Pharmacies can optimize inventory controls, and people learn to trust vaccines and resume social life with confidence. A win-win scenario: one solution implemented, gains assured for all involved in the process.

Rubbing their hands, many experts are expecting the 2021 and 2025 elections in Russia which are said to use the blockchain. The chain technology will address the issues of information integrity during voting, transparency of software code execution and invariability and personal data security, and will enable a review of transactions and tracking the voting progress.

While being on the topic of Russia, the CIS progress flagship, it should be noted that blockchain has penetrated, in addition to the defense industry and the public sector, such services as the customs and taxes. I am convinced that the state’s trust in the technology was a key factor, and as a result public authorities and government-owned companies have a much better idea why they need this technology.

Afterword

Digital technologies have become so convenient and safe that they can be scaled up to all spheres of life ranging from defense to food industries. When one sees the UN consider in all seriousness applying the blockchain in the context of climate change and humanitarian programs, the level of technology penetration is evident.

According to the World Economic Forum estimates, 10% of the global GDP will be stored with the help of blockchain by 2027. The most impact will be decidedly experienced by the public sector, healthcare, education and mass media which thanks to the technology’s “transparency” will get the opportunity to redeem their good name and battle disinformation. As for the money equivalent, experts predict that the global economy will grow by $1.76 trillion by 2030 through the blockchain technology implementation. This is also confirmed by the opinion of transnational company managers: according to Deloitte, 59% of respondents perceive the blockchain as a revolutionary technology which could improve the business processes in any sector.

The success of blockchain technologies will certainly depend on a favorable regulatory framework and business ecosystem of each country willing to use new opportunities offered by the technology, and also on the suitable industry structure. The delay in implementing the chain technology is largely predetermined by the legislation of specific countries and internal peculiarities, as is the case with Ukraine which is not yet ready to bid farewell to the shady approach to management.

I am convinced that the strong process optimization potential inherent in the blockchain is comparable to that of cloud technologies revealed 10 years ago.