What strategic value does blockchain have?
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A new report from the BSV Association outlines the strategic value of blockchain to enterprises across a range of use cases, from optimizing smart city fees and reducing supply chain costs in manufacturing to monetizing the fan experience and central bank digital currencies (CBDCs).
In May, the Switzerland-based custodian organization of the BSV blockchain – the BSV Association – in collaboration with the Boston Consulting Group published a report titled “Mastering Digital Transformation: Building Trust in an Automated World.”
The first of our in-depth insights into the report examined how blockchain technology is being portrayed as a solution to the trust issues of the “new digital age,” particularly in the context of artificial intelligence (AI). In this second in-depth insight, we examine the use cases outlined for how blockchain can help organizations build and maintain trust in their data, systems and technologies.
“To be successful in today’s digital, data-driven economy, your company must digitize its processes end-to-end and ensure that these processes are always verifiable and secure. Blockchain should therefore play a central role in the digital transformation strategy,” says the BSV association’s report.
“By ensuring data integrity, blockchain increases trust and reliability across all your digital platforms.”
The report divided the specific use cases into three broad categories: examples of how blockchain can secure the data used by companies; examples of how blockchain can create new revenue streams; and examples of how blockchain can increase the efficiency of payments and data exchange.
Backing up your data
The report highlights how blockchain technology can be used to secure data collection from verified systems and ensure it remains accurate, tamper-proof and tamper-proof, which is critical for operational integrity and compliance.
One example of this was the optimization of smart city fees. With blockchain and IPv6 – the latest and most secure internet protocol – smart city administrators can use the Internet of Things (IoT) with confidence.
IoT refers to a network of interconnected devices that collect, exchange and process data over the Internet, enabling intelligent and automated interactions between objects and systems.
“Low transaction fees and high throughput ensure that microtransactions such as minute-by-minute parking and utility fees are economically viable and secure,” the report says.
Another use case proposed by the BSV Association was how blockchain could reduce manufacturing supply chain costs by revolutionizing manufacturing logistics.
According to shipping logistics company Maersk, about a fifth of overseas trade costs are caused by paperwork. The report argues that blockchain could reduce this burden.
“Blockchain provides a secure and scalable platform for managing IoT device data, enabling smart contracts to automate supply chain transactions at a much lower cost, delivering significant savings in management costs.”
The third use case stems from the benefits that blockchain could offer for accurate and efficient reporting, especially for the many companies that deal with environmental and social (ESG) policies.
In particular, blockchain can ensure the integrity of emissions data collected by IoT sensors along the supply chain, providing a cost-effective solution for comprehensive carbon footprint reporting. This could help companies align with industry standards such as the EU’s corporate sustainability reporting guidelines.
The final data-related use case cited in the report was in the ever-growing field of AI, where the BSV Association stated that blockchain could help support or automate AI operations.
“Blockchain can help verify, timestamp and attribute content to its source, ensuring AI models are trained with reliable data.”
The ability to verify, timestamp and accurately attribute content to its source also plays a role in the second category of use cases described in the report, which focuses on how blockchain can create new revenue streams for businesses.
Create new sources of income
Monetizing digital assets can become difficult if a company cannot easily prove ownership of those assets or understand how its intellectual property (IP) is being used. Blockchain provides a powerful framework for attribution of digital assets with a clear audit trail and also helps with data security.
According to the BSV Association, this represents an invaluable source of revenue for many companies across industries. To underline this point, the report outlined three use cases.
The first example concerns the collection of royalties. “Blockchain networks can manage complex intellectual property rights and automate the distribution of royalties, ensuring that creators such as authors or musicians benefit from the AI-generated use of their works.”
This could bring enormous benefits to creatives and creators in the age of artificial intelligence, as copyright disputes can no longer be resolved through a streamlined monetization process, but end up in lengthy and expensive litigation.
The second use case also benefits creators by bringing blockchain into the realm of fan experience and engagement.
The report explained how blockchain-based fan experience apps could turn event tickets into “digital collectibles” that give ticket holders access to exclusive perks and help keep them loyal to a company. Some big-name football clubs –Football clubs, for readers from the USA– are already implementing similar ideas, such as “fan tokens” to increase engagement.
Fan tokens are not widely accepted, but theoretically offer their holders access to a range of fan-related membership benefits, such as voting on club decisions, rewards, merchandise designs and one-off experiences.
The third use case where blockchain could increase business revenue is micropayments for IoT. Blockchain networks give businesses the ability to buy and sell the data generated by IoT devices using subscription-based micropayments.
“This business model allows users to access up-to-date, specific information and pay only for the data they need,” the report said.
The ability to facilitate micropayments – small transactions or payments typically less than a dollar, in some cases even a fraction of a cent – is one area where blockchain technology can significantly differentiate itself from the competition; another is increasing the efficiency of payments and data exchange.
Fast and secure transaction processing
The final category of use cases described in the report relates to how blockchain helps digital systems conduct transactions smoothly and cost-effectively by sharing data across the blockchain, eliminating the need for reconciliation – “a boon for businesses that frequently collect, send and receive money or information digitally.”
One example is CBDCs, where blockchain can enable real-time transactions and support innovations such as currency programmability and new financial products.
Blockchain also makes emissions trading simpler and more reliable, and potentially more environmentally sustainable. The report points to one provider, ZeroSix, that provides U.S. oil and gas producers with blockchain-based carbon credits in exchange for keeping reserves in the ground.
“In this way, ZeroSix incentivizes companies to stop extracting and burning these fuels, helping to meet our planet’s carbon budget,” wrote the BSV Association.
The final use case examined in the report was blockchain as a trusted instrument for financial markets.
For example, JP Morgan (NASDAQ: JPM) launched the Onyx initiative in 2020 to advance blockchain and digital currency projects in the banking sector. Products launched under Onyx include solutions that facilitate cross-border payments, simplify customers’ liquidity financing needs, and solve complex information sharing challenges.
This rounded off the report’s discussion of the wide range of use cases that demonstrate how blockchain technology can provide strategic value to companies across all industries. However, it is worth noting that not all blockchains are the same. Some are better able to provide the scalability required for microtransactions and mass adoption than others.
The third part in this series of in-depth analyses of the BSV Association report examines how the organization’s namesake blockchain, BSV, is particularly well suited to some of these use cases, such as providing the scalability needed to enable mass micropayments.
Stay up to date with news from the BSV Association – download the first report in this series via this link. For detailed information on the second part, “Mastering Digital Transformation: Building Trust in an Automated World”, click here.
Watch: Micropayments will enable people to trust AI
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