We are going through the year of the great lockdowns; years of strategic planning shattered within days. Covid-19 has been a test for individuals, businesses, governments and societies. It not only accelerated the development and use of emerging technology across industries, it highlighted the importance of transformation and going digital as a key for basic survival.
More than ever, trust is playing a central role in the new digital normal. All businesses are striving to build and gain stakeholder trust as a strategic priority. This is not only limited to businesses; the same building relationship ladder applies to leaders, opinion makers, professionals and family members! Trust, transparency, privacy and ethics have moved into the consciousness of the digital economy. For example, digital native businesses need the trust of their users in order for their apps to be downloaded. For context: how many of you feel comfortable practically living with Alexa?
Businesses must ensure they deposit enough trust in their relationships account to gain loyalty. An important play in the new native digital world is the need to have an internet of value, a currency or a kind of global database where anything of value, from money to votes to art, can be managed, transacted and exchanged in a private and secure way. This digital medium of value is enabled by Blockchain which is an early stage technology (some call it the second generation internet) that enables a decentralised and secure storage and transfer of information. Blockchain is a distributed ledger or database and any industry with a ‘record’ or working on a ‘transaction’ can benefit from blockchain.
The biggest misconception and reputational dilemma faced by blockchain is a strong association and identity reference with cryptocurrencies, which is not an entirely correct representation, although this is where it all started. Satoshi Nakamoto (no one knows the real name and face behind this name) created the first blockchain transaction in 2009. The fact that since October 2019 (source: Google Ads Planner) a staggering 15.6 million blockchain related global searches have been carried out, highlighting both a growing awareness and curiosity to know more about this technology. Somehow, traditional media with little knowledge of blockchain’s broader applications picked up negative headlines to do with crime, hacking and get-rich-quick schemes, whereas the potential uses of blockchain technology are essentially limitless. Let’s have a look at a few business verticals where blockchain is helping to bridge a trust gap in relationships.
Media, Marketing and Advertising
Digital (even in pre-Covid-19 times) accounts for more than 50% of total media spend worldwide. Blockchain can address the growing mistrust and exploitation of programmatic advertising, brand safety, transparency concerns and the rise of clickbait (all digital problems) in the following ways. Firstly, blockchain enabled micro-payments can help publishers to monetise through ‘per use’ payment models, as younger digital natives are more willing to pay a few cents for a music track they want, rather than be charged a flat monthly subscription. Secondly, because context, location and brand placement are critical to marketing decision making, blockchain solutions can accurately track where an ad is placed and if the location is legitimate, preventing ghost sites from burning precious marketing dollars. Thirdly, fraudulent bot traffic not only consumes precious media inventory, but messes up future insight led decisions. Blockchain’s enabled advertising ecosystem can be a bot-free environment. Fourthly, blockchain provides transparency in programmatic set ups in the digital ad buying value chain.
Supply Chain Monitoring (SCM)
SCM is the most relevant use case for blockchain. It solves the core problem faced by industries by removing fraud, improving efficiency and reducing costs. Complex paperwork, local ad-hoc processes, lack of standardised electronic data interchange across shippers, manufacturers, suppliers and customs authorities is prevalent. Furthermore, the value chain speaks in multiple administrative languages with undefined protocols and fluid procedural timelines. To address these issues, the Maersk Group (which owns the largest shipping and vessel operations) and IBM launched TradeLens enterprise blockchain. A blockchain deployment strategy can also be done in phases; for example, DP World (another giant in global supply chain solutions) did it phase wise, giving priority to the digitisation of the documentation process while looking for the right technology platform.
DeFi – Decentralised Finance
Blockchain is helping re-imagine banking in a disruptive manner, providing transparency, decentralisation, efficiency and a non-bureaucratic outlook. Traditional banking systems have had little success with financial innovation. For example, individuals have hardly any freedom to invest in a customised way. Unlike fintech, which still has some central authority, DeFi applies blockchain technology and cryptographic security to build trustworthy systems. Anyone with access to the internet can experience DeFi’s limitless world in terms of faster money transfers, instant foreign remittances, richer options in asset management, in addition to the benefit of staking (users can use blockchain’s smart contract feature whereby the ledger automatically triggers transactions once certain conditions are met) to vote on various issues as well as to earn passive income through token/investment lock ups. For example, Zin (a project of Zin Finance) is an intuitive and simple to use investment platform that provides their global user base the financial freedom to access, invest, save and grow both traditional and digital assets, including but not limited to gold, crypto and stocks. In summary, investment flexibility, real-time low cost transactions are only the tip of the benefits.
Some governments too have adopted blockchain in their national strategic narrative. Australia, China, Japan and Switzerland are bringing blockchain technology mainstream and the UAE have been instrumental in putting blockchain at the centre of their digital transformation efforts. No doubt, blockchain still faces implementation challenges in terms of regulation, inter-operatibiliy, scalability and adoptability. My opinion is that it will become mainstream in the near future, as it has the flexibility to act as both a marginal technology as well as a major business disruptor depending on the industry type and deployment strategy. Most of all, blockchain is the currency that will overcome the trust deficit we need to build a better tomorrow.
Khurram Mahboob is currently working for a blue chip telecom company in the GCC region.