Beyond the blockchain hype

A person looks at a piece during a press preview on March 25, 2021 of the grand opening of Superchief Gallery NFT. (Photo by TIMOTHY A. CLARY / AFP)

With cryptos surging and Non-Fungible Tokens (NFTs) dominating the headlines, blockchain is back on the tech innovation agenda. The evangelists who hyped the technology in 2017 then promptly moved onto the next shiny thing when it failed to immediately be an answer to everything will be pleased. Those of us who inhabit the space full time however, are taking a far more measured and realistic view, focused on the practical benefits that blockchain can deliver today.

Roughly 10 per cent of the people talking about NFTs actually know how they work. The other 90 per cent are asking those people how a jpeg can sell for $10 million. For that larger audience, here’s the deal. A blockchain creates a set of rules so that people who interact with it can trust the integrity of information stored there, without having to necessarily trust the other participants in the system.

In the case of NFTs, a second set of rules is created that sits on top of this, using the same mathematical architecture. This set of rules says “this version of the artwork is genuine and original”. Attempts to replicate the jpeg may result in a similar image, but it will not contain the same blockchain verified digital signature that the NFT has.

In this way NFTs create scarcity and certify authenticity and authorship. Once the hype dies away – and it will – there is genuine practical value in NFTs to help artists, creators and other rights holders maintain ownership of their creative works, derive value from them and finance creative development and production. Our company is working on one such program for screenwriters at the moment.

It’s important to remember however that NFTs and cryptos are the shiny tip of a very big iceberg. They are only a couple of highly visible use cases for a technology that has been quietly fulfilling its promise over the past several years. While the hype around blockchain tracks very closely to the price of bitcoin and other cryptocurrencies, the technology delivers a multitude of stand-alone solutions to a varied range of problems, across any industry.

When you get under the hood of blockchain technology, the ability to create a trusted system for information sharing is the characteristic that drives the most mature use cases.

The business efficiencies that stem from this are immense. Asset and facilities management company Downer are in the process of creating an enterprise blockchain that will be shared with operational partners. Where previously both operational and financial data had to be duplicated and verified on the individual systems of partner organisations, the enterprise blockchain gives partners confidence in the integrity of the data and saves every party significant technological and human resources.

As networks like the one Downer are building proliferate and grow, the value they create and the efficiencies that they enable compound. The larger the network and the number of participants within it, the greater the value. This will drive down costs and make businesses and sectors leaner and more competitive.

The same principles apply to supply chains, particularly those around goods like food and pharmaceuticals where transport temperatures and product origin are particularly important. Imagine a shipment of pork where temperature and humidity sensors inside shipping containers record information on a blockchain shared between supply chain actors and regulators.

This way if there is the possibility of contamination no actor can attempt to cover it up, the affected product can be discarded, a possible public health emergency is averted, along with the wholesale shutdown of an industry and its associated supply chain in response.

The inherently traceable and transparent nature of blockchain is also a game changer for sustainability reporting, which is an increasingly important customer consideration. These benefits are compounded by the fact that procurement can be pinpointed back to location, enabling a business to support its community at a time when “support local” sentiment is high.

Elsewhere so-called “stablecoins” backed by private blockchains are helping un-banked populations in developing countries enter the digital age overnight without having to rollout traditional banking infrastructure, much like the advent of mobile telephony connected billions of people who were never on a copper PTSN network.

These practical blockchain applications aren’t generating the same kind of headlines as Elon Musk selling his first tweet as an NFT, daily fluctuations of the bitcoin price or other flashy newsbait. But frankly, they are more important and more substantial than developments in the space that generate millions of mouseclicks, and their impact on our lives will resonate much farther and last much longer.

Lachlan Feeney is Founder & CEO Labrys