Transcending Bitcoin: The rise of blockchain technology
Editor’s Note: This article was published on cyberfinance.cn, and has been translated into Engish.
Blockchain technology is transcending from its original purpose of supporting cryptocurrencies such as Bitcoin. This innovative technology is used in different applications, including tokenization of real-world assets, non-fungible tokens (NFTs), B2B payments, fraud prevention, decentralized trade, creating a new financial system, among others.
However, blockchain technology is still in its infancy stage and still lacks the global standardization needed to promote mainstream adoption. Regardless, its potential is apparent, and widespread interest is growing — suggesting the technology’s budding ability to transform financial systems across the globe.
Several industries can potentially benefit from blockchain technology. Since all transactions in it are transparent, it can be a reliable model for the end consumer. With all its various use-cases, the most significant effects of blockchain might lie beyond bitcoin and cryptocurrencies.
How blockchain can solve the challenges in the financial system
Blockchain technology applied in the current financial system introduced more innovative, interoperable, borderless, decentralized financial products and services. It has created a new system called decentralized finance (DeFi) which can reduce transaction costs, broaden financial inclusion, facilitate open access and provide more opportunities for users.
“With blockchain technology, you always have the freedom to be in the sole custody of your funds. This means no random frozen bank accounts or barring users from trading at inconvenient times, for example. Not only that, but all financial transactions are visible on the blockchain. If stocks were issued on the blockchain, you wouldn’t need to guess how much short interest a given stock has; it would be directly visible to anyone with access to blockchain data, which anyone can do by simply running a node on their computer,” explains Sasa Milic, Co-founder of API3, a decentralized API (dAPI) network.
Blockchain technology can also enable entirely new ways of managing money and facilitating payments. This technology creates a more efficient and secure global payment infrastructure from microloans, remittances, and more. The impact of blockchain in the financial sector can be massive, especially if more decentralized products and services are introduced in the market. But apart from potentially solving the issues of the current financial system, blockchain has a lot more to offer.
Other blockchain use cases
Apart from revolutionizing the current financial system, blockchain has several other use cases that can make our lives easier. “This innovative technology has so much more to offer than simply creating digital currencies. For example, the creation of non-fungible tokens has paved the way for a new gaming experience, allowing users to monetize their in-game items such as a game character or rare item found on various games. NFTs are unique and live on the blockchain, ensuring that their value is verifiable,” says Felix Mago, co-founder of DASH NEXT, an end-to-end crypto payment solution.
Management of tangible, intangible, and complex assets can become more efficient by integrating blockchain technology. For example, assets such as real estate that are often constricted by liquidity and investment size can be tokenized, divided, and distributed with minimal management cost, operational friction, and security risks.
“Tokenization of assets is a huge use case. Turning all assets into digital assets that can be bought and sold in global networks will expand financial inclusion and access everyone to the global financial systems. The fact that everyone can have access to the same investment opportunities no matter where they are is world-changing,” says Federico Ast, CEO at Kleros, an open-source online dispute resolution protocol.
With all of these promising potential, blockchain technology can go beyond its original mission of providing a public distributed ledger and digital currency.
The future of blockchain
Bitcoin, in general, will continue to proliferate and attract more mainstream users. “Inevitable, due to price hype which attracts attention from the media and people of the entire world. More people know about Bitcoin — more people learn what BTC is a technological and economic phenomenon — more people start to use it as the store of value, P2P electronic cash, and the trading asset,” Eugene Romanenko, Austrian School Economist, CryptoEmcee, Trustee Wallet Ambassador.
As we see an increase in Bitcoin usage, we can also expect that more and more people will be open to adopting blockchain technology and will see its potential transcending from cryptocurrency usage.
Image credit: Pixabay