These Markets Could Benefit From Blockchain Technology

The disruptive force of the blockchain technology may have been overlooked because of the popularity of bitcoin and other cryptocurrencies.

20Dec

The blockchain technology has not received the plaudits it deserves for disrupting the currencies market. Instead, all the credit seems to be directed towards bitcoin and its counterparts. This is mainly because of the rise in cryptocurrency prices witnessed in 2017.

In simple terms, this is similar to buying shares of a video game developer rather than investing in the technology that the developer used to create the video game. So, in a real-life scenario, it is like investing in Activision Blizzard instead of Nvidia.

As we have seen, there are several cryptocurrencies competing for the same addressable market. And while it might be a while yet before alternative technologies emerge to provide a similar platform to what blockchain currently offers.

What’s next in line for disruption?

The blockchain technology has massively disrupted the currency markets, but that's not where its influence ends. There are several industries ready for disruption and startups won't hesitate to pounce. Some industries have been extremely rigid when adapting to the changing market trends, but blockchain could change that.

Diamond-backed cryptocurrencies

The diamonds market could be among the top beneficiaries of the blockchain technology. Through tokenization, blockchain is bringing every industry and market from the shadows into the decentralized open network where anyone from anywhere in the world can access and trade. The diamonds market is characterized by a lack of liquidity, but the blockchain technology could change that through tokenization.

The emergence of gold-backed cryptocurrencies like GoldMint and OneGram has inspired more blockchain startups to explore the possibility of adding the diamonds market to the tokenized economy. PinkCoin and SparkleCoin are among the few diamond-backed cryptocurrencies that have already been announced. Tokenization could help decentralize the highly illiquid diamonds market as experts continue to caution buyers about the potential cases of fraud.

With tokenization, if you purchased $100 worth of diamond-backed crypto-coins, there would be an equivalent value worth of certified diamonds to back your investment. For instance, PinkCoin issued 5,000,000 coins in 2016, which it said was backed by $5,000,000 worth of certified colored diamonds insured by Lloyd’s of London. This simply translates to a value of $1.00 worth of diamonds for every coin purchased by investors.

'Coloured diamonds are the rarest commodity in the world and quite simply, the world’s most concentrated form of wealth; it is expected that this trend will continue,' Dr. Nataliya Hearn, CEO of the company that owns PinkCoin said earlier this year. The current global yield of colored diamonds mined per year is expected to slow down while demand from the jewelry industry continues to grow. Statistics indicate that pink and other fancy grade colored diamonds are the only commodities that have not decreased in price since 1959 when tracking of their prices began. 'This will only enhance their value and thus the validity of PinkCoin in the marketplace,' Dr. Hearn added.

Tokenized real estate

Blockchain technology and the increasing global acceptance of digitized transactions are further pushing the world towards tokenization. The process of tokenization allows encryption experts to replace sensitive data with unique identification symbols that retain all the essential information about the data without compromising its security. The information is then stored in a list of records, called blocks, which are linked and secured using cryptography.

From the perspective of real estate, such information could include the location of a property, its size, type, records of previous owners, pricing and transfer records, as well as its availability and the current market value. Some people would argue that even without blockchain or tokenization, most of this information (location, size, type etc.) is already available on several online platforms such as commercial office portals. However, this does not mean that retail traders have the same access and trading capability that the tokenized market would offer.

Generally, only three entities are party to a deal that involves the transfer of property in the brick-and-mortar real estate market. The buyer, the seller, their legal representatives, and at times, a real estate agent. It is difficult to purchase or lease a small piece of a listed property (a house, office or a commercial building) because the listing is not tokenized. However, with blockchain and tokenization, platforms like ATLANT are already looking to demystify this obstacle and allow tokenized trading of real estate properties.

Workflow management in the construction industry

During a construction project, several stakeholders are involved. This can be cumbersome thereby dragging the project longer than it is necessary. However, with the blockchain technology, teams can easily access real-time project data, which assists in workflow collaboration.

Contractors can use smartphones and tablets, which are linked to cloud-data storage and management systems 'to access blueprints, documents, contracts, and other important information in real-time from the job site. This decreases the wait time that can cause serious delays thereby allowing contractors to avoid costly mistakes', reports the SBCI.

In addition, by using 'Smart Contracts', construction companies can make a staggered payment to suppliers. This means that the company could purchase equipment directly from a supplier, pay off a portion when the equipment leaves the port of origin, after which, the liability is transferred to the shipping company. Then pay another portion when the equipment arrives on site (after which the construction company reassumes responsibility). The final payment can then be paid when the equipment has been installed and commissioned.

In summary, there are several industries and markets that blockchain is yet to disrupt with the same magnitude that we have witnessed in the currency market. Some of these markets and industries could actually use the blockchain technology to reinvent themselves. Other industries should continue to try and capitalize on its growing popularity as the real estate, construction, and diamonds market are but to mention a few. 

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