The crypto winter is temporary. Johannes Schweifer, CEO and co-founder of CoreLedger, said the use of blockchain is on the rise.
Due to the turmoil in the financial markets and sentiment bleak, the hype and speculation of crypto and blockchain has come to a halt. Gone are the days when NFTs can easily fetch millions of dollars. Now, digital pictures of cute animals or meme culture are increasingly being labeled as scams amid a reaction to the dwindling crypto markets.
Thankfully, every dark cloud has a silver lining. Bear markets signal the beginning of the construction season. A new generation of builders may emerge. Companies lean in and focus on continuing to build practical innovations that will bring utility and greater efficiency. They can overcome some of the biggest challenges facing us today.
NFT is a small application of tokenization. In addition to art, many other objects can be converted into digital tokens. This allows any asset to become accessible and tradable on the blockchain.
So where exactly are these practical innovations being developed? Here are some examples of how blockchain for enterprise is increasingly becoming an increasingly important aspect of our lives.
Is Crypto Winter? Agriculture in Emerging Economies
As we globally recover from the pandemic, farmers in Argentina are grappling with a fall in the peso amid financial uncertainties. Inflation is reaching above 50 percent. More than 40% of soybean oil and soy-meal production comes from Argentina. This puts pressure on farmers to liquidate their real, physical assets. It also makes them vulnerable to undercutting by middlemen.
This is a prevalent issue especially for agriculture and livestock in emerging economies. Their fiat currency is constantly being devalued. By tokenizing farm assets, farmers can potentially hedge against inflation.
Blockchain technology gives them access to capital provided by national and international investors through blockchain. This is a solution that has been used by cattle ranchers in Bolivia. Investors from around the world can participate through a tokenized revenue sharing model. This is where each token represents a percentage of revenue or digital barter.
Crypto Winter? Digital swap moving forward
So how can this be possible? All that is needed is a digital swap technology to increase liquidity in the token economy by enabling instantaneous value-conversion. It facilitates a peer-to-peer (P2P) exchange of contracts that allows parties to trade tokens of different denominations. It aggregates any number of swaps and payouts together and selects the optimal path through thousands of available trades based on set criteria, as shown in the figure below.
In short, it makes anything tradable for something else. While this development is exciting, much more needs to be done to develop awareness of the technology to realize its full potential. The more potential trades there are, the more useful they are.
More efforts are needed among companies, regulatory bodies and institutions to facilitate this. There is a need to change the perception of technology – from fear of the unknown, to an understanding of its benefits to setting appropriate guidelines.
While still relatively experimental, the total tokenized asset market value is estimated to be less than $20B. The total size of the digital asset market is up to $350B, highlighting the tremendous scope for growth that can be achieved.
Crypto Winter and Combatting Climate Change
Another important area that is currently seeing successful experiments with tokens is combating climate change. Carbon credits are measurable, verifiable emissions reductions from certified climate action projects. Companies can reduce, eliminate or avoid greenhouse gas (GHG) emissions by using them.
They are transferable devices certified by governments or independent certification bodies that represent a reduction in emissions by an equivalent amount of one metric ton of CO2, or other GHGs. Thus a credit owner can use the credit to meet his own GHG reduction goals.
The purpose of tokenizing carbon credits is to address the issues of poor credit quality, operational transparency and project measurement and evaluation. By tokenizing credit, blockchain enables greater transparency and integrity in markets. Data is stored in a way that eliminates double counting while making it globally tradable and accessible.
There are already 22 million retired credits on the blockchain. The introduction of decentralized protocols integrated with carbon credit markets has inspired new ideas on how to create greater transparency and accountability. This is while providing opportunities to meet the growing demand which will further drive capital towards climate-positive projects.
This is where regulatory bodies and companies need to work together to eliminate ambiguity in order to achieve a net positive for the environment.
Protection of Intellectual Property (IP)
Legal documents and other types of agreements or contracts are often shared in print form to ensure confidentiality and immutability.
Tokenization allows any asset to become accessible and tradable on the blockchain. Documents and other forms of data allow businesses to use tokens for strong digital security and secure transfer of data.
Records on the blockchain are immutable (they cannot be changed and can only be added). It provides proof in a valid manner without the need for an intermediary or notary, whether in the form of digital claims, certificates or proof of ownership.
This creates a level playing field for the management of copyrights and IPS. The legal fee to establish proof of ownership in long-drawn court cases can be prohibitively expensive. Singer wants to maintain the originality of his work, and scientists who want to patent their technology have an additional way of doing so, different from traditional methods.
It is being used since 2019. Different countries and territories have different policies governing whether digital records are legally binding. This is constantly changing as complex underlying technology is being transformed into easy-to-use apps that provide a seamless user experience.
Even traditionally conservative jurisdictions such as China have begun adopting blockchain to help legal courts deal with cases of piracy and copyright infringement. The applications of blockchain in the enterprise beyond agriculture outlined in emerging economies. The environment and protection of IP are great appetizers of the benefits it can provide.
Blockchain companies need to work closely with governments and regulatory bodies to find the most effective and practical ways to implement the technology. This is to remove skewed assumptions and provide suitable guidelines. Only then will we have a safe and sustainable environment that helps stakeholders use applications in meaningful ways.
About the Author
Johannes Schweifer, CEO and co-founder of CoreLedger. He holds a Master’s degree in Chemistry and a PhD in Distributed Computing and Quantum Chemistry from the Technical University of Vienna. He is a passionate problem solver and builder. Johannes is best known as a serial blockchain entrepreneur who has founded and co-founded several blockchain startups in Crypto Valley.
He was a co-founder of Bitcoin Suisse AG 2013 and built its first backbone infrastructure with banking and accounting, actively serving as of 2016. In 2017, he founded CoreLedger AG to advance blockchain ideas beyond financial and speculative use cases. It is actively using blockchain technology to solve some of the world’s biggest challenges and demonstrate the true value of blockchain with practical applications.
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