Crypto Winter Is Temporary As Blockchain Use Evolves, Claims Johannes SchweiferCEO and co-founder of CoreLedger†
As the financial markets run out and pessimism is running high, the hype and speculation about crypto and blockchain are fading. Gone are the days when NFTs could easily fetch millions of dollars. Today photos of cute animals and memes are seen as scams.
Fortunately, after the rain, the beautiful weather comes. The bear market marks the beginning of the development season. A new generation of developers could emerge. Companies work hard and focus on creating practical innovations that will bring utility and greater efficiency. So that they can overcome some of the biggest challenges we face today.
NFTs are just a small demonstration of the potential of tokenization. Outside of the artistic domain, various objects can be converted into digital tokens. This allows us to host and trade all assets on the blockchain.
So, where are these innovative projects being developed? This is how blockchain is becoming increasingly important for businesses.
The crypto winter is tough, but what about the agricultural crisis in emerging countries?
In the wake of the pandemic, the free fall of the peso and the financial crisis are plaguing Argentina, where inflation is over 50%. More than 40% of soybean oil and flour production comes from Argentina. Farmers therefore rush to liquidate their real and physical assets. This allows intermediaries to obtain the goods at a lower cost to the detriment of farmers.
This is a widespread problem in agriculture and livestock, especially in emerging economies, as their national currencies are constantly depreciating. By symbolizing their agricultural assets, farmers could hedge against inflation.
Blockchain technology also gives them access to domestic and international capital. This solution has already been tested on livestock farms in Bolivia. The tokenized participation model allows investors from all over the world to invest in it. Each token represents a percentage of sales or a digital voucher.
How it works ?
So, how can we apply this solution? All it takes is digital swap technology that increases the liquidity of tokens by enabling instant conversion of value. Using this technology, one can create a P2P platform that allows users to trade tokens of different values. For this, the platform brings together an unlimited number of swaps and payments. It then chooses the optimal path from thousands of available trades. This according to a number of predefined criteria.
This allows each asset to be exchanged for another. While very interesting, this technology still has a long way to go to reach its full potential. The more trade increases, the more useful the technology becomes.
This requires companies, regulators and institutions to coordinate their efforts. There must also be a change in the perception of technology. To draw the right guidelines, the fear of the unknown must turn into an understanding of the benefits of this technology.
Though still in its infancy, the market value of tokenized assets is close to $20 billion. On the other hand, the total market size for digital assets has reached $350 billion. This means that there is enormous growth potential.
Fight against climate change
The fight against climate change is one of the sectors benefiting from tokenization. Indeed, carbon credits are units used to measure the reduction of carbon emissions. By using them, companies can reduce, eliminate or avoid greenhouse gas (GHG) emissions.
These are transferable units that are certified by governments or independent certification bodies. Each unit represents an emission reduction of one tonne of CO2, or an equivalent amount of other greenhouse gases. The owner of a credit can also use it to offset his own emissions.
The tokenization of carbon credits eliminates problems with quality, operational transparency and project evaluation. By integrating these credits on the blockchain, governments can ensure the transparency and integrity of information. Indeed, the data is stored in such a way that double counting is eliminated (when credit is accounted for by both buyer and seller) while the credits are tradable and accessible all over the world.
So far, the blockchain houses almost 22 million CO2 credits. The use of decentralized protocols in the carbon credit industry has opened up new ideas on how to improve transparency and accountability. It also makes it possible to attract new categories of investors for projects with a positive impact on the climate.
Of course, legislators and businesses must work hand in hand to eliminate opacity and help protect the environment.
Intellectual Property Protection
Legal documents and other types of agreements or contracts are often shared in hard copy to ensure confidentiality and immutability.
However, we know that tokenization makes it possible to capture and exchange all assets on the blockchain. Companies can therefore tokenize documents and other types of data to increase their security.
The elements recorded on the blockchain are immutable. This makes it possible to prove their ownership without the involvement of intermediaries or notaries, while standardizing copyright and intellectual property management processes.
Obtaining a title deed is often a long and expensive process. Thanks to the blockchain, singers who want to prove the originality of their work and scientists who want to patent their invention have an extra tool.
Blockchain entered the legal world in 2019. However, digital record policies differ from country to country, which can be cumbersome. But as the blockchain, which was previously complex, offers simple and user-friendly applications, the situation is changing in the right direction.
Today, even the most conservative jurisdictions, such as China, have begun to use blockchain to help courts deal with piracy and copyright infringement cases. The applications of the blockchain in business exceed those of the agricultural sector. The environment and the protection of intellectual property are an excellent example of the potential of this technology.
Blockchain companies need to work with governments and regulators to find the most efficient and practical ways to use this technology. This is to eliminate false ideas and draw the right guidelines. Only then will we have a secure and sustainable environment that helps different players to take advantage of blockchain.
About the author
Johannes Schweifer is the CEO and co-founder of CoreLedger. He holds a master’s degree in chemistry and a doctorate in distributed computing and quantum chemistry from Vienna University of Technology. As a serial entrepreneur, Johannes spends his time solving problems and innovating. He has founded and co-founded several blockchain startups in Crypto Valley.
In 2013, he co-founded Bitcoin Suisse AG and created his first banking and accounting infrastructure. In 2017, he founded CoreLedger AG, a startup that aims to encourage the use of blockchain outside of finance and speculation. Johannes is actively exploring blockchain to solve some of the world’s biggest problems. It demonstrates the real value of this technology with practical applications.
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