We have been discussing a lot about blockchain, smart contracts and insurance in almost each and every article that we are writing every day, because we want to let each and every one of our readers to know more about blockchain’s importance and its key value proposition which is about security, workflow simplification, cost reduction and control over how data is leveraged over the extended enterprise. We also want to emphasize every day that using this technology, it has the capability of reducing costs by eliminating the need for a trusted third party service provider and for automating labor-intensive manual verification processes, just like what we are trying to create here at Inmediate when it comes to insurance. Last year, we have seen the adoption of blockchain in digital payments, international remittance, provenance, insurance, track and a trace of documents, products, and packages. And for this year, we are expecting smart notaries and digital KYC to be driven by blockchain-enabled multi-point authentication including biometrics.
And in case you don’t know, permissionless blockchain based cryptocurrencies peaked in 2017 and have been losing ground ever since. We think that it is now time for government-driven cryptocurrency initiatives, which are likely to succeed and bring blockchain back to life. Outside this government regulated cryptocurrency space, only blockchain applications that promise to deliver topline advantages to corporations and have use cases with clear bottom-line benefits are only going to succeed, in our opinion. We also think that there is no way to predict the way cryptocurrencies work without any real assets backing them, and are going to go in the immediate future.
Blockchain’s Global Acceptance
It is safe to guess that blockchain adoption will proliferate in international trade and commerce, money transfer, policy management in the insurance sector, fraud detection and document management and approvals in any business with geographically dispersed stakeholders. In order to bring blockchain to a broader audience, it has to be endorsed and adopted by the government to enforce regulatory frameworks in digital payments, banking, insurance, pharma, etc. Several countries like Sweden, Denmark, Estonia, Malta, Netherlands, the USA, Thailand, and Canada are adopting blockchain technology integrated with artificial intelligence as part of their digital transformation initiatives. Swiss Postal Service and Telecom, Thailand VAT payments, the Dubai government’s credit bureau’s digital payment system are all on blockchain now. The government of Denmark is in process of utilizing AI and blockchain into digital identity, healthcare, business support, and its citizen welfare system. Sweden is the most digitalized economy in the world with AI and blockchain slowly becoming mainstream in all government functions. The objectives of all these initiatives are to create an environment for economic growth facilitated through the development of high-quality digital solutions delivered on blockchain-enabled user-friendly smartphone devices where everyone has the comfort of security and confidence and AI- or ML-based systems.
STO And The Tokenized Future
Cryptocurrency safe havens like Malta are under strict scrutiny of US and European regulators as they are becoming a hub for bringing embargo affected Iranian and illegal Russian investments into the mainstream. The craze behind ICOs has disappeared by quite a bit and a new STO (Security Token Offering) is emerging as a viable alternative to crowdfunding. Security tokens are real assets that are “tokenized” and the digital equivalent represented, traded and invested on a blockchain. These are very different from utility tokens, where security tokens are subjected to securities regulations, like stocks, bonds, and other types of securities. Security tokens are much safer alternatives backed by real assets like balance sheets tied to profit margins, valuations and rewarded through dividends and bonuses. Loyalty points from retail purchases, frequent flyer miles, credit card cash back, and entitlements from telecom and utility providers will all be tokenized and available as an alternative to real cash. We will see STOs backed by such tangible and intangible assets of real value soon in the global digital marketplace this year. As soon as the STO processes stabilize in Europe and the US with regulatory concerns addressed, several STO projects will succeed in raising capital this 2019, with more liquidity coming in early 2020.
Nasdaq, London Stock Exchange, and the Swiss Stock Exchange are developing digital asset platforms and market infrastructure will be available by the end of 2019 to compete with existing established crypto exchanges. Global economic indicators are showing a possibility of a global slowdown later in 2019 and investors are likely to jump into alternative asset classes showing promise. STOs cannot give 10x returns but will yield reasonable returns with much lesser risk. We will see a lot of existing well-established companies with real revenue of more than $100 million and healthy small and medium enterprises (SMEs) and Real Estate Assets coming out with security tokens. Well-performing assets and companies with significant IPs that previously lacked liquidity will be tokenized to enable future growth and valuations that will potentially yield robust returns. So there will be a unique opportunity for companies with significant assets like patents, infrastructure collaterals but not in a position for an IPO to get capital infusion through STOs. This will help them scale and become global businesses of billion dollar revenue global businesses. This is significant as ninety percent of global businesses are still SMEs waiting for creative strategies to raise funds without onboarding nosy and controlling institutional investors.
A Decentralized Ecosystem Towards The Future
It is possible for blockchain-integrated AI-, ML-, social media- and robotic automation-driven technology companies emerging with truly multinational B2B2C business models that are purely data-driven and can challenge established local and global marketplace providers. As e-commerce created disruption in the nineties, there is a huge potential for decentralized P2P marketplace, which can bring the power of data to local SMEs and benefit consumers. This can be achieved by smart contracts powering revenue and margin sharing and automating access to consumers with a decentralized marketplace where data is owned by one global entity. New business models will emerge, which will encourage cooperative competition with potential competitors coming together to with decentralized ecosystems that interconnect stakeholders managing product lifecycles and end-to-end delivery cycles.
There will be lots of experiments this year in creating a decentralized ecosystem for enabling digital token based digital payments and commerce worldwide. The true winners of this year and the years to come will be the ones that are able to bridge the crypto and fiat worlds through the deployment of public and private blockchain driven enterprise software solutions and services.