Many know blockchain as the innovative technology that allows the cryptocurrency Bitcoin to work. The underlying blockchain protocol can be repurposed for many non-currency purposes. The blockchain protocol is suitable for anything that requires a process to record transactions and track assets, whether those assets relate to property, IP, finance or something else. It promises more efficient and transparent business transactions compared to existing solutions.
Blockchain is still an evolving technology. In the legal world we are keeping a close eye on ‘smart contracts’ that use blockchain. We are also looking forward to seeing how blockchain for business develops alongside other disruptive technologies, like big data analytics, the Internet of Things and artificial intelligence.
As we enter this new decade, continued collaboration between government and private enterprises is needed to help blockchain for business gain momentum. It is vital for the technology to gain the trust of stakeholders to encourage greater uptake. As blockchain for business matures and the technology and standards develop to address the challenges around data protection, regulatory compliance and long term stability, many more projects are likely to progress past the proof of concept phase.
We expect to see increased government and private sector awareness and investment. Other trends to watch out for include:
Rise of private permissioned ledgers
Building on a current trend, organisations with business-critical services or with sensitive data will opt for ‘blockchain for business’ private, permissioned blockchain networks rather than public blockchain networks. The identity management feature of a private, permissioned network that only allows selected participants to join is better suited for business to business (B2B) use cases.
Consortiums and individual organisations are exploring the ability for blockchain to provide an efficient, transparent form of digital ID for individuals or businesses. This will be valuable for facilitating access to government services or streamlining customer on-boarding and ‘know your client’ checks.
The ‘tokenisation’ of assets is the process of issuing a blockchain token that digitally represents ownership of a real tradable asset. Although tokenisation is in its early stages, the tokenisation of assets and trading, and exchanging those tokens, will pick up speed in sectors such as financial services and real estate, improving operational efficiency and decreasing trading costs.
Digital Single Market
There is a strong belief at an EU level that blockchain technology can help build Europe’s Digital Single Market. As such, we expect to see significant steps this year on the drafting and adoption of appropriate legal and regulatory frameworks for blockchain to help foster innovation and harmonise standards for the Digital Single Market.
Blockchain for business in Ireland
From an Irish perspective, Ireland has made progress to capitalise on the opportunities that blockchain for business offers. However, more work is needed to keep up with other member states. To continue operating at the leading edge, Ireland needs a clear plan and vision for blockchain. Building trust will be crucial.
Regulation doesn’t need to mean the end of innovation. As a small nation it is possible to implement a ‘blockchain friendly’, innovative and technology-neutral regulatory framework. Countries like Gibraltar, Liechtenstein and Malta are leading the way. It is important that the newly formed government is on board to help drive the agenda for our businesses at a national and EU level.
Stakeholders, such as technology experts, banks and professional services, need to actively work together to promote blockchain for business-use cases. Ultimately, success will depend on support from the wider community, through a mix of investment, collaboration and innovation.
For more information, contact a member of our Fintech team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.