Forbes Councils Member
COUNCIL POST
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As the world around us continues to rapidly change, most institutions and individuals recognize that we are living and working in an increasingly digital economy. However, there remain several questions about the underlying technologies that act as a foundation of our future digital economy, including on-chain technologies and how it can transform the way we conduct transactions, manage data, and help build scalability and trust at a cost that is a fraction compared to traditional technologies. Just as the internet, mobile, cloud computing, and artificial intelligence have reshaped our world, on-chain technologies are set to be the foundational technology that could define the future of the digital economy.
On-chain technologies represent a paradigm shift in how we build ecosystems at an unprecedented scale, enabling a more efficient, inclusive and transparent digital economy. By providing an on-chain platform for transactions, processing times are decreased, costs are reduced, and scalability and security are increased.
Here are some examples across different sectors where on-chain technologies are already having a meaningful impact and how we can implement this innovation across other industries.
Financial Services And Banking
On-chain technologies could revolutionize the way we manage financial transactions, especially for the unbanked and underbanked populations, by providing them with secure and efficient access to financial services, such as enabling secure and efficient cross-border payments or providing access to low-cost microloans to help businesses scale. Further, on-chain technologies can enable the creation and sustainability of new business models and platforms, opening up new economic opportunities.
For example, Ripple, an on-chain-based payment protocol company run by a former colleague of mine at Yahoo, has partnered with numerous banks and financial institutions around the world to facilitate faster and cheaper cross-border transactions. Its network enables real-time and on-demand liquidity for international payments, thereby significantly lowering the time and cost associated with traditional banking systems.
Digital Identity And Verification
Another exciting application of on-chain technologies is related to digital identity and secure verification. In the digital age we live in, and especially given growing artificial intelligence applications, securing and verifying personal identities and associated data has become increasingly critical, and the need for secure and efficient global identity management is particularly relevant.
Using on-chain technologies, individuals and institutions can create self-sovereign identities using decentralized identifiers (DIDs) and verifiable credentials (VCs), providing them with greater ownership and protection of their global digital identities. Individuals and institutions can also selectively disclose only relevant information using zero-knowledge proofs, which are an innovative methodology that enables one party (the prover) to prove to another party (the verifier) that they know certain information without revealing the actual information itself. This enables individuals to prove they possess certain credentials or own specific assets without disclosing sensitive data. This drives greater privacy and security, while streamlining and scaling processes such as authentication and identity verification.
On-chain-based identity solutions can be beneficial for numerous industries such as financial services, healthcare, retail, payments and public services, where the secure and efficient management of sensitive information is crucial. Moreover, these solutions can promote financial inclusion and easier access to services for underserved populations around the world by providing them with a secure and verifiable digital identity that is affordable and easy to access using mobile devices.
As an example, Microsoft is advancing the development of on-chain-based identity solutions with its decentralized identity (DID) system. Through its Azure Active Directory verifiable credentials, Microsoft enables organizations to issue digital credentials based on open standards.
In a 2020 study, Microsoft partnered with Keio University in Japan to issue on-chain-based digital identities to students and staff for secure access to campus facilities and online resources, streamlining administrative processes and enhancing privacy. This innovative approach to digital identity management illustrates new innovative approaches for more secure, efficient and user-centric identity systems across various sectors, revolutionizing how we interact with digital services and protect our personal information online.
Supply Chain Management And Logistics
On-chain technologies could also revolutionize the economic value chain, including supply chain management, by enabling businesses to track products at every stage—from factories, to shipping, to delivery, to end consumers. By providing a transparent and immutable record of progress, updates and transactions, companies could ensure authenticity, reduce fraud and improve efficiencies. This increased transparency and traceability could streamline operations, build increased trust amongst stakeholders and foster enhanced collaboration among different stakeholders in the digital economy.
Major companies such as Walmart and Nestlé are currently exploring the usage of on-chain technologies to enhance their supply chain management. Walmart Canada launched an on-chain-based freight and payment network to manage, integrate and synchronize supply chain and logistics data in real time, automating payments and reconciliation among their supply chain participants.
Nestlé, in collaboration with on-chain platforms, has been piloting a public on-chain to trace milk from farms and producers in New Zealand to Nestlé’s factories and warehouses in Central Asia and the Middle East to bring more transparency to its supply chain and allow consumers to make more informed choices and decisions.
Challenges And Opportunities Ahead As We Advance Toward A Digital Future
The path to broader adoption and the benefits of on-chain technologies, however, is not without its challenges. The need for greater interoperability between different on-chain networks and consistent global regulatory standards are just a couple of the hurdles that must be overcome. As with any new and innovative technology, as we saw with the internet, mobile, cloud computing—and currently with artificial intelligence and on-chain technologies—there will be a period of evolution as we navigate this new landscape.
As we collectively navigate this rapidly evolving technological landscape, it will be essential to both embrace the opportunities presented by these innovative technologies while addressing the challenges that arise, ensuring that the benefits of the future digital economy are open and accessible to all. The foundation of the future digital economy is here, and it is up to us to collectively build upon it and benefit from it, creating a more prosperous and equitable world for generations to come.
Follow Rahul Mewawalla, Mawson CEO and President, on Twitter (X) or LinkedIn.
