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3 September, 2021updated 29 Oct 2021 12:41

Blockchain use is about more than NFTs and dogecoin. It’s about you.

Blockchain use around the world proves more valuable than the most overpriced NFTs, giving people a worth that can perhaps be more fairly weighted on the blockchain.

By Giacomo Lee

blockchain-image

Blockchain has a significant role to play in everything from data security to smart cities, but the technology continues to be both underrated and misunderstood. (Photo by Peshkova/Shutterstock)

Blockchain use can save lives, build smart cities and boost data privacy, but before it can do any of those things, it has to step out the shadow of dodgy cryptocurrencies and multimillion-dollar digital art deals.

Blockchains keep confounding tech-watchers. In a way, blockchain use is bigger than ever before. At the same time, it is as underrated and misunderstood as it was in 2008 when the mysterious Satoshi Nakamoto published a groundbreaking paper on Bitcoin, kicking off the cryptocurrency revolution. The use of non-fungible tokens, or NFTs, has only intensified matters in the 2020s.

A digital certificate of authenticity that can be verified on a blockchain, NFT tech has been used to transform GIFs and viral videos into a one-of-a-kind item belonging to an exclusive party. One GlobalData report on blockchain goes as far as to say the hype around NFTs “is out of proportion”, stating that NFT copyright and patent infringement remain “in their infancy, and the implications are unclear”.

Just come of the factors preventing a sober, nuanced assessment of the use of blockchain include an almost cultish devotion to cryptocurrencies, meme-worthy coins and simple tweets that can make or break a currency, usually by Tesla founder Elon Musk. However, blockchain use is about more than that.

Distributed ledger technology

Both NFTs and cryptocurrencies rely on distributed ledger technology (DLT), of which blockchain is a subset. Blockchain commonly involves the use of public key encryption and hashing, cryptographic tools that prevent third parties from viewing or tampering with private data. Bought a tweet for almost $3m? Then your proof of ownership is theoretically locked up, as safe as can be.

Blockchain doesn’t simply keep the rest of the internet’s grubby paws off of the digitally ethereal. A method of storing information, the tech offers a digital ledger of transactions that is decentralised. This means that no central authority or intermediary – such as a government or bank – will validate a transaction.

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DLTs keep the key out of others’ hands for one participant only, and as ledger uses around the world are proving, people are more valuable than the most overpriced NFT around, with a worth that can perhaps be more fairly weighted on the blockchain.

Blockchain can save lives

Sometimes keys need to be handed to others, at least in the physical sense. Access can save lives and, perhaps, blockchain too, argues Szymon Fiedorowicz, CEO and co-founder of SmartKey.

In emergency situations, seconds matter and so by giving the emergency services access to SmartKey technology they are able to open any barrier or secure building in the city without having to track down a keyholder or seek permission. This can literally save lives. Szymon Fiedorowicz, SmartKey

Borne out of Poland, the SmartKey platform aims to be a secure and universal communication standard for tools in Polish smart cities. Through blockchain, the tech allows citizens to easily control smart city functions such as smart bikes, water meters and entry barriers from their device.

The tech itself came about from a “dumb” rooted problem that was putting city dweller lives in danger, Fiedorowicz explains.

“The initial pilot project in Olsztyn, Poland, solves a clear and present problem in many Polish cities: the use of entry barriers in many districts, which hinders rescue services in case of emergency,” he says.

“In emergency situations, seconds matter and so by giving the emergency services access to SmartKey technology they are able to open any barrier or secure building in the city without having to track down a keyholder or seek permission. This can literally save lives.

“It is a dramatic use case,” Fiedorowicz continues, “but it also shows how it could be applied to more mundane, everyday situations such as granting access to taxi drivers or delivery companies for a specific time before removing the permissions to ensure security.”

The blockchain use here goes beyond safeguarding a few pretty pennies and art investments. Fiedorowicz tells of his frustration that the ideal vision of the smart city of the future couldn’t be fully realised without a universal communication standard. A standard is needed to enable all stakeholders in a city, from utilities and government to consumers and more, to share data without compromising security and commercial advantage.

With the advent of blockchain, Fiedorowicz felt he had found the key to removing this barrier, using technology that is secure and anonymous by design to efficiently bring together sources of big data.

“It also creates a connective tissue which the smart cities of the future can be built on, so new implementations such as using weather data to control building temperature can integrate seamlessly within the same infrastructure,” he says.

A smarter kind of citizen

Smarter cities make for a smarter kind of citizen, and blockchain can redefine what a citizen means in the 21st century.

The EU is already piloting projects relating to self-sovereign identity (SSI), a decentralised approach to digital identity that gives individuals control of their digital identities and data.

Using blockchain, citizens can create and manage digital identities that provide greater privacy and control of data using a decentralised identifier (DID). Users sign up to an SSI and data platform to create and register a DID, gaining a pair of encrypted private and public keys that are then used to prove or control an identity. Creating more than one DID is possible to avoid correlation, and can be presented in more than one form (QR codes or tokens, for example) when opening bank accounts, travelling or even voting in elections.

Japanese cities such as Kaga and Tsukuba are developing blockchain voting systems using digital identity apps such as xID. Neighbouring South Korea, meanwhile, has launched an identity verification app and service in its second city, Busan. The country’s first city, Seoul, already offers blockchain-based drivers’ licences, and a blockchain system for autonomous vehicle identification exists in the Korean de facto administrative capital of Sejong City.

Fiedorowicz, though, feels a blockchain linking all the smart aspects of augmenting cities remains rare, with other examples, in his view, limited to a particular ecosystem or brand.

“SmartKey’s vision is more democratic,” he says. “We want to be a connective tissue that links all smart city initiatives and turns it from a collection of cool projects into a proper infrastructure limited only by what our imagination can conceive.”

There is already bold backing behind his platform, with Orange providing an internet of things (IoT) platform to power the SmartKey card, described as the first ever ‘blockchain of things’ SIM card. As smarter cities combine with more digitally self-sovereign citizens, such as in South Korea, the more the market will conceivably expand for offerings such as SmartKey’s.

Nevada may one day be home to a city built on the blockchain, for example. Phnom Penh may become home to another courtesy of Singaporean start-up Limestone Network. Singapore itself is planning to transform one of its districts with the help of China’s Wanxiang Blockchain.

Blockchain use in Asia

East and South East Asia therefore seem to be hot spots for the blockchain. Gaurang Torvekar, CEO and co-founder of Indorse, picks out the majority of East and South East Asian blockchain start-ups as being located in Singapore, where he is sometimes based, followed by Indonesia and Malaysia.

The Singapore regulator, MAS, has been at the forefront of innovation, having finished five phases of Project Ubin, which used blockchain technology for inter-bank settlements, among other things. Gaurang Torvekar, Indorse

“The Singapore regulator, MAS, has been at the forefront of innovation, having finished five phases of Project Ubin, which used blockchain technology for inter-bank settlements, among other things,” says Torvekar.

“[The Singaporean government] itself has been heavily promoting and supporting the development of technical talent, incentivising deep-tech start-ups, universities, polytechnic schools and other ecosystem partners to train and upskill their citizens.

“The government also has sensible regulations that don’t stifle innovation, while at the same time safeguarding its citizens.”

This is a different picture from what Torvekar sees in his other base of the UK, which he says is “not as favoured among nascent blockchain start-ups because of the relatively cautious attitude by banks towards these companies”.

“Historically, it has been difficult to even open a bank account for a start-up that has got to do anything with cryptocurrencies,” he says of the situation in the UK.

Capitalising on this situation is a location famous for being a regulatory haven, but perhaps a little less well known for digital innovation and smart urban living.

How the Isle of Man is making a name in blockchain

Spanning 572km2 and with a population of less than 85,000, the Isle of Man has always punched above its weight through its tax attractiveness when compared with the UK mainland. The island is hoping to parlay some of that attraction towards blockchain companies struggling with UK regulations.

Being a small jurisdiction, we can change our legislative framework for the right businesses, but you have to have really solid requirements and very clear aims to make anybody do that. Lyle Wraxall, Digital Isle of Man

This is being done through tech initiative Digital Isle of Man, which, aside from cryptocurrency start-ups, has attracted DLT businesses working in green tech, education and agriculture to the territory.

“We have stepped away from initial public offering raising and chasing exchanges, and we are looking for more interesting use cases rather than just more of the same,” says Lyle Wraxall, Digital Isle of Man CEO, although he admits anything off the well-beaten cryptocoin track can struggle to raise capital.

“For some of these more societal use cases for blockchain, it is challenging to bring in the capital, to engage the stakeholders, to actually agree the right way forward and then to bend policy and legislation to your will to make that happen,” he explains.

“Being a small jurisdiction, we can change our legislative framework for the right businesses, but you have to have really solid requirements and very clear aims to make anybody do that. Some of these businesses have pivoted multiple times and completely changed identity, their purpose, their objective and pretty much most of their staff.”

Wraxall notes that blockchain players can be “unclear” on their objectives, and this isn’t simply limited to younger leaders with less experience pushing DLTs.

“We have some very seasoned, very well-established people who have also flip-flopped on their key objectives,” he says.

For now, the island is a haven more for cryptocurrency exchanges than it is for DLTs that can change the world or empower citizens. However, it hasn’t even been three years since the project began, and Wraxall’s vision for the Isle of Man is in no way stymied.

“When it comes to things such as power usage, if we can start encouraging people to create their own power, we do need to have a better view of how that is being done – how it is bought and sold into the grid – and these prosumer models we see through smart contracts and blockchain fit that very, very well,” he says.

“Given the size of our island, we probably have more than our fair share of electric vehicles because they make a lot of sense, so what you end up with is not just the ability of people to generate electricity in the house, but essentially to store it and release it at a particular time.

“That is really where the prosumer model becomes very interesting, and we have already got some use cases on the island of people generating their own electricity, using predictive technology around weather patterns to decide how much to store and how much to sell back to the grid.

“DLT can really take that to a far more interesting level from a societal perspective.”

Away from the skyscrapers of Asia and ‘blockchain of things’ cities, the true power of blockchain may actually be revealed by a humble isle in the Irish Sea, and while no man is an island, they can stand unique in the chain and above centralised powers, all via distributed ledger technology.

By Verdict’s Giacomo Lee. Find out more in GlobalData’s Thematic Research Blockchain report.

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