360° Digital Innovation and Blockchain

Intro

Our society is experiencing substantial changes and improvements in its traditional systems and processes due to continuous technological innovation. The results of technological development identified in industry 4.0 and digital technology concepts enable the optimization of industrial production and logistics processes.

The advancement of cutting-edge technologies, the new payment directive (PSD2), and the availability of capital to invest in innovative ideas are all phenomena that have driven the emergence of new technologies in various services.

Blockchain technology

Given the highly innovative connotations of this technology, it is necessary to provide an overview of the main characteristics and types of Blockchain.

Blockchain technology is a digital recording system that monitors the ownership of securities and the payments related to securities exchanges (Chiu & Koeppl 2018). In the Blockchain, data is stored in “blocks,” and each block records all its value exchange activities during its creation. It is a digital ledger whose entries are chained in chronological order, and whose integrity is guaranteed by the use of cryptography. In this case, not only can it keep information intact, but it also makes it difficult to tamper with, fundamentally solving the problem of information traceability and tampering.

The most appropriate term to describe Blockchain, in my opinion, is Group Security. What this technology brings to the parties involved is the security of group historical data: instead of having a single party (the classic intermediary) ensuring that the data history is correct and has not been modified, there is a group of parties providing this security together. This technology is useful, therefore, to protect the entire history of data and is excellent for tokenization, for data ownership records, and potentially for payment records.

Progress in Blockchain technology

The study of Blockchain technology has become an important subject of study in Italy and worldwide. The size of the global Blockchain technology market was valued at $3.67 billion in 2020, and a CAGR increase of 82.4% is expected from this year to 2028 (Market Insights), as seen in Italy where Blockchain investments increase to reach a market of €30 million (ANSA.it).

This emerging technology is set to influence various sectors:

Cross-border payment and settlement services. Since transfers via Blockchain do not require the authorization of third parties, and banks do not require resources to transfer funds, payment processing fees are also lower. Payments on Blockchain are also very secure because all participants in the transaction must provide their approval for the transaction to take place, and anyone can check the updated ledger after the transaction.

Optimization of the Supply Chain: Optimizing supply chains should actually be evident from a business perspective. However, there are many obstacles, especially in the area of goods flow and logistics. Due to digitization and the desire for transparency in all processes, a uniform system is needed that can map every good as a digital twin and permanently store it in a secure and distributed database.

NFTs are universal property records based on Blockchain. Unlike currencies like Bitcoin and fungible tokens like utility tokens, NFTs are not interchangeable with each other. Being linked to a blockchain, the historical ownership storage of items can be traced back to the original creator, allowing for authentication of pieces without the need for third-party verification. It is interesting to note that their use allows for demonstrating and certifying the intellectual property of the object in question: regardless of its ownership transfer, its attribution will always remain in the hands of the creator.

Use cases for NFTs

The potential applications of this technology are numerous: modernizing the collecting market, eliminating fraud in the entertainment industry, allowing someone to demonstrate ownership or other rights to real or digital assets are just a few examples.

Art. The space where art and consequently the blockchain applied to it must confront are: ownership, corporeality, manipulation, and value. The ability to combine the identity of a work with its creative path, and to bring this story to the blockchain, makes it possible to document every creative action and passage of the work in an immutable form, which maintains the information and generates the origin that is more difficult to forge. The structure “tells” the entire story of the work, and it would be very difficult to alter its sequence.

Music. Currently, even the payment of royalties from labels to artists is a laborious process that involves multiple providers, payment systems, and software platforms, and control of all documents.

Collecting. Music and rare collectibles are just a few examples of real-world objects whose ownership records are digitized. In practice, these NFTs could represent fractions of physical assets, including real estate, cars, wines that can be traded as tokens on a blockchain.

Supply Chain. NFTs can also be used to represent physical components and products that flow through a supply chain. This allows for origin checks for each item. Some advantages of tokenizing these resources are proof of quality control, ethical sourcing, and counterfeit reduction, although these depend on the ability to scan and uniquely identify the physical element.

Benefits of Blockchain

In conclusion, the main advantages related to Blockchain-based applications are authenticity, traceability, error reduction, elimination of duplication, faster transaction regulations, and an automated reconciliation process. Additionally, its results demonstrate that this technology allows for greater transparency management thanks to the visibility of changes made to the ledger and the impossibility of removing or altering information in the chain, unlike what can happen in a centrally managed registry.

The use of a digital platform reduces transaction times and eliminates time constraints, all with the utmost reliability and transparency. While in a traditional system, many operations and transactions require the presence of an intermediary to ensure the trust and security of the system, the implementation of Blockchain-based systems eliminates the need for intermediaries, allowing two people to start a transaction directly without involving a third party.

Despite the various benefits, it is important to specify that Blockchain technology should be used for data ownership without including the data itself as there are a series of ethical considerations regarding the privacy of data and information.

The NFT market: As we have seen, in March 2021, the prestigious auction house Christie’s sold its first digital art using Non-Fungible Tokens (NFT) for $70 million, and the NBA saw over €200 in new revenue from its NFT-based Top Shots digital collectibles.