Our previous article in this series looked at the legal framework surrounding blockchain technology. This article will look at practical uses for the technology. Blockchain technology has implications for many business owners, even those not interested in the speculative trading element in cryptocurrency which is akin to trading in the stock market. In addition to acting as a cash replacement, cryptocurrencies have many other applications, or use cases; some of the most recent uses include non-fungible tokens, tokenization, and wallet transfers.
A recent trend in blockchain technology is the creation, sale, and trade of non-fungible tokens, or NFTs. NFTs can take several forms, but the most common are digital collectibles. NFT collectibles can be released in a single issuance representing an individual piece of digital art, such as Beeple’s “Everydays – The First Five Thousand Days” which recently sold for $69 million. Another popular NFT collectible is the National Basketball Association’s recently released NBA Top Shot. The product is a 21st century version of sports trading cards that are digital images of players along with individual player game highlights (or “moments”) that can be purchased separately or in sets. Additionally, NFTs are used to back physical goods, serving as both an ownership title and a certificate of authenticity. Similar to physical collectibles, ownership of an NFT generally does not confer any intellectual property rights upon the owner, only the ownership of the digital collectible itself.
Entrepreneurial business owners looking to capitalize on blockchain technology may wish to research tokenization, the process by which NFTs and other tokens are created. Tokenization permits blockchain users to break down an asset into standardized units, and to sell said units as digital assets redeemable for some product or commodity, such as a share in a company, ownership in a piece of real estate, or participation in an investment fund. These tokens can then be traded on a secondary market. One of the best examples of this can be found on the Bitcoin SV (BSV) network. Rather than trading cryptocurrency to cryptocurrency or exchanging cryptocurrency for fiat money, users trade tokenized assets for BSV. BSV tokenization is in its infancy, but entrepreneurs are already creating, trading, and profiting on various tokenized assets such as time, tacos, NFTs, and even social media posts. Regulation aside, it is easy to see how this seemingly niche technology can one day be used for crowdsourced capital generation or demand-based pricing for goods and services traded on an exchange. Combining tokenized assets with smart contract functionality, the possibilities are potentially limitless. In one example, the nation of Tuvalu, with its population of 13,000, is seeking to use the BSV platform for its national digital currency as well as other governmental recordkeeping.
Some businesses may wish to avoid all the intricacies of the cryptocurrency world by avoiding it completely. Others, however, may wish to understand the technology by creating the necessary accounts and performing wallet-to-wallet transfers, to gain insight into the world of blockchain technology. Some businesses set up wallets to prepare for potential ransomware attacks, in which hackers usually demand payment in cryptocurrency, such as in the recent ransomware attack on the Colonial Pipeline. Setting up and funding a wallet can take days, which can be difficult if a business’s network is taken offline by ransomware. Wallet systems currently lack some of the user-error safeguards offered in the fiat banking system, so understanding the technology is a must. Having these systems in place before a ransomware attack can prevent an already bad situation from snowballing into a longer-term loss of productivity, if a business has made the decision to pay…