By now everyone’s heard of blockchain, with headlines about Bitcoin, NFTs, and even Dogecoin showing up everywhere from the local newspaper to Saturday Night Live. However, blockchain isn’t just for crypto-currencies or digital collectibles, it is also driving a wave of innovation within the enterprise that has the potential to transform many of the legacy, paper-based back-office processes that still power much of the global economy.
We’ve always known that many of these legacy back-office systems were fragile, and that’s been exposed in big ways by COVID-19. Think of retailers having a tough time tracking where the toilet paper is. Or the recent global supply-chain issues that have led everyone from clothing manufacturers to auto-makers to run out of the raw materials needed to get their products to market.
There are plenty of other non-COVID examples as well. Like stock sales taking 3 days to settle. Or food producers not knowing which ingredients are genetically modified. Pharmacies struggle to guarantee that drugs are genuine, and a single international money wire can involve a dozen banks (and the fees that come with them).
The list goes on and on, and in every example the problem is the same. The level of digitization that powers these systems is simply not where it needs to be or where it should be. There’s an enormous amount of value that can be unlocked by fixing that, and that’s where enterprise blockchain comes in.
Blockchain makes it possible to reinvent legacy systems on a shared ledger that provides a single source of truth. This allows data flows to be automated across parties, and allows smart contracts to be deployed to keep actors within these systems in sync. In this context, NFTs, or non-fungible tokens, become powerful tools for the enterprise, and there are three things every Enterprise should know about them.
You’ve heard of NFTs being used for NBA Top Shot trading cards or digital art, but tokens can also represent real-world assets that businesses care about, like cars, buildings, deeds, titles, or other financial instruments.
Enterprises need to collaborate on these types of real-world assets and be able to move value from party to party. Since NFTs are highly programmable, what these assets look like on the blockchain can be defined and customized.
The blockchain provides a single source of truth and a level of decentralization, where no one owns or is in control of that thing but everyone is helping to maintain it within the network. This unlocks the potential to streamline and automate processes that span multiple parties, greatly increasing efficiency and collaboration.
The idea of a non-fungible token can be really hard to wrap your head around. An NFT is a programming construct native to blockchain protocol that is flexible and customizable because it runs as code. This means that NFTs can be automated and instrumented.
The basic standards for NFTs have simple functions like how to create them (known as minting) or how to delete them (known as burning). Tokens can also be transferred from one owner to another.
NFTs become a "digital twin" of real-world things, creating a digital representation of that thing on the blockchain. This allows the state of that thing to be more easily tracked on an ongoing basis. It also provides transparency into the status of that thing and allows automation to be built on top of it, with rules for what happens when the ownership of that thing changes, for example. This puts that thing firmly into the digital world, allowing for much greater efficiency.
Think about the last time you bought a car or a house. The paperwork involved with transferring the title or deed for assets like these is really a relic of a pre-digital era, with lawyers, notaries, and bankers all needing to be involved. With blockchain, these assets can be tokenized, allowing those processes to be digitized and greatly sped up.
Three key attributes of blockchains are that they are decentralized, transparent, and open. Decentralization means that no one party has control over the blockchain itself. Once the rules are set in code, a malicious actor can’t come in and change them.
Those rules are also known to all parties and codified in the smart contract. This provides transparency into how the system works.
Finally, the openness of blockchains makes it easy for parties to join and participate. For enterprise use cases, that participation can be limited to known parties, but it’s easy to add new members to the system.
The decentralization, transparency, and openness inherent in blockchain systems means that NFTs are able to provide all parties with a common view of trusted information about a thing since they know what the rules are, they’re open participants in the system, and they know the trusted information can’t be changed maliciously. This makes NFTs a powerful tool for enterprises to track, verify, and manage assets.
There are numerous examples of enterprises putting tokens to use in the world today. UnionBank, for example, is using them to streamline remittance payments from abroad. RiskStream Collaborative is using NFTs to make the claims process more efficient across insurance providers. Greenfence uses NFTs to power an improved coupon process for retailers. Everywhere you look, blockchain solutions are being deployed more and more across supply chains, finance and banking, healthcare, and many other industries.
You probably have ideas for how your business can put NFTs to use too. If so, Kaleido’s enterprise blockchain platform and token factory makes it easy to get started with your digital transformation projects. Try it free today.
Want to go deeper? I recently presented on enterprise tokens for RiskStream Collaborative’s NFT Education Series. You can see the full webinar recording below:
Kaleido is your easy button for developing next era blockchain based business applications.