With cryptocurrencies under scrutiny and heightened concerns over cybersecurity due to sophisticated hackers, demand for more secure decentralised financial systems is growing.
This is focusing attention on the role of blockchain ledger systems in driving other business applications which could create future investment opportunities.
“Blockchain is branching out into new business applications and could prove as important an innovation as the development of the internet itself,” said Jonathan Piskorowski, lead portfolio manager of the BNY Mellon Blockchain Innovation strategy.
“You would be hard pressed to think of an industry that hadn’t been, in some way, transformed by the internet and we believe this will prove the same for Blockchain over time,” he added.
Blockchain breeds new potential
Consumers are increasingly wary of centralised financial and digital intermediaries which can control and use their data.
Further, access to financial products and services for under-banked populations remains a global issue that BNY Mellon IM believes can be improved by regulated decentralised solutions that democratise finance for consumers.
Taking that approach, for example, makes it much harder for hackers since data is not stored in a single place.
In turn, blockchain is being increasingly used in the transfer of goods, service and data well beyond the financial services industry.
As a result, there are opportunities to apply the technology in sectors as diverse as healthcare, shipping, real estate and supply chain management.
“Blockchain technology can provide all the aspects a business or organisation could need for a decentralised ledger,” added Piskorowski. “Any centralised business function which involves multiple independent parties that are reluctant or unable to share information can benefit from the transparency, efficiency and asymmetric data sharing embedded in blockchain-based solutions.”
A case in point is healthcare, where different entities can execute their process in real time instead of waiting in line for their turn via a central intermediary to register information. “This can help to eliminate friction and improve overall efficiency and patient outcomes,” said Piskorowski.
Ready for regulation
The potential for blockchain and investors will also grow in line with the evolution of regulation in the technology space.
For example, the coming European Digital Markets Act is expected to require some leading tech giants to open up their services and platforms to other businesses.
“There is growing unease about the power of some of the huge tech ‘titans’ sitting right at the centre of networks in gathering up all available data and information,” said Robbie Henderson, portfolio manager of the BNY Mellon Blockchain Innovation strategy.
“We believe new regulations could help create the space for blockchain to create a technical solution for the problems of centralisation through what is a genuinely democratic digitised ledger network.”
At the same time, the metaverse might create new opportunities for blockchain, added Henderson. “[It] could hold the potential for brands to monetise themselves in new ways.”