Blockchain for Business

Video transcript: How can blockchains

change the way we do things

Welcome back… now that we have explored what Blockchains are, and how they
work, it’s time to delve a little deeper… In this Activity we will look at two key areas of
functionality… firstly “Decentralised Applications” and “NFTs”, before considering
some of the limitations of Blockchains. A Decentralised Application, which is referred
to as “dApp”, is very similar to the apps that run on mobile phones, with one big
difference… as they run in a Blockchain ecosystem they can deliver a range of new
functionality without the need for a central entity. This means that our activities and
data can actually be private because users don’t have to give up their data in order
to use the application.

Most of us don’t think twice these days about agreeing to give our data away when
we install a new app… If we do reconsider, then we quickly realise that we can’t
actually install the app unless we agree to the terms... But imagine if we could use
our phones and computers to access apps that didn’t require us to give up our
privacy, and that cant be controlled, hacked or censored by third parties. This is the
promise of Web 3.0, and with the advent of Blockchain it is now possible. For
instance, there are over 1,000 dApps loaded into the Cardano Blockchain that offer
functionality in finance, education, insurance, health, security, property, identity, and
much much more with dApps like these set to become more and more popular and
over the coming years.

Some of you may have heard of the term “NFTs” and if you have you might be
thinking of silly cartoons and images that were sold for millions of dollars… for
instance an image called “The First 5000 days” sold for a staggering US$69 million
in the Christies Auction House in 2021. The first NFT was sold in 2014 and by the
end of 2021 there had been over $24 billion worth of NFTs purchased. However
much like using a Blockchain to host a currency is just the beginning of its
functionality… the use case for NFTs goes far beyond cartoons and trading cards
and, if properly designed, can be digital proof of ownership for a range of digital
assets, along with physical assets like devices, cars and even houses. An NFT, or
“Non-Fungible Token”, is simply a digital identifier that is stored in a Blockchain. This
identifier contains information about a specific digital or physical asset that cannot be
changed … such as when it was purchased and by whom. And herein lies its value,
not only does the NFT provide indisputable proof of ownership, but it can also
contain instructions as part of an inbuild smart contract around how people can use
the asset, such as a song, and if there are fees or royalties involved how they are
paid.

Before we get into a little more detail let’s clarify the term ‘Fungible’ which is a key
part of what makes an NFT work. For something to be fungible it needs to be
interchangeable, for instance if I give you a $100 note and you give me a different
$100 note, or if you give me two $50 notes, then this is ok, no value has been lost,
making the notes fungible. What makes NFTs important, and potentially very useful,
is that they cannot be exchanged for anything else making them a unique digital
asset. We have all gotten very used to ‘Copy/Paste’ and the idea that anything we
see on the internet can be copied or captured in a screenshot. Although the actual
image of many NFTs can be easily viewed or copied, such as a picture of a sports
trading card, its ownership is locked and can be verified online – meaning that the
owner can act against miss-use.

However given there is a lack of regulatory support for digital assets on Blockchains
there have been some that have taken advantage by, for instance, stealing other
works and creating NFTs of them, or making imperceptible changes to the image
that then produce a new identifier and trying to pass it off as a separate asset.

In this topic we will explore Decentralised Applications and NFTs and start to get a
sense of how they can be used in business. We will then wrap up this week’s content
by looking at the legitimate concerns around Blockchains are how they are being
addressed.